Question 1 (30 Marks)
Calculate the normal tax liability of SA Metals (Pty) Ltd for the year of assessment ending 31 March 2023. Start your answer with the taxable income of R12 653 000
Asset register and Additional Information Workings
Asset Name
or
Additional
Informatio Income Tax
n Cost Calculations Notes Reference R
Taxable
Income R 12 653 000,00 Given Given R 12 653 000,00
Manufacturing
Machine s 12C - 40% in 1st year because it is a new manufacturing
(SP10) R 750 000,00 40% x R750000 machine s12C R 300 000,00 Less
(20% x
Manufacturing R450000)+(R16400 s 12C - 20% if second hand. This is for 5 years. The cost of moving
Machine (RT4) R 450 000,00 /5) the machine is written of over the remaining 5 years as well. s12C R 93 280,00 Less
Manufacturing Not a section 11D Deduction as the machine was brought into
Machine (DP1) R 500 000,00 50% x R500000 use specifically for R&D. S12C 1gA S12C 1gA R 250 000,00 Less
BGR 7 - 4.3.5 "Small" Items - Value less than R7000 can be
Printer R 6 499,00 100 x R6499 deducted in full. BGR 7 - 4.3.5 R 6 499,00 Less
Delivery Van R 380 000,00 R380000/4 x 7/12 BGR 7 - 4 year write off period, apportioned over 7 months BGR 7 R 55 416,67 Less
s 12C - 40% in 1st year allowance and s11(o) Disposal
Manufacturing R900000 - (40% x Recoupment. The machine was sold for more than the tax value,
Machine R900000) - hence the recoupment is added to the gross income. Capitals s12C & section
(EB09) R 900 000,00 R770000 gains tax has not been considered here. 8(4)(a) R (230 000,00) Plus
, R560000 -
Heavy duty (R560000/3 x BGR 7 - 3 year write off period, apportioned over 7 months. S
Truck (HD1) R560 000,00 12/12) - R95000 11(o) scrapping allowance applied BGR 7 & s11(o) R 278 333,33 Less
Suite of offices - Commercial building was not bought as new or unused and as
JHB R 1 800 000,00 such cannot claim the s 13quin deduction. Section 13quin -
Factory 5% x R3700000 +
Building - JHB R 3 700 000,00 R84000 S 13(1) - 5% per year - Not Apportioned. S 11(d) Repairs S13(1) & S11(d) R 269 000,00 Less
R12 000 000,00
Factory (Including
Building - Refurbishment
Qqeberha costs) 5% x R12000000 S 13(1) - 5% per year - Not Apportioned S13(1) R 600 000,00 Less
Design and R30 000,00 + Acquisition of a trademark is not deductible, but the
Trademarks R65 000,00 10% x R30000 registration of a design is. s 11(gC) R 3 000,00 Less
Research and 150% of R&D expenditure actually incurred. Sales promotion is
Development R375 000,00 + not deductible. The sales promotion does not qualify for a s11
Costs R158 000,00 150% x R375000 deduction as it wasn't incurred in the production of income. s 11D R 562 500,00 Less
Payment of
Traffic Fines R 26 800,00 Traffic fines are not deductible s 23 (o) -
R12653000 - Total Normal
R2188029 Taxable Income R 10 464 971,00
27% x R10 464 Total Normal
971.00 Tax Liability R 2 825 542,17
Calculate the normal tax liability of SA Metals (Pty) Ltd for the year of assessment ending 31 March 2023. Start your answer with the taxable income of R12 653 000
Asset register and Additional Information Workings
Asset Name
or
Additional
Informatio Income Tax
n Cost Calculations Notes Reference R
Taxable
Income R 12 653 000,00 Given Given R 12 653 000,00
Manufacturing
Machine s 12C - 40% in 1st year because it is a new manufacturing
(SP10) R 750 000,00 40% x R750000 machine s12C R 300 000,00 Less
(20% x
Manufacturing R450000)+(R16400 s 12C - 20% if second hand. This is for 5 years. The cost of moving
Machine (RT4) R 450 000,00 /5) the machine is written of over the remaining 5 years as well. s12C R 93 280,00 Less
Manufacturing Not a section 11D Deduction as the machine was brought into
Machine (DP1) R 500 000,00 50% x R500000 use specifically for R&D. S12C 1gA S12C 1gA R 250 000,00 Less
BGR 7 - 4.3.5 "Small" Items - Value less than R7000 can be
Printer R 6 499,00 100 x R6499 deducted in full. BGR 7 - 4.3.5 R 6 499,00 Less
Delivery Van R 380 000,00 R380000/4 x 7/12 BGR 7 - 4 year write off period, apportioned over 7 months BGR 7 R 55 416,67 Less
s 12C - 40% in 1st year allowance and s11(o) Disposal
Manufacturing R900000 - (40% x Recoupment. The machine was sold for more than the tax value,
Machine R900000) - hence the recoupment is added to the gross income. Capitals s12C & section
(EB09) R 900 000,00 R770000 gains tax has not been considered here. 8(4)(a) R (230 000,00) Plus
, R560000 -
Heavy duty (R560000/3 x BGR 7 - 3 year write off period, apportioned over 7 months. S
Truck (HD1) R560 000,00 12/12) - R95000 11(o) scrapping allowance applied BGR 7 & s11(o) R 278 333,33 Less
Suite of offices - Commercial building was not bought as new or unused and as
JHB R 1 800 000,00 such cannot claim the s 13quin deduction. Section 13quin -
Factory 5% x R3700000 +
Building - JHB R 3 700 000,00 R84000 S 13(1) - 5% per year - Not Apportioned. S 11(d) Repairs S13(1) & S11(d) R 269 000,00 Less
R12 000 000,00
Factory (Including
Building - Refurbishment
Qqeberha costs) 5% x R12000000 S 13(1) - 5% per year - Not Apportioned S13(1) R 600 000,00 Less
Design and R30 000,00 + Acquisition of a trademark is not deductible, but the
Trademarks R65 000,00 10% x R30000 registration of a design is. s 11(gC) R 3 000,00 Less
Research and 150% of R&D expenditure actually incurred. Sales promotion is
Development R375 000,00 + not deductible. The sales promotion does not qualify for a s11
Costs R158 000,00 150% x R375000 deduction as it wasn't incurred in the production of income. s 11D R 562 500,00 Less
Payment of
Traffic Fines R 26 800,00 Traffic fines are not deductible s 23 (o) -
R12653000 - Total Normal
R2188029 Taxable Income R 10 464 971,00
27% x R10 464 Total Normal
971.00 Tax Liability R 2 825 542,17
