,TAX3701 Assignment 2 (COMPLETE ANSWERS)
Semester 1 2025 - DUE 17 April 2025
QUESTION 1 (30 marks, 54 minutes)
REQUIRED:
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.
Calculation of the VAT payable by/refundable to Lucky
Dlamini Steel (Pty) Ltd for the VAT period ending 28 February
2025:
� Step 1: Output Tax (VAT on Income)
LDS is a registered VAT vendor and only makes taxable supplies.
The standard VAT rate is 15%.
1.1 Sales to South African customers
R1,575,000 – R13,200 = R1,561,800 (Exclude irrecoverable
debt)
R13,200 relates to a sale to Mr. D. Moto, who was
sequestrated (irrecoverable), hence excluded from output
VAT.
Output VAT: R1,561,800 × 15% = R234,270
, 1.2 Sales to customers in Germany (export)
Zero-rated supply (Section 11(1)(a) of VAT Act)
Output VAT: R0
1.3 Receipt from Naidoo Attorneys (bad debt recovered)
Full amount includes VAT = R18,975
→ VAT = R18,975 × 15/115 = R2,475
1.4 Interest received on investments
Exempt supply (Section 12(a) of the VAT Act)
Output VAT: R0
1.5 Insurance payment received
R171,250: For business asset (cutting machine) → taxable
R18,500: Coffee machine (canteen use) → not used for
taxable supply, not taxable
Output VAT = R171,250 × 15% = R25,688
1.6 Rent received from DCT Consulting
Considered taxable commercial rental
Output VAT = R75,500 × 15% = R11,325
✅ Total Output Tax (VAT)
Semester 1 2025 - DUE 17 April 2025
QUESTION 1 (30 marks, 54 minutes)
REQUIRED:
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.
Calculation of the VAT payable by/refundable to Lucky
Dlamini Steel (Pty) Ltd for the VAT period ending 28 February
2025:
� Step 1: Output Tax (VAT on Income)
LDS is a registered VAT vendor and only makes taxable supplies.
The standard VAT rate is 15%.
1.1 Sales to South African customers
R1,575,000 – R13,200 = R1,561,800 (Exclude irrecoverable
debt)
R13,200 relates to a sale to Mr. D. Moto, who was
sequestrated (irrecoverable), hence excluded from output
VAT.
Output VAT: R1,561,800 × 15% = R234,270
, 1.2 Sales to customers in Germany (export)
Zero-rated supply (Section 11(1)(a) of VAT Act)
Output VAT: R0
1.3 Receipt from Naidoo Attorneys (bad debt recovered)
Full amount includes VAT = R18,975
→ VAT = R18,975 × 15/115 = R2,475
1.4 Interest received on investments
Exempt supply (Section 12(a) of the VAT Act)
Output VAT: R0
1.5 Insurance payment received
R171,250: For business asset (cutting machine) → taxable
R18,500: Coffee machine (canteen use) → not used for
taxable supply, not taxable
Output VAT = R171,250 × 15% = R25,688
1.6 Rent received from DCT Consulting
Considered taxable commercial rental
Output VAT = R75,500 × 15% = R11,325
✅ Total Output Tax (VAT)
