TAX3701 ASSIGNMENT 2 SEMESTER 2 2025 *COMPLETE ANSWERS* DUE DATE SEPTEMBER 2025

, 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: