, TAX3701 ASSIGNMENT 2 SEMESTER 2 2025 ANSWERS
DUE DATE: SEPTEMBER 2025
QUESTION 1
Joseph Dlamini Manufacturers (Pty) Ltd (JDM)
Calculation of normal income tax liability for the year of assessment ended 31 March 2025
Gross Income
Sales (Note 1)
All sales to South African customers are included in gross income. However, the amount of
R125 000 was cancelled and returned before year-end and therefore does not accrue. This
must be excluded.
Interest Received (Note 2)
Interest on overdue debtors (R15 126) and interest from investments (R16 130) are both
included in gross income.
Dividends (Note 3)
Dividends from a foreign company amount to R175 998. As JDM only holds 5% of the
shares, the participation exemption does not apply. The full amount is included in gross
income.
Insurance Proceeds (Note 4)
Insurance received was R250 675 including VAT. The VAT portion must be excluded, leaving
R217 978 as taxable proceeds in terms of paragraph (g) of the gross income definition.
Sundry Income (Note 5)
Bad debts recovered (R25 252) are included in gross income under section 8(4)(a).
Gross income therefore consists of:
DUE DATE: SEPTEMBER 2025
QUESTION 1
Joseph Dlamini Manufacturers (Pty) Ltd (JDM)
Calculation of normal income tax liability for the year of assessment ended 31 March 2025
Gross Income
Sales (Note 1)
All sales to South African customers are included in gross income. However, the amount of
R125 000 was cancelled and returned before year-end and therefore does not accrue. This
must be excluded.
Interest Received (Note 2)
Interest on overdue debtors (R15 126) and interest from investments (R16 130) are both
included in gross income.
Dividends (Note 3)
Dividends from a foreign company amount to R175 998. As JDM only holds 5% of the
shares, the participation exemption does not apply. The full amount is included in gross
income.
Insurance Proceeds (Note 4)
Insurance received was R250 675 including VAT. The VAT portion must be excluded, leaving
R217 978 as taxable proceeds in terms of paragraph (g) of the gross income definition.
Sundry Income (Note 5)
Bad debts recovered (R25 252) are included in gross income under section 8(4)(a).
Gross income therefore consists of:
