Summary TAX Oct Solution

SOLUTION TO QUESTION 1 Oct/Nov 2016
Part A
Mashadi-Edu
VAT Payable/refundable 31 January 2016 (2 month period)

VAT Output
Sales - direct export zero rated -

Local sales - 1 785 000 x 15/115 232 826

Creche fees - exempt -

232 826

VAT Input
Purchases (337 300 x 15%) 50 595

Purchase of second hand goods, timing only upon payment
(40 000 x 15/115) 5 217

Salaries - not carrying on an enterprise -

Fuel - zero rated -

Entertainment of clients - Vat denied -

Marketing - 20000x14/115 2 609

Rental amount 50 000 x15/115 x 90% x 2 11 739

Cleaning services 8 400 x15% x 90% 1 134

New computers ((4 400 x 3 x 12)-13 800)x15/115 18 861

Total Vat output 71 294
Vat payable (Vat output less Vat input) 161 532

Part b

The requirements of a going concern are:

1. Seller must be VAT vendor.
2. Purchase must be VAT vendor.
3. All assets necessary for going concern must be supplied.
4. Tax invoice must have VAT at 0%.
5. Agreement must state VAT at 0%.
6. Agreement must state going concern sale.
7. The operation must be an income earning activity on date of transfer.