TAX3701
ASSIGNMENT 2 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 18 SEPTEMBER 2025
, lOMoARcPSD|21997160
QUESTION 1 (10 marks, 18 minutes)
Moses Patel (Pty) Ltd (MP) is a company that sells animal feed to farmers and
operates from Winterton in KwaZulu-Natal Free-State. The company also has a few
specialists that assists the farmers with cost effective improvements of feeding
supplements for their life stock. This commercial knowledge (know-how payments)
passed to the farmers has proven to be very profitable.
The company’s year of assessment ends on 28 February 2025 and is a registered
VAT vendor making only taxable supplies. On 27 September 2024, MP received an
amount of R95 000 in cash from a big commercial farmer in KwaZulu-Natal for the
service rendered by the company’s newly appointed animal feeding supplement
specialist.
REQUIRED: MARKS
Discuss, whether the amount of R95 000 received by Moses Patel (Pty)
Ltd will be regarded as gross income as defined in the Income Tax Act 10
for the 2025 year of assessment, supported with relevant legislation and
case law principles.
QUESTION 2 (30 marks, 54 minutes)
Part A (20 marks, 36 minutes)
Naidoo Electronics (Pty) Ltd (NE) supplies electronic parts to computer and electronic
gadgets manufacturers in South Africa and the rest of the Southern Africa region.
Some of their inventory parts are imported from Japan and some are sourced from
local suppliers. NE is registered for VAT on an invoice basis and trades with VAT
vendors.
Set out below are some of the transactions that took place during the months of
January and February 2025:
1. On 17 January 2025, NE imported 7 500 inventory parts at a cost of R345 each
from a supplier in Japan. The customs value was determined to be R340 per item.
Import surcharges of R75 500 were charged. The date reflected on the Customs
Billing of Entry is 12 February 2025.
NE approached JHN Bank and was granted a loan of R500 000 for funding
towards paying for this purchase. The loan agreement was concluded on the
18th of January 2025 and the interest rate was set at 10% per annum compounded
monthly. (7)
ASSIGNMENT 2 SEMESTER 2 2025
UNIQUE NO.
DUE DATE: 18 SEPTEMBER 2025
, lOMoARcPSD|21997160
QUESTION 1 (10 marks, 18 minutes)
Moses Patel (Pty) Ltd (MP) is a company that sells animal feed to farmers and
operates from Winterton in KwaZulu-Natal Free-State. The company also has a few
specialists that assists the farmers with cost effective improvements of feeding
supplements for their life stock. This commercial knowledge (know-how payments)
passed to the farmers has proven to be very profitable.
The company’s year of assessment ends on 28 February 2025 and is a registered
VAT vendor making only taxable supplies. On 27 September 2024, MP received an
amount of R95 000 in cash from a big commercial farmer in KwaZulu-Natal for the
service rendered by the company’s newly appointed animal feeding supplement
specialist.
REQUIRED: MARKS
Discuss, whether the amount of R95 000 received by Moses Patel (Pty)
Ltd will be regarded as gross income as defined in the Income Tax Act 10
for the 2025 year of assessment, supported with relevant legislation and
case law principles.
QUESTION 2 (30 marks, 54 minutes)
Part A (20 marks, 36 minutes)
Naidoo Electronics (Pty) Ltd (NE) supplies electronic parts to computer and electronic
gadgets manufacturers in South Africa and the rest of the Southern Africa region.
Some of their inventory parts are imported from Japan and some are sourced from
local suppliers. NE is registered for VAT on an invoice basis and trades with VAT
vendors.
Set out below are some of the transactions that took place during the months of
January and February 2025:
1. On 17 January 2025, NE imported 7 500 inventory parts at a cost of R345 each
from a supplier in Japan. The customs value was determined to be R340 per item.
Import surcharges of R75 500 were charged. The date reflected on the Customs
Billing of Entry is 12 February 2025.
NE approached JHN Bank and was granted a loan of R500 000 for funding
towards paying for this purchase. The loan agreement was concluded on the
18th of January 2025 and the interest rate was set at 10% per annum compounded
monthly. (7)
