Tax2601 October 2025 Question 1 to 3

Added: 2026-05-27

[00:00:04]Uh hi hi students. I'm welcoming you to my class again once again as we prepare for the examination. Uh this is our final final revision class.

[00:00:18]This is our final revision class. So I'm expecting you guys in class to be participating uh to ask some questions.

[00:00:27]Actually I would also like you to go deeper. I'm sure you have been exercising. I saw Rob was also very very busy. If you have encounter some questions then just feel free to share with me that particular question or that area which you might feel like might be a challenge if it comes in.

[00:00:55]Unless otherwise I will stick to the paper. The syllabus is simply the same.

[00:01:04]The questions are more like related.

[00:01:07]So let's practice more. Let's just run through the question and let's also will be discussing.

[00:01:16]I'm seeing that from last year they are bringing multiple choice questions. I'm sure we did some multiple choice questions in our I think was it the fourth test the final quiz and as well possibly the first quiz on learning unit one and two which I feel most of these questions on question one uh come from there once again let's look at question number on November 2025 paper question one.

[00:02:13]Uh okay. Beverage private limited is a South African resident company that manufactures uh energy drinks uh beverage box year of assessment ends on 31 January 2025. The year of assessment guys it's very important to know. Yes. Uh answer question 1 to 15 by either selecting the correct answer for the multiple choice questions or by choosing true or false.

[00:02:43]Okay, we can start with question one.

[00:02:46]What does the question one say? Uh, the following entities people may qualify as micro business. Which of the following is incorrect?

[00:02:58]Which one is incorrect saying here?

[00:03:02]What does not qualify as a micro business?

[00:03:06]A natural person or company. A natural person or trust.

[00:03:12]Any company or close corporation.

[00:03:15]Any natural person or close cooperation.

[00:03:21]Remember a micro business are those small businesses with qualifying turnover which does not exceed a million rand. and micro businesses from my previous class I said is designed for who for who for people who are starting to who are getting into business most of them are not very very rich so the one I'm sure we also talked about the requirements for a business to qualify to to be registered as a micro business one of them is turnover over which should not exceed a million rand in a 12 months period and once again shareholders must be natural persons and shareholders should not have interests in other companies and as well income from investments should not exceed 20% of that qualifying turn over and it must not be a trust so it's option B. Yes.

[00:04:36]Be a trust. Remember trusts are for very rich people and rich people often hide their assets in a trust.

[00:04:46]So all of the other ones can qualify to register as a micro business. I can be small. I can register a company but a company also can if the qualifying turnover does not exceed a million rand they can qualify h but trusts with trusts it's common that trusts are used by rich people to avoid paying tax to run away from tax or as a means of reducing the burden of tax. Uh any question on that one?

[00:05:29]Okay. Number two, which of the following statements about turnover tax is correct?

[00:05:39]Qualifying turnover refers to receipts only, not to amounts acured.

[00:05:45]What do you say about this one, Roa?

[00:05:51]They're looking for a correct one.

[00:05:54]I see that it's false.

[00:05:57]>> Not really.

[00:06:00]Refers to receipts only and not to amounts accordingly. Okay, it's fine.

[00:06:04]Let's read. Let's read. B. Any any natural person, company, trust or close corporation with a qualifying turnover less than 1 million may elect to be taxed in terms of turnover tax system.

[00:06:20]What do you say about this one?

[00:06:24]This one is incorrect because of the trust.

[00:06:30]Uhhuh. See, a company or close corporation is disqualified as a micro business if the year of assessment ends on the last day of February. Is it disqualified?

[00:06:45]No.

[00:06:53]So let's see um D taxable turnover includes 100% of receipts of capital N ah no this one is also out so they want which one is correct so A is correct refers to receipts only and not amounts accured according to the question that we did last week. It's also on YouTube which I posted. It's the class which is trending right now. You will see we when calculating qualifying turnover you only work with cash receipts. Uh so A is the correct one. A is the correct one.

[00:07:47]A B is wrong because of the word trust and C is wrong because of what?

[00:07:58]A micro business's year of assessment should always ends end of February. If a company does have a year of assessment which does not ends in February will automatically be disqualified as a micro business. So this one is is not correct because they are saying any company with the year of assessment ending on February would be disqualified. It's incorrect. Actually all micro business c of assessment must end on the last day of February.

