[TYPE THE COMPANY NAME]
LML4804 OCTOBER
NOVEMBER
PORTFOLIO
(COMPLETE
ANSWERS) Semester
2 2024 - DUE 25
October 2024
[Type the document subtitle]
[Pick the date]
, [Type the abstract of the document here. The abstract is typically a short summary of the contents of
the document. Type the abstract of the document here. The abstract is typically a short summary of
the contents of the document.]
Exam (elaborations)
LML4804 OCTOBER NOVEMBER PORTFOLIO
(COMPLETE ANSWERS) Semester 2 2024 - DUE 25
October 2024
Course
Tax Law (LML4804)
Institution
University Of South Africa (Unisa)
Book
Income Tax in South Africa
LML4804 OCTOBER NOVEMBER PORTFOLIO (COMPLETE ANSWERS)
Semester 2 2024 - DUE 25 October 2024; 100% TRUSTED Complete, trusted
solutions and explanations. Ensure your success with us...
QUESTION 1 (TAX ADMINISTRATION AND TAX AVOIDANCE) The Tax
Administration Act 28 of 2011 (TAA) empowers the Commissioner for the
South African Revenue Service (the Commissioner) to conduct audits on
taxpayers. The Commissioner has, over the years, announced that the South
African Revenue Service (SARS) will conduct audits on all taxpayers that
enjoy a certain lifestyle. Most recently, the Commissioner announced that
taxpayers who buy certain premium-brand goods would be subjected to
audits. In doing so, SARS is upholding its commitment to keep a close eye on
the so-called High-Net-Worth (HNW) taxpayers. A HNW taxpayer is defined
as a person whose estate is worth more than R50 million. Following the above
statement, SARS announces in the press that it will be conducting lifestyle
questionnaires on all wealthy taxpayers who are members of the Vintage
Club. The Vintage Club receives a notice from SARS demanding information
about the names and personal details of its members. WHAT IS REQUIRED
OF YOU: The club approaches you for advice regarding SARS’ notice. Advise
the club in terms of the existing law. [15] SUB-TOTAL FOR QUESTION 1 [15
, marks] QUESTION 2 (GROSS INCOME) 2.1 Kamogelo is a South African tax
resident and an attorney trading as a sole proprietor in Seshego, in the
province of Limpopo. She has a policy of not doing any work for her clients
unless they have deposited money into her trust account. Accordingly, at the
end of the 2022/23 year of assessment, Kamogelo had an amount of R175
000 in her trust account for the work she still had to do. Despite this policy,
Kamogelo failed to ensure that other clients deposited money into her trust
account before she rendered legal services. Therefore, she issued invoices to
those clients who did not pay into her trust account to collect the outstanding
amounts. The invoices specified that if the client settled the outstanding
account before 1 April 2023, the client would only need to pay ninety per cent
(90%) of the invoiced amount. Failure to pay before this date would mean that
the client must pay the full amount (100%). At the end of the 2022/23 year of
assessment, none of the clients who received invoices had made a payment.
WHAT IS REQUIRED OF YOU: Discuss the income tax consequences for
Kamogelo’s 2022/23 year of assessment. [08] 2.2 In December 2021, Pravya
purchased a new plot in Durban, KwaZulu-Natal, on which she built house. On
1 March 2022, Pravya decided to rent out the house on a LML4804 OCT/NOV
EXAM 2024 permanent basis. She entered into a three-year renewable lease
agreement with Natali. In terms of the agreement, Natali will pay a monthly
rent of R12 000. The agreement also provides that Natali must construct a
wooden deck and outdoor braai (Barbeque) at her own expense. In
consideration for this, Pravya agreed to waive two months of rent upon
completion of the deck and braai. Natali duly completed the construction and
Pravya waived the rent for April and May 2022. WHAT IS REQUIRED OF
YOU: Advise Pravya if the value of the improvements to the leased property
must be included in her gross income for the 2022/23 year of assessment.
Also advise her on waiver of the rent for April and May 2022. [07] SUB-TOTAL
FOR QUESTION 2 [15 marks] QUESTION 3 (CAPITAL GAINS TAX) Zemura
is a qualified structural engineer and a South African tax resident. He is
married to his childhood sweetheart, Maria, with whom he has two children.
The company he worked for, R&R (Pty) Ltd (R&R), experienced financial
difficulties during the COVID-19 pandemic. As a result, R&R retrenched
several engineers including Zemura. Upon his retrenchment, Zemura was
given a severance package of R3 million for having worked for R&R for about
ten years. The retrenchment did not sit well with Zemura. His health
deteriorated and he was in and out of hospital. One evening on his way from
the hospital, he was arrested on a suspicion of driving under the influence of
alcohol. The officer who arrested him relied on Zemura’s slurred speech and
poor vision. Zemura stated that these were the side effects of a flu medicine
called Bilophys (not a real name), which he showed to the officer. However,
LML4804 OCTOBER
NOVEMBER
PORTFOLIO
(COMPLETE
ANSWERS) Semester
2 2024 - DUE 25
October 2024
[Type the document subtitle]
[Pick the date]
, [Type the abstract of the document here. The abstract is typically a short summary of the contents of
the document. Type the abstract of the document here. The abstract is typically a short summary of
the contents of the document.]
Exam (elaborations)
LML4804 OCTOBER NOVEMBER PORTFOLIO
(COMPLETE ANSWERS) Semester 2 2024 - DUE 25
October 2024
Course
Tax Law (LML4804)
Institution
University Of South Africa (Unisa)
Book
Income Tax in South Africa
LML4804 OCTOBER NOVEMBER PORTFOLIO (COMPLETE ANSWERS)
Semester 2 2024 - DUE 25 October 2024; 100% TRUSTED Complete, trusted
solutions and explanations. Ensure your success with us...
QUESTION 1 (TAX ADMINISTRATION AND TAX AVOIDANCE) The Tax
Administration Act 28 of 2011 (TAA) empowers the Commissioner for the
South African Revenue Service (the Commissioner) to conduct audits on
taxpayers. The Commissioner has, over the years, announced that the South
African Revenue Service (SARS) will conduct audits on all taxpayers that
enjoy a certain lifestyle. Most recently, the Commissioner announced that
taxpayers who buy certain premium-brand goods would be subjected to
audits. In doing so, SARS is upholding its commitment to keep a close eye on
the so-called High-Net-Worth (HNW) taxpayers. A HNW taxpayer is defined
as a person whose estate is worth more than R50 million. Following the above
statement, SARS announces in the press that it will be conducting lifestyle
questionnaires on all wealthy taxpayers who are members of the Vintage
Club. The Vintage Club receives a notice from SARS demanding information
about the names and personal details of its members. WHAT IS REQUIRED
OF YOU: The club approaches you for advice regarding SARS’ notice. Advise
the club in terms of the existing law. [15] SUB-TOTAL FOR QUESTION 1 [15
, marks] QUESTION 2 (GROSS INCOME) 2.1 Kamogelo is a South African tax
resident and an attorney trading as a sole proprietor in Seshego, in the
province of Limpopo. She has a policy of not doing any work for her clients
unless they have deposited money into her trust account. Accordingly, at the
end of the 2022/23 year of assessment, Kamogelo had an amount of R175
000 in her trust account for the work she still had to do. Despite this policy,
Kamogelo failed to ensure that other clients deposited money into her trust
account before she rendered legal services. Therefore, she issued invoices to
those clients who did not pay into her trust account to collect the outstanding
amounts. The invoices specified that if the client settled the outstanding
account before 1 April 2023, the client would only need to pay ninety per cent
(90%) of the invoiced amount. Failure to pay before this date would mean that
the client must pay the full amount (100%). At the end of the 2022/23 year of
assessment, none of the clients who received invoices had made a payment.
WHAT IS REQUIRED OF YOU: Discuss the income tax consequences for
Kamogelo’s 2022/23 year of assessment. [08] 2.2 In December 2021, Pravya
purchased a new plot in Durban, KwaZulu-Natal, on which she built house. On
1 March 2022, Pravya decided to rent out the house on a LML4804 OCT/NOV
EXAM 2024 permanent basis. She entered into a three-year renewable lease
agreement with Natali. In terms of the agreement, Natali will pay a monthly
rent of R12 000. The agreement also provides that Natali must construct a
wooden deck and outdoor braai (Barbeque) at her own expense. In
consideration for this, Pravya agreed to waive two months of rent upon
completion of the deck and braai. Natali duly completed the construction and
Pravya waived the rent for April and May 2022. WHAT IS REQUIRED OF
YOU: Advise Pravya if the value of the improvements to the leased property
must be included in her gross income for the 2022/23 year of assessment.
Also advise her on waiver of the rent for April and May 2022. [07] SUB-TOTAL
FOR QUESTION 2 [15 marks] QUESTION 3 (CAPITAL GAINS TAX) Zemura
is a qualified structural engineer and a South African tax resident. He is
married to his childhood sweetheart, Maria, with whom he has two children.
The company he worked for, R&R (Pty) Ltd (R&R), experienced financial
difficulties during the COVID-19 pandemic. As a result, R&R retrenched
several engineers including Zemura. Upon his retrenchment, Zemura was
given a severance package of R3 million for having worked for R&R for about
ten years. The retrenchment did not sit well with Zemura. His health
deteriorated and he was in and out of hospital. One evening on his way from
the hospital, he was arrested on a suspicion of driving under the influence of
alcohol. The officer who arrested him relied on Zemura’s slurred speech and
poor vision. Zemura stated that these were the side effects of a flu medicine
called Bilophys (not a real name), which he showed to the officer. However,
