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TAX2601 Assignment 3 (ANSWERS) Semester 1 2024 - DISTINCTION GUARANTEED

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Well-structured TAX2601 Assignment 3 (ANSWERS) Semester 1 2024 - DISTINCTION GUARANTEED. (DETAILED ANSWERS - DISTINCTION GUARANTEED!). . (DETAILED ANSWERS - DISTINCTION GUARANTEED!). ...... QUESTION 1 (19 marks) Buy-a-lot (Pty) Ltd (a South African company) sells various products online and delivers for free. Its year of assessment ends on 31 March 2024 and it operates from offices and warehouses that are located in Johannesburg. Customers must pay the full purchase price of the product on the date that the online order is submitted. The company’s terms and conditions state that if a customer is not satisfied or does not like the product after receipt of the product, he/she can return the product within two weeks after the delivery date and Buy-a-lot (Pty) Ltd will provide a full refund of the purchase price. Mrs Khumalo ordered a pair of blue high heel shoes on 25 March 2024 and made an EFT (electronic fund transfer) payment of R900 on the same date. The shoes were delivered on 29 March 2024. Mrs Khumalo realised that the heel was higher than what she expected and decided to return the shoes. She successfully logged a return request online on 31 March 2024. Buy-a-lot (Pty) Ltd processed the return on 2 April 2024 and paid the R900 into Mrs Khumalo’s bank account on the same date. Buy-a-lot (Pty) Ltd made a provision for product returns of R30 000 on 31 March 2024. REQUIRED MARKS a. Discuss whether the R900 sale of the blue high heel shoes will constitute gross income for Buy-a-lot (Pty) Ltd for the 2024 year of assessment. List the requirements of the gross income definition and briefly discuss each requirement using the given information at hand. Make a brief reference to relevant case law to strengthen your argument. 12 b. Determine whether the R30 000 provision for product returns is deductible by Buy-a-lot (Pty) Ltd for the 2024 year of assessment. List all the requirements of the general deduction formula (section 11(a), read with section 23 of the Income Tax Act), briefly discuss only the requirement(s) that will not be met (i.e. what will cause the expense not to be deductible), if any, and conclude whether Buy-a-lot (Pty) Ltd will be able to deduct the amount of R30 000. 7 4 TAX2601/2024/Semester 1/Assessment 3 QUESTION 2 (11 marks) Protea (Pty) Ltd is a small business corporation as defined in the Income Tax Act and its year of assessment ends on 31 January 2024. The following information is presented to you: Tax year Taxable income Date of ITA34 notice of assessment 2021 R3 910 500 7 November 2021 2022 R4 270 000 27 July 2023 2023 R5 100 300 Not yet assessed 2024 R5 890 700 Estimated – not yet assessed REQUIRED MARKS a. Calculate the first provisional tax payment that Protea (Pty) Ltd would have made for the 2024 year of assessment. Briefly explain why you selected the basic amount for the provisional tax payment calculation. Also state the date that this payment had to be made at the latest. 7 b. Calculate the second provisional tax payment that Protea (Pty) Ltd would have made for the 2024 year of assessment. Also state the date that this payment had to be made at the latest.

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TAX2601
Assignment 3 Semester 1 2024
Unique Number:
Due Date: 8 April 2024

QUESTION 1


a. (2 ANSWERS PROVIDED)

To analyze whether the R900 sale of the blue high heel shoes will constitute gross income for
Buy-a-lot (Pty) Ltd for the 2024 year of assessment, we need to consider the elements of the
gross income definition as outlined in the provided segments and apply them to the given
scenario. These elements are:



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