[00:08:39]A D is incorrect. Uh because turn over exclude receipts of capital nature.

[00:08:47]Qualifying turnover excludes receipts of capital nature. Are we together? Are we all are we do we agree here saying? Yes.

[00:08:56]Rafa was right when she said A is correct.

[00:09:06]Uh three.

[00:09:09]>> Let's go to three.

[00:09:11]Which of the following factors is not considered when determining if a receipt is of capital nature for the purpose of definition of gross income?

[00:09:23]Whether the recept of capital N is of capital nature or not. Let me quickly come here.

[00:09:32]Whether a receipt is of capital nature or not, we must look at the tests. The courts established tests. Uh the reason why the courts and s put this test together it's because it's a tricky part. Taxpayers doesn't want to pay tax. So they try to use that provision which says receipts of capital nature should not be included in gross income.

[00:10:08]Remember you don't include the receipts of capital nature in your gross income.

[00:10:14]Capital nature receipts are those receipts from the disposal of fixed assets or disposal of noncurren assets.

[00:10:27]So why using tests?

[00:10:30]It's because an asset can be fixed asset in my hand but in hand is not.

[00:10:41]So the two tests which are used are subject as well as the first of all the intention of the taxpayer on disposing of on disposing an asset has to be established. Uh let me find my routter.

[00:11:08]I might Looks like the network is more like catching.

[00:11:20]Okay.

[00:11:24]Am I Can you hear me? Am I cutting a little bit?

[00:11:31]>> No, it's fine.

[00:11:33]>> Okay. Thanks so much.

[00:11:38]Uh so the intention is very important uh from the intention if there is to see whether there's a change in intention because sometimes the intention can change I can declare and say h I'm using my assets as fixed assets but when you look at the activities I do as a company it can show the evidence would show that the intention has changed. So to establish whether the intention has changed you look at these tests like manner of acquisition, manner of disposal and taxpayers trade period and asset has been held accounting treatment and then continue it.

[00:12:31]Uh so these are the tests which we look at. So let's quickly go to the question and see which one is not considered when determining if a receipt is of capital nature for the purpose of definition of gross income. Intention of the taxpayer.

[00:12:55]Yes, intention of the taxpayer is there.

[00:13:00]Change in in of intention. Yes, we said sometimes intentions do change.

[00:13:06]When you look at here I said change in intention is part of and then the taxpayers mind. No text takes place activities. Yes. What do you do on daily basis? So C is not a test. The S or the course are not going to work with what is in your mind but they work with your intention.

[00:13:36]on what you have done or what you are doing or what the business is saying your mind can be something else which is very different but the intention the statement of intent so C is not uh let's quickly look at option number four which of the following deductions is prohibited in terms of section 23 even though it may comply with section 11 A.

[00:14:13]Uh section 23 covers prohibited deductions.

[00:14:20]H it must be ready together with the general deduction formula because you might have some expenses which might meet all the requirements of the general deduction formula but however they would be prohibited by section 23. Section 23 prohibits the deduction of things like bribes, fines, kickbacks and so forth. domestic and private expenses, the tax penalties and interest, insured expenses and losses, expenditure incurred uh on earning exempted income provisions and some rest of trade payments to companies.

[00:15:09]These are prohibited by section 23 even though they might meet the requirement of general deduction formula.

[00:15:22]Uh so which one is prohibited?

[00:15:29]Costs incurred in maintaining a taxpayer.

[00:15:32]Any loss or expense to the extent that it is recoverable under any contract of uh insurance uh expenses incurred in respect of exempted income. They're looking at at this all of them all of them are prohibited. All of them are prohibited. Cost in maintaining a taxpayer. This is more like a private expenses.

[00:16:08]Insured expenses which is coverable by insurance. It's those insured expenses and losses.

[00:16:16]Expenses incurred in respect of exempted income. We looked at it.

[00:16:22]All of them are prohibited.

[00:16:26]Therefore, option D.

[00:16:32]Uh, question five.

[00:16:34]The third provisional tax payment then referred to as a top payment is compulsor.

[00:16:42]Is this statement true or false?

