TAX3701
Assignment 2
Semester 1
DUE: 16 APRIL 2026
, QUESTION 1 – SUGGESTED SOLUTION
Calculation of the normal income tax liability for Thabo Manufacturing (Pty) Ltd
for the year of assessment ended 31 March 2026
DESCRIPTION CALCULATION R
GROSS INCOME
Sales Revenue; received in the 27 789 261
course of trade
Bad debt written off – client in s 11(i): debt due to TM from (22 520)
final liquidation (s 11(i)) sale on 22 Nov 2025; became
bad during 2026 year (DC
Attorneys confirmed final
liquidation 15 Mar 2026);
previously included in income –
all 3 requirements met
Interest received from South Revenue; no interest 17 780
African banks exemption available to
companies
Foreign dividends – 3% equity TM holds only 3% < 10% 145 200
holding threshold; full s 10B(2)(a)
participation exemption does
NOT apply; included in gross
income
SA dividends received – SA dividends subject to 20% Nil
EXCLUDED (s 10(1)(k)(i)) dividends tax (final tax);
therefore exempt from normal
income tax
GROSS INCOME 27 929 721
LESS: EXEMPT INCOME
SA dividends exempt (s 10(1) Exempt from normal income (114 520)
(k)(i)) tax
Foreign dividend partial TM is a company; ratio = 8/28; (41 486)
exemption (s 10B(3)) 8/28 x R145 200 = R41 486
Assignment 2
Semester 1
DUE: 16 APRIL 2026
, QUESTION 1 – SUGGESTED SOLUTION
Calculation of the normal income tax liability for Thabo Manufacturing (Pty) Ltd
for the year of assessment ended 31 March 2026
DESCRIPTION CALCULATION R
GROSS INCOME
Sales Revenue; received in the 27 789 261
course of trade
Bad debt written off – client in s 11(i): debt due to TM from (22 520)
final liquidation (s 11(i)) sale on 22 Nov 2025; became
bad during 2026 year (DC
Attorneys confirmed final
liquidation 15 Mar 2026);
previously included in income –
all 3 requirements met
Interest received from South Revenue; no interest 17 780
African banks exemption available to
companies
Foreign dividends – 3% equity TM holds only 3% < 10% 145 200
holding threshold; full s 10B(2)(a)
participation exemption does
NOT apply; included in gross
income
SA dividends received – SA dividends subject to 20% Nil
EXCLUDED (s 10(1)(k)(i)) dividends tax (final tax);
therefore exempt from normal
income tax
GROSS INCOME 27 929 721
LESS: EXEMPT INCOME
SA dividends exempt (s 10(1) Exempt from normal income (114 520)
(k)(i)) tax
Foreign dividend partial TM is a company; ratio = 8/28; (41 486)
exemption (s 10B(3)) 8/28 x R145 200 = R41 486
