TAX 3701 ASSIGNMENT 2

Question 1 Tax liability of eZhonda (Pty) Ltd for the year of assessment ended 28 February 2019. Rand Rand Taxable income ,00 Factory Building (Section 13) = * 5% - 525 000,00 Restraint of Trade (Section 11(cA) = less than 3 year therefore 3mil/,00 Research & development costs (Section 11D) = 600 000 * 150% - 900 000,00 Patent purchased (Sec 11(gC)): cost less than 5000 hence full deduction allowed - 4 500,00 © CTM Tutoring All rights reserved +19 Amount (R ) Amount (R ) Taxable Income (given) ,00 Factory Building (Sec 13): ( x 5%) - 525 000,00 Restraint of Trade (Sec 11(cA)): < 3 years, therefore (3 000 000 / 3) - 1 000 000,00 Research & development costs (Sec 11D): (R600 000 x 150%) - 900 000,00 Patent purchased (Sec 11(gC)): cost < R5000, full deduction allowed - 4 500,00 New Machine Imported: • Sec 12C allowance - (€100 000 x R15) x 40% - 600 000,00 • Foreign exchange loss - [100 000 x (R15.50 - R15)] - 50 000,00 Used Machine Purchased (Sec 12C): [(R800 000 + R25 000 + R15 000) x 20%] - 168 000,00 Equity Shares (Sec 11(l A): • Shares @ market value [(5000 x R4) x 100] 2 000 000,00 • Less: Amount paid by employees [(5000 x R1) x 100] - 500 000,00 1 500 000,00 • Deduction limited to R10 000 per employee (R10 000 x 100) - 1 000 000,00 Fire damage to factory: • Repairs (Sec 11(d)) (R750 000 - R250 000) - 500 000,00 • Assembly station installed for R250 000 - Imp