[00:16:47]Uh what do you say you are here on this one?

[00:16:54]>> I would say it's false.

[00:16:58]>> The Fed often Fed is a top up is compulsory.

[00:17:03]Is this true or false?

[00:17:10]It's true, isn't it?

[00:17:11]>> I said false.

[00:17:13]>> You said it's false.

[00:17:16]Why are you saying it's false?

[00:17:25]>> Because we already make the the tax payments with our first and second provisional tax payments. So there's no it's not compulsory to pay it for the third time. If that makes sense.

[00:17:38]Uh remember first provisional tax is paid on estimated amount and second provisional tax as well. You normally use estimated amount. Remember when is it is payable? It's payable exactly by financial year end.

[00:17:58]of which by financial year end the taxpayer might not have determined is exactly or right taxable income.

[00:18:10]So 30 professional tax is paid.

[00:18:14]It's more like it must be paid in a case amounts used in calculating second provisional tax is less than the actual taxable income. Remember second provisional tax is payable exactly by the financial year of assessment.

[00:18:39]That's when it is payable.

[00:18:41]The company can actually get their actual taxable income a month or even 3 months after year end.

[00:18:51]So you end up having to pay the provisional tax. That's why normally referred as top up payment.

[00:19:00]Is it compulsory or voluntary? It's compulsory, isn't it?

[00:19:06]Can we say I'm only worried about the wedding when they say compulsory?

[00:19:13]Yeah, but it's compulsory. Something compulsory is not something which which is something which has to be done. So I will say it's true. I'm sure you anyone who wants to argue yeah I might be wrong in terms of understanding the wedding.

[00:19:30]But if you say something it's not compulsory, it means you can pay it if you want. Am I right?

[00:19:41]Something is not compulsory means you pay it when you want.

[00:19:47]Uh but I would say 30 professional tax is payable.

[00:19:53]you have to pay it if the amount used for calculating the second professional tax is less than your actual taxable income. That's why I'm saying um this one might be compulsor and if they say it's voluntary then it will be something else.

[00:20:28]Anyway, let's look at the text book.

[00:20:31]Let's look at the text book maybe because some of the wedding might be in the text box. As I'm saying, I'm a bit worried about the wedding. They want us to apply. Let's go to the wedding. They might actually they might actually tell us like okay I'm on 10 over text I'm I'm looking at which chapter covers provisional text.

[00:21:25]Uh let's look at business entities.

[00:21:27]Business entities 64.

[00:21:43]Yeah. Here we go.

[00:21:47]Provisional tax payment. First payment.

[00:21:50]Second payment.

[00:21:53]Uh they did not give us more on paid professional tax payment here in the textbook.

[00:22:35]Okay, we've got a long day. Uh that's why we stop but I will I'll further check if there's different wording that might be used in different uh text books.

[00:22:50]Uh let's look at question number six.

[00:22:53]With some limited exceptions, South African dividends received by or accured to in favor of any person are generally fully exempt from normal tax. What do you say here again? What did you say about this one?

[00:23:21]Uh I will say this one is a false.

[00:23:33]Let's see.

[00:23:35]Oh, it's dividends with some South African dividends received by any This one is true. Sorry.

[00:23:45]Uh with some limited exceptions. These are the dividends received from a real investment trust. But all dividends received from South African companies would be fully exempt.

[00:24:05]It is foreign dividends which are partially exempted.

[00:24:16]Uh one of the requirements of the gross income definition is that amounts received must be of capital nature.

[00:24:28]Various tests have been formulated to determine whether amounts received are of capital.

[00:24:36]Which of the following scenarios would be considered not of capital nature?

[00:24:42]Which ones would not be considered?

[00:24:48]Not of capital nature. A taxpayer wins a prize on a radio station.

[00:24:57]A a taxpayer sells his car to his neighbor.

[00:25:02]A taxpayer who trades a fixed in fixed property sells three residential properties.

[00:25:12]A taxpayer who sells the house in which he resides.

[00:25:17]Erh recept of capital nature are generally those receipts from the disposal of fixed assets or those receipts which are dependent on l rather than effort or rather than the taxpayers trade.

