JUNE 2022 MAIN EXAMINATION
TAKE HOME QUESTION PAPER
PROGRAMME Bachelor of Commerce Degree (BCOM)
MODULE Taxation 302
INSTRUCTIONS TO CANDIDATES:
• Students are advised to carefully read and understand the questions before answering
them.
• Students must answer the questions fully but concisely and as directly as possible, using
sufficient research and application. All research should be referenced, using the Harvard
referencing protocols.
• Students should follow all specific instructions for individual questions (e.g., “list”, “in
point form”, “show all workings”).
• The mark allocation is an indication of the weight and the length of the question.
• The responses must be your own work. Plagiarism is a form of academic dishonesty and
will not be tolerated.
DATE: 20 June 2022 TIME: 13h30 - 17h45
DURATION: 4 hours MARKS: 100
, QUESTION ONE [14]
1.1. Differentiate between tax avoidance and tax evasion and give an example of each.
(8)
1.2. Define ‘resident’ and ‘non-resident’ in terms of Section 1 of the Income tax act. (6)
QUESTION TWO [16]
LBW (Pty) Limited owns the LBW cricket team. LBW (Pty) Limited recently sold two of its
players, namely, Shaun Blue and Henry Walker, to Bowlem (Pty) Limited.
• Shaun Blue was sold for R2 000 000,and
• Henry Walker for R20 000.
Shaun Blue started playing for the LBW cricket team five years ago in its under-19 team and,
after signing a life-service contract, had been coached by LBW (Pty) Limited until he became
the best fast bowler in the country.
Henry Walker had been snapped up at a bargain price from Strikers Cricket Club for
R12 000. When ‘purchasing’ Henry Walker, the board of directors of LBW (Pty) Limited
realised he was unlikely to play in its first team, but anticipated being able to ‘sell’ him for a
quick profit. This it succeeded in doing, only eight weeks after purchasing him.
Required
Discuss what amount, if any, LBW (Pty) Limited should include in its gross income. Assume
that the receipts and accruals of LBW (Pty) Limited are not exempt from normal tax. Ignore a
possible inclusion of an amount in its taxable income under section 26A (being the inclusion
of a taxable capital gain in its taxable income).
QUESTION THREE [30]
George Dlamini is a retired judge. He is now 82 years old. His income is made up of
• His pension
• An annuity from a retirement annuity fund, and
• The returns from his various investments (taxable dividends and interest).
Although retired, George Dlamini is required, from time to time, to judge on certain issues,
usually as part of a tribunal (a group of three people to settle certain types of disputes).
Since judges are expected to provide services of this nature, he is not paid for them.
He lost his driver’s licence two years ago. His wife, aged 75 years, has never driven a car.
He is unable to use public transport. He therefore employs Jack Daniels, on a full time basis,
as his chauffeur (a person employed to drive a car).
Jack Daniels’s employment contract with George Dlamini entitles him to a
TAKE HOME QUESTION PAPER
PROGRAMME Bachelor of Commerce Degree (BCOM)
MODULE Taxation 302
INSTRUCTIONS TO CANDIDATES:
• Students are advised to carefully read and understand the questions before answering
them.
• Students must answer the questions fully but concisely and as directly as possible, using
sufficient research and application. All research should be referenced, using the Harvard
referencing protocols.
• Students should follow all specific instructions for individual questions (e.g., “list”, “in
point form”, “show all workings”).
• The mark allocation is an indication of the weight and the length of the question.
• The responses must be your own work. Plagiarism is a form of academic dishonesty and
will not be tolerated.
DATE: 20 June 2022 TIME: 13h30 - 17h45
DURATION: 4 hours MARKS: 100
, QUESTION ONE [14]
1.1. Differentiate between tax avoidance and tax evasion and give an example of each.
(8)
1.2. Define ‘resident’ and ‘non-resident’ in terms of Section 1 of the Income tax act. (6)
QUESTION TWO [16]
LBW (Pty) Limited owns the LBW cricket team. LBW (Pty) Limited recently sold two of its
players, namely, Shaun Blue and Henry Walker, to Bowlem (Pty) Limited.
• Shaun Blue was sold for R2 000 000,and
• Henry Walker for R20 000.
Shaun Blue started playing for the LBW cricket team five years ago in its under-19 team and,
after signing a life-service contract, had been coached by LBW (Pty) Limited until he became
the best fast bowler in the country.
Henry Walker had been snapped up at a bargain price from Strikers Cricket Club for
R12 000. When ‘purchasing’ Henry Walker, the board of directors of LBW (Pty) Limited
realised he was unlikely to play in its first team, but anticipated being able to ‘sell’ him for a
quick profit. This it succeeded in doing, only eight weeks after purchasing him.
Required
Discuss what amount, if any, LBW (Pty) Limited should include in its gross income. Assume
that the receipts and accruals of LBW (Pty) Limited are not exempt from normal tax. Ignore a
possible inclusion of an amount in its taxable income under section 26A (being the inclusion
of a taxable capital gain in its taxable income).
QUESTION THREE [30]
George Dlamini is a retired judge. He is now 82 years old. His income is made up of
• His pension
• An annuity from a retirement annuity fund, and
• The returns from his various investments (taxable dividends and interest).
Although retired, George Dlamini is required, from time to time, to judge on certain issues,
usually as part of a tribunal (a group of three people to settle certain types of disputes).
Since judges are expected to provide services of this nature, he is not paid for them.
He lost his driver’s licence two years ago. His wife, aged 75 years, has never driven a car.
He is unable to use public transport. He therefore employs Jack Daniels, on a full time basis,
as his chauffeur (a person employed to drive a car).
Jack Daniels’s employment contract with George Dlamini entitles him to a
