Exam (elaborations)
TAX3701 Assignment 2 (100% COMPLETE
ANSWERS) Semester 1 2025 - DUE 17 April
2025 Course
Taxation of Business Activities (TAX3701)
Institution
University Of South Africa
Book
International Taxation of Banking
Taxation of Business Activities - TAX3701 Assignment 2 Semester 1 2025 -
DUE 17 April 2025 ;100 % TRUSTED workings, Expert Solved, Explanations
and Solutions.....
VAT calculation South Africa Output and input VAT SARS VAT return VAT
refund or payment VAT 201 return example VAT on imports South Africa VAT
on bad debt recovery VAT on insurance claims VAT on rent income VAT on
motor vehicles South Africa South African VAT system VAT for small
businesses VAT zero-rated exports VAT exempt income South Africa Input
tax claim rules VAT credit notes VAT inclusive vs exclusive SARS VAT guide
VAT on commercial property VAT on financial services How to calculate VAT
for a South African business SARS rules on input tax deductions Examples of
output VAT and input VAT When to declare VAT on insurance payouts
Claiming input VAT on imported goods in South Africa Can you claim VAT on
a bakkie in South Africa? VAT treatment of staff amenities like coffee
machines Difference between zero-rated and exempt supplies How to treat
bad debt recovery under VAT VAT accounting for manufacturing businesses
TAX3701 Assignment 2 Semester 1 2025 - DUE 17 April 2025 QUESTION 1
(30 marks, 54 minutes) Lucky Dlamini Steel (Pty) Ltd (LDS) manufactures a
wide variety of steel products for the building industry in South Africa. LDS is
a small business corporation as defined in the Income Tax Act. LDS’s
financial year ends on 28 February 2025 and the company is also a
registered VAT vendor. LDS only makes taxable supplies and have all the
valid tax invoices in support of expenses incurred and payments made. The
accountant provides you with the following information for the two-month
VAT period ending on 28 February 2025. All amounts stated excludes VAT,
unless specifically stated otherwise: INCOME/RECEIPTS NOTE AMOUNT R
Sales to South African customers 1 Sales to customers in Germany 85 000
Receipt from Naidoo Attorneys 2 18 975 Interest received on investments 5
780 Insurance payment received 3 189 750 Rent received 4 75 500
EXPENSES/PAYMENTS MADE Bank charges 3 790 Interest paid to AZN Bank 9
,820 Steel sheets purchases for South African suppliers 5 950 350 New single
cab bakkie purchased from a registered VAT vendor 6 425 500 Steel cutting
machine purchased 7 95 000 A new coffee machine purchased for the
canteen 25 750 Steel products imported from Italy 8 275 350 Electricity 100
851 Legal fees 2 2 250 Salaries and wages 352 500 Membership fees 9 16
675 Notes 1. Included in the amount of the sales to South African customers
is an amount of R13 200 for sales made to Mr. D. Moto on 15 January 2025.
Mr. D. Moto was finally sequestrated on 25 February 2025 in the Pretoria
High Court. 2. The receipt of R18 985 from Naidoo Attorneys relates to an
amount that was written off as a bad debt on 20 February 2024 for a sale to
Peter Odinga Manufacturing (Pty) Ltd during the 2024 year of assessment.
This amount includes VAT. The legal fees paid of R2 250 relates to the
collection of the bad debt previously written off. 3. LDS received an amount
of R189 750 on 21 February 2025 from its insurance company. The amount
received represents a claim for the following: • R171 250 for a damaged
steel cutting machine used in the manufacturing process. • R18 500 for a
damaged coffee machine used by staff members in their canteen. 4. The rent
received of R75 500 is for rental income from DCT Consulting (Pty) Ltd
renting vacant office space from LDS. 5. Included in the purchases amount of
R950 350 is an amount of R15 250 that was identified as damaged goods on
delivery to the factory building of LDS on 17 February 2025. The supplier has
issued the necessary tax credit note on 22 February 2025 for LDS. 6. A new
single cap bakkie was purchased on 1 February 2025 for an amount of R425
500 (including VAT). The bakkie was provided as a company vehicle to Mr. D
Matebula, the marketing manager of LDS, on 1 February 2025. Mr. Matebula
makes not contribution to the cost of the bakkie. 7. A second-hand cutting
machine was purchased from a non-vendor on 2 January 2025 for R95 000.
LDS paid R50 000 of the purchase price on 15 January 2025 and the balance
of R40 000 on 3 March 2025. 8. LDS purchased special steel plates from an
Italian supplier for R275 350 on 17 January 2025. LDS also had to pay import
surcharges of R15 180 on 19 January 2025 before the goods were released
from customs in Durban. 9. LDS paid the following membership fees
(including VAT) on 1 February 2025: • R10 350 to the Engineering Society of
South Africa for the membership fees of the three mechanical engineers
involved in the manufacturing of the steel products at LDS. • R6 325 to the
local golf club for the membership fees of the managing director of LDS.