[00:25:39]And lastly uh those receipts from compensation uh which is not related to the loss of income. Let me say if a taxpayer is being compensated uh for defamation of correct that one is capital nature. But if a taxpayer is being compensated for the loss of income, let me say I sue I s you sign a contract in saying you signed a contract with me like Mr. Mondo. I'm going to attend your tutorial class and so much. So we are going to pay maybe,000 rand a month.

[00:26:23]Then after signing a contract which is binding h you say nope I'm not going to be part of you I can sue you and then so that you pay me that amount which I was expected to receive from you that that one I should include in my gross income because it's related to the loss of my income but you talk about me and then I sue you for defamation of correct that one is capital nature. So I said receipts which are dependent on luck like your lottery your lottery it's capital nature disposal of fixed assets as well as compensation for defamation of charact. So let's look at the solutions. A taxpayer wins a prize on a radio. This one we look at what is your trade as a taxpayer.

[00:27:34]If you are you win a prize as a radio presenter then it can be included in gross income. But if I just enter into a draw at home from home then I won or just I called and then I won. That one is capital nature. A taxpayer sells his car to his neighbor. A car it's a fixed asset. It's there for capital nature. A taxpayer who trades in fixed property.

[00:28:02]Let's look at his trade. Somebody is buying fixed property and selling them.

[00:28:09]Then it's not capital nature because it's his trade.

[00:28:14]So it is revenue in nature. The residential properties are more like his trading stock.

[00:28:21]Trading stock is revenue in nature. It's not capital nature. H then a taxpayer sells the house in which he resides.

[00:28:30]Again it's a fixed property.

[00:28:33]So the question is saying which one will not be considered will be considered as not of capital nature. Obviously it's option C.

[00:28:44]Are we happy with this one?

[00:28:50]Anyone with a question please feel free to ask.

[00:28:59]Question number eight. Which of the following requirements can be found in the gross income definition? Which of the following requirements can be found in the gross in the gross income definition as well as the general deduction formula. I can say note of capital nature, isn't it? Yeah. This is the general deduction formula you are going to see excluding expenditure and losses of capital nature but it's fine but the one which is already already there during the year of assessment during the year of assessment excluding of capital not of capital nature during the year of assessment these are are there on both the side we go to gross income you will see during the year of assessment and not of capital nature they found on both sides. So let's see which one there's no during the year of assessment during the year of assessment is on both side but not of capital nature is there so our answer is option D question nine uh the general deduction formula requires taxpayers to carry on a trade to be able to deduct expenses. Which of the following scenarios would not constitute the carrying on of trade?

[00:30:37]Yes. For a taxpayer to get a deduction, remember what you when you are calculating tax liability, there are lot of deductions.

[00:30:49]Uh so for you to apply the general deduction formula for you to be able to apply the general deduction formula uh the taxpayer should be carrying on trade that is the first thing. So what is regarded as carrying all of trade?

[00:31:07]H carrying all of trade can be you are running a business h or you are working that is carrying on trade.

[00:31:19]Okay that is carrying on of trade. What is not regarded as carrying on of trade is somebody who earns passive income. If you are earning passive income you are not carrying on trade.

[00:31:37]You will therefore not be entitled to deductions under the general deduction formula.

[00:31:48]What is passive income?

[00:31:51]Passive income that's where you you can put a fixed deposit somewhere and it brings you interest income. That interest income is passive income.

[00:32:02]You invest, you buy shares in a company.

[00:32:06]You're not involved in running the company. You're not managing anything.

[00:32:10]You just check your, you just go and send it there if the company is declaring dividends.

[00:32:16]So dividends are passive income. Interest income are passive income. So if you aiming passive income, you are not caring on trade.

[00:32:37]So let's look at here which of the following scenarios would not constitute the carrying on of trade. The taxpayer who invests on the Johannesburg stock exchange and earns dividends from shares. This one you are not carrying on trade.

[00:32:53]Uh the taxpayer carries on a business in construction. You are very busy. You are carrying on trade. the taxpayer owns a trademark and earns royalties by granting the right to use uh the trademark. So when you have your trademark obviously you would be you are some sort of carrying on trade.

