Answers for Taxation for business entities 2025 case study

Question 1

Income tax for the year ended 28 February 2024

Profit before tax 658 500
Provision for doubtful debts ( no deductible) 10 000
Allowance for doubtful debts (25% x 10000) (2 500)
Depreciation ( not deductible) 8 500
Wear and tear allowance (11 000)
Retired employee (not allowable) 1000 x 12 12 000
Legal expenses (not allowable) 7000 Nil
Profit on sale of equipment (not taxable) (3 500)
Capital gains 4 200
Interest received (exempt) (35 000)
Taxable income 51 200
Tax expense (51200 x 27%) 13 874
Provisional tax payment (17 000)
Tax paid in advance 3 176



Question 2

Vat payable or refundable for year ended

Sale of goods (125 000 x 15%) output vat 18 750
Accounting fees ( exempt) Nil
Cleaning material (2000 x 15%) input vat (300)
Staff welfare (2500 x 15%) input vat (375)
Bad debts (900 x 15%) output vat (135)
Fuel ( exempt) Nil
Municipality rates, taxes, water and electricity ( zero rated) Nil
Staff accommodation (15% x 18 000) input vat (2 700)
Telephone and internet costs (15% x 9000) input vat (1 350)
Transport and freight (exempt) Nil
Staff transport fees (exempt) Nil
Interest paid (exempt) Nil