TAX3701
Notes
Pack
2021/ OCT/SEP/NOV/-
EXAM PACKS
Written & Examine by:
Prof. Davidson
Prof. Williams
Lecture A. Jones
,QUESTION 1 (20 marks, 24 minutes)
Skhothana (Pty) Ltd (Skhothana) is a South African company that imports luxury fashion
clothing brands from overseas to resell locally. Skhothana is registered for Value-Added Tax
(VAT) on the invoice basis and has a two-month tax period. The following amounts relate to
receipts and payments for the two-month period ending 31 March 2014.
Where applicable, all amounts are exclusive of VAT, unless otherwise stated.
Receipts Notes R
Cash sales 150 000
Credit sales 490 000
Rentals 1 140 400
Loan from Qhoma bank 2 100 000
Equity contributions from shareholders 2 150 000
Indemnity payment 3 80 000
Payments
Import of stock 4 300 000
Purchase of land 5 100 000
Sundry payments 6 32 490
Notes:
1. Rentals
Skhothana has excess floor space in its commercial buildings that it let to aspiring local
designers. The rentals received from the designers amounted to R62 400 for the two-month
period and constituted 8% of the total revenue of the company.
As part of its remuneration package, the company lets residential accommodation to its
employees at a discount to market value. The amount received for the period was R78 000
and makes up 10% of the total revenue of the company.
2. Loan from Qhoma Bank
In March 2014, Skhothana opened two new stores locally. To finance the expansion, the
company acquired a loan of R100 000 from Qhoma Bank and received equity contributions
of R150 000 from the company’s shareholders.
3. Indemnity payment
On 6 March 2014, a fire broke out at the Johannesburg branch and stock valued at R80 000
was destroyed. The insurance company indemnified the company with a cash payment of
R80 000 (inclusive of VAT).
4. Import of stock
On 28 February 2014, Skhothana imported the Ska-Vela brand of shoes from Italy. The
cost price and value for customs duty purposes was R300 000. Import surcharges of
R2 400 were levied. The date reflected on the Customs Billing of Entry is 4 March 2014.
, QUESTION 1 (continued)
5. Purchase of land
Skhothana purchased a second-hand building from a non-vendor for a consideration equal
to R100 000. The property was paid for in full and registered on 6 March 2014. The open
market value on the date of registration was R120 000.
6. Sundry payments comprise of the following amounts inclusive of VAT:
R
Fuel cost 14 250
Bank charges 7 410
Maintenance costs 5 700
Insurance premium 3 990
Subscription fees 1 140
The fuel costs, bank charges and maintenance costs relate to the import business as well
as the property rental business. The insurance premium and subscription fees only relate to
the import business.
The subscription fees are for the purchase of international magazines and membership with
fashion trend forecasting agencies to ensure that the company stocks up on the latest
trends.
REQUIRED: Marks
Calculate the VAT payable by or refundable to Skhothana (Pty) Ltd for the
two-month tax period ending 31 March 2014. 20
Note: Where an amount is nil, please indicate and provide a brief reason.
Notes
Pack
2021/ OCT/SEP/NOV/-
EXAM PACKS
Written & Examine by:
Prof. Davidson
Prof. Williams
Lecture A. Jones
,QUESTION 1 (20 marks, 24 minutes)
Skhothana (Pty) Ltd (Skhothana) is a South African company that imports luxury fashion
clothing brands from overseas to resell locally. Skhothana is registered for Value-Added Tax
(VAT) on the invoice basis and has a two-month tax period. The following amounts relate to
receipts and payments for the two-month period ending 31 March 2014.
Where applicable, all amounts are exclusive of VAT, unless otherwise stated.
Receipts Notes R
Cash sales 150 000
Credit sales 490 000
Rentals 1 140 400
Loan from Qhoma bank 2 100 000
Equity contributions from shareholders 2 150 000
Indemnity payment 3 80 000
Payments
Import of stock 4 300 000
Purchase of land 5 100 000
Sundry payments 6 32 490
Notes:
1. Rentals
Skhothana has excess floor space in its commercial buildings that it let to aspiring local
designers. The rentals received from the designers amounted to R62 400 for the two-month
period and constituted 8% of the total revenue of the company.
As part of its remuneration package, the company lets residential accommodation to its
employees at a discount to market value. The amount received for the period was R78 000
and makes up 10% of the total revenue of the company.
2. Loan from Qhoma Bank
In March 2014, Skhothana opened two new stores locally. To finance the expansion, the
company acquired a loan of R100 000 from Qhoma Bank and received equity contributions
of R150 000 from the company’s shareholders.
3. Indemnity payment
On 6 March 2014, a fire broke out at the Johannesburg branch and stock valued at R80 000
was destroyed. The insurance company indemnified the company with a cash payment of
R80 000 (inclusive of VAT).
4. Import of stock
On 28 February 2014, Skhothana imported the Ska-Vela brand of shoes from Italy. The
cost price and value for customs duty purposes was R300 000. Import surcharges of
R2 400 were levied. The date reflected on the Customs Billing of Entry is 4 March 2014.
, QUESTION 1 (continued)
5. Purchase of land
Skhothana purchased a second-hand building from a non-vendor for a consideration equal
to R100 000. The property was paid for in full and registered on 6 March 2014. The open
market value on the date of registration was R120 000.
6. Sundry payments comprise of the following amounts inclusive of VAT:
R
Fuel cost 14 250
Bank charges 7 410
Maintenance costs 5 700
Insurance premium 3 990
Subscription fees 1 140
The fuel costs, bank charges and maintenance costs relate to the import business as well
as the property rental business. The insurance premium and subscription fees only relate to
the import business.
The subscription fees are for the purchase of international magazines and membership with
fashion trend forecasting agencies to ensure that the company stocks up on the latest
trends.
REQUIRED: Marks
Calculate the VAT payable by or refundable to Skhothana (Pty) Ltd for the
two-month tax period ending 31 March 2014. 20
Note: Where an amount is nil, please indicate and provide a brief reason.