REQUIRED: MARKS Calculate the VAT payable by/refundable to Lucky Dlamini
Steel (Pty) Ltd for the two-month VAT period 28 February 2025. Please
provide a reason should any amount not be subject to output tax or does not
qualify for an input tax deduction. 30
Amount (Excl. VAT
Description Notes
VAT) (15%)
1. Sales to South African R (unknown Assume full amount is taxable. Details to be
R?
customers total)* confirmed.
Less: Bad debt (Mr. D. Sequestrated, can deduct previously declared
R13 200 R(1 980)
Moto) VAT.
, Amount (Excl. VAT
Description Notes
VAT) (15%)
2. Sales to customers in
R85 000 R0 Zero-rated export (section 11(1)(a)).
Germany
3. Receipt from Naidoo VAT-inclusive: R18 975 → VAT = R2 475;
R16 500 R2 475
Attorneys Recovery of bad debt = Output VAT.
4. Insurance payment:
R171 250 R25 688 Taxable (machine used in production).
Cutting machine
Insurance payment:
R18 500 R0 Not taxable (used for staff amenities).
Coffee machine
5. Rent from DCT
R75 500 R11 325 Rent of commercial property is taxable.
Consulting (Pty) Ltd
🔸 Total Output VAT = R? (needs total local sales) - R1 980 + R2 475 + R25 688 + R11 325 =
RX
🧾 INPUT VAT CALCULATION
Amount VAT
Description Notes
(Excl. VAT) (15%)
Bank charges R3 790 R0 Exempt, no input VAT.
Interest paid R9 820 R0 Exempt supply.
R142
Steel purchases (local) R950 350 Deduct full amount except credit note.
553
Less: Credit note on
R15 250 R(2 288) Credit note reduces input VAT.
damaged goods
Bakkie (company vehicle, Input VAT denied (passenger vehicle, no
R425 500 R0
incl. VAT) cost contribution).
Cutting machine (second-
R95 000 R0 No input VAT; vendor status required.
hand, non-vendor)
Coffee machine R25 750 R0 Staff amenity – input VAT denied.
Input VAT claimable on customs VAT
Imports: Steel plates R275 350 R41 302
(15% of 275,350 + 15,180 = R290,530).
Electricity R100 851 R15 128 Input VAT allowed.
Legal fees (for bad debt
R2 250 R338 Input VAT allowed.
recovery)
Salaries and wages R352 500 R0 No VAT on salaries.
Membership: Engineering R10 350 Input VAT allowed (direct manufacturing
R1 350
Society (incl. VAT) (VAT incl.) relevance).
Membership: Golf Club R6 325 (VAT
R0 Not allowed – entertainment.
(incl. VAT) incl.)
TAX3701 Assignment 2 (100% COMPLETE
ANSWERS) Semester 1 2025 - DUE 17 April
2025 Course
Taxation of Business Activities (TAX3701)
Institution
University Of South Africa
Book
International Taxation of Banking
Taxation of Business Activities - TAX3701 Assignment 2 Semester 1 2025 -
DUE 17 April 2025 ;100 % TRUSTED workings, Expert Solved, Explanations
and Solutions.....
VAT calculation South Africa Output and input VAT SARS VAT return VAT
refund or payment VAT 201 return example VAT on imports South Africa VAT
on bad debt recovery VAT on insurance claims VAT on rent income VAT on
motor vehicles South Africa South African VAT system VAT for small
businesses VAT zero-rated exports VAT exempt income South Africa Input
tax claim rules VAT credit notes VAT inclusive vs exclusive SARS VAT guide
VAT on commercial property VAT on financial services How to calculate VAT
for a South African business SARS rules on input tax deductions Examples of
output VAT and input VAT When to declare VAT on insurance payouts
Claiming input VAT on imported goods in South Africa Can you claim VAT on
a bakkie in South Africa? VAT treatment of staff amenities like coffee
machines Difference between zero-rated and exempt supplies How to treat
bad debt recovery under VAT VAT accounting for manufacturing businesses
TAX3701 Assignment 2 Semester 1 2025 - DUE 17 April 2025 QUESTION 1
(30 marks, 54 minutes) Lucky Dlamini Steel (Pty) Ltd (LDS) manufactures a
wide variety of steel products for the building industry in South Africa. LDS is
a small business corporation as defined in the Income Tax Act. LDS’s
financial year ends on 28 February 2025 and the company is also a
registered VAT vendor. LDS only makes taxable supplies and have all the
valid tax invoices in support of expenses incurred and payments made. The
accountant provides you with the following information for the two-month
VAT period ending on 28 February 2025. All amounts stated excludes VAT,
unless specifically stated otherwise: INCOME/RECEIPTS NOTE AMOUNT R
Sales to South African customers 1 Sales to customers in Germany 85 000
Receipt from Naidoo Attorneys 2 18 975 Interest received on investments 5
780 Insurance payment received 3 189 750 Rent received 4 75 500
EXPENSES/PAYMENTS MADE Bank charges 3 790 Interest paid to AZN Bank 9
,820 Steel sheets purchases for South African suppliers 5 950 350 New single
cab bakkie purchased from a registered VAT vendor 6 425 500 Steel cutting
machine purchased 7 95 000 A new coffee machine purchased for the
canteen 25 750 Steel products imported from Italy 8 275 350 Electricity 100
851 Legal fees 2 2 250 Salaries and wages 352 500 Membership fees 9 16
675 Notes 1. Included in the amount of the sales to South African customers
is an amount of R13 200 for sales made to Mr. D. Moto on 15 January 2025.
Mr. D. Moto was finally sequestrated on 25 February 2025 in the Pretoria
High Court. 2. The receipt of R18 985 from Naidoo Attorneys relates to an
amount that was written off as a bad debt on 20 February 2024 for a sale to
Peter Odinga Manufacturing (Pty) Ltd during the 2024 year of assessment.
This amount includes VAT. The legal fees paid of R2 250 relates to the
collection of the bad debt previously written off. 3. LDS received an amount
of R189 750 on 21 February 2025 from its insurance company. The amount
received represents a claim for the following: • R171 250 for a damaged
steel cutting machine used in the manufacturing process. • R18 500 for a
damaged coffee machine used by staff members in their canteen. 4. The rent
received of R75 500 is for rental income from DCT Consulting (Pty) Ltd
renting vacant office space from LDS. 5. Included in the purchases amount of
R950 350 is an amount of R15 250 that was identified as damaged goods on
delivery to the factory building of LDS on 17 February 2025. The supplier has
issued the necessary tax credit note on 22 February 2025 for LDS. 6. A new
single cap bakkie was purchased on 1 February 2025 for an amount of R425
500 (including VAT). The bakkie was provided as a company vehicle to Mr. D
Matebula, the marketing manager of LDS, on 1 February 2025. Mr. Matebula
makes not contribution to the cost of the bakkie. 7. A second-hand cutting
machine was purchased from a non-vendor on 2 January 2025 for R95 000.
LDS paid R50 000 of the purchase price on 15 January 2025 and the balance
of R40 000 on 3 March 2025. 8. LDS purchased special steel plates from an
Italian supplier for R275 350 on 17 January 2025. LDS also had to pay import
surcharges of R15 180 on 19 January 2025 before the goods were released
from customs in Durban. 9. LDS paid the following membership fees
(including VAT) on 1 February 2025: • R10 350 to the Engineering Society of
South Africa for the membership fees of the three mechanical engineers
involved in the manufacturing of the steel products at LDS. • R6 325 to the
local golf club for the membership fees of the managing director of LDS.
REQUIRED: MARKS Calculate the VAT payable by/refundable to Lucky Dlamini
Steel (Pty) Ltd for the two-month VAT period 28 February 2025. Please
provide a reason should any amount not be subject to output tax or does not
qualify for an input tax deduction. 30
Amount (Excl. VAT
Description Notes
VAT) (15%)
1. Sales to South African R (unknown Assume full amount is taxable. Details to be
R?
customers total)* confirmed.
Less: Bad debt (Mr. D. Sequestrated, can deduct previously declared
R13 200 R(1 980)
Moto) VAT.
, Amount (Excl. VAT
Description Notes
VAT) (15%)
2. Sales to customers in
R85 000 R0 Zero-rated export (section 11(1)(a)).
Germany
3. Receipt from Naidoo VAT-inclusive: R18 975 → VAT = R2 475;
R16 500 R2 475
Attorneys Recovery of bad debt = Output VAT.
4. Insurance payment:
R171 250 R25 688 Taxable (machine used in production).
Cutting machine
Insurance payment:
R18 500 R0 Not taxable (used for staff amenities).
Coffee machine
5. Rent from DCT
R75 500 R11 325 Rent of commercial property is taxable.
Consulting (Pty) Ltd
🔸 Total Output VAT = R? (needs total local sales) - R1 980 + R2 475 + R25 688 + R11 325 =
RX
🧾 INPUT VAT CALCULATION
Amount VAT
Description Notes
(Excl. VAT) (15%)
Bank charges R3 790 R0 Exempt, no input VAT.
Interest paid R9 820 R0 Exempt supply.
R142
Steel purchases (local) R950 350 Deduct full amount except credit note.
553
Less: Credit note on
R15 250 R(2 288) Credit note reduces input VAT.
damaged goods
Bakkie (company vehicle, Input VAT denied (passenger vehicle, no
R425 500 R0
incl. VAT) cost contribution).
Cutting machine (second-
R95 000 R0 No input VAT; vendor status required.
hand, non-vendor)
Coffee machine R25 750 R0 Staff amenity – input VAT denied.
Input VAT claimable on customs VAT
Imports: Steel plates R275 350 R41 302
(15% of 275,350 + 15,180 = R290,530).
Electricity R100 851 R15 128 Input VAT allowed.
Legal fees (for bad debt
R2 250 R338 Input VAT allowed.
recovery)
Salaries and wages R352 500 R0 No VAT on salaries.
Membership: Engineering R10 350 Input VAT allowed (direct manufacturing
R1 350
Society (incl. VAT) (VAT incl.) relevance).
Membership: Golf Club R6 325 (VAT
R0 Not allowed – entertainment.
(incl. VAT) incl.)