[00:33:18]The taxpayer owns several investments in the form of properties and ears rental income. If you are earning rental rental income, you are carrying only trade because there's a lot of followup that you do. There's a lot of follow up you must do in terms of maintaining the buildings. It's the same as the onesh the one person who has got a trademark because you will be involved very very involved designing your statements to make sure so was there profit was there any loss?

[00:33:53]What expenses are incurred?

[00:33:55]The same with the person who is running some properties. You are carrying only trade. One who is not carrying only trade as I said you invest in a fixed deposit or you buy shares and you earn dividends and you any dividends. So as long you any dividends you're not carrying any trade.

[00:34:30]So answer option A 10 where a taxpayer buys a residential unit which represents only part of a building without erecting it or constructing that unit or acquires an improvement to a residential unit. The cost of for the purpose of calculating capital allowance is deemed to be 55% on the acquisition if it is a part. Yes.

[00:35:09]If it is improvement it's 30%, the cost will be reduced by such percentages before you apply that 5% allowance or 10% allowance if it is a low cost residential unit. So here it's true.

[00:35:30]So the cost would be cost multiplied by 55%. If you buy a residential unit without erecting it, if there's a improvement you buy without erecting it, then when calculating capital allowance, you say cost of that improvement by 35 30% and then multiply by the percentage for allowances. So this one is true.

[00:36:00]Uh, question 11.

[00:36:05]On 10 January 25, Beverage Box Limited sold 500 cans to a retailer at 10 rand each. 105 each. The cans were delivered on 26th February 2025 and the retailer paid 2,500 on the same date. The remaining 5,000 rand was only received on 4 February 2025.

[00:36:32]Calculate the amount that will be included in the gross income of beverage box limited for the year of assessment ending on January 2025.

[00:36:47]Which one of the following is correct?

[00:36:50]What is gross income? So gross income as simply amounts in cash or otherwise received by or acred to in favor of the taxpayer.

[00:37:02]So whether an amount is acred or received that amount the amount would still be part of gross income.

[00:37:13]So the 2500 must be included in gross income. Let me see.

[00:37:20]I know the whole amount. Let me say the full amount. What is gross income? Uh let me calculate the gross income.

[00:37:33]It is simply the 500 can uh multiply by 15 rand each.

[00:37:46]Anyone with the calculator to calculate for me?

[00:38:01]It's 7,500, isn't it?

[00:38:07]>> Yes.

[00:38:09]>> 7,500. That is the gross income. So the fact that the other one was not and so forth because the year of assessment ends in January.

[00:38:25]So including acrals even though the amount was received after financial year end the amount acred to the taxpayer during the year on 10 January 2025.

[00:38:46]Any question on that one?

[00:38:57]Number 12. For capital gains tax purposes and according to paragraph 20 of the eth schedule, the base cost of an asset includes only the original cost when the asset was acquired.

[00:39:11]Is it true or false?

[00:39:24]Um I said true.

[00:39:28]Uh near.

[00:39:31]So base cost is going to be original cost.

[00:39:39]Mhm. plus transportation cost plus installation cost.

[00:40:07]Uh plus any improvements plus any improvements plus selling cost if you in case I'm legal cost plus legal cost as well.

[00:40:32]Mhm.

[00:40:36]and less capital allowances.

[00:40:58]So in short basic cost is not going to be restricted by the original cost.

[00:41:06]So you have got that cost what is called cost of an asset it's purchase price plus any transportation or any other expenditure including installation cost to bring in asset where it should be that would be the cost a taxpayer to claim the capital allowances on.

[00:41:29]So on top of that if you in case some expenditure when you were selling that asset that selling expenditure that selling costs should also form part of base cost.

[00:41:44]So the answer here we can agree that it's false isn't it?

[00:41:56]Because they say includes only like nothing else, no advertisement when selling, not anything, no improvement.

[00:42:04]You only stick to the original cost which is false.

[00:42:15]Uh 13. The general we wear and tear allowance obtained in section 11E on removable assets should never be aortioned for a part of your assessment.

[00:42:26]What do we say here?

[00:42:34]A general we and should never be abortion. What you saying here?

[00:42:46]It's true.

[00:42:49]>> That is this one is false because it say should never be aortioned.

[00:42:58]It must be it's false.

[00:43:03]Remember when we looked at capital allowances we said on other sections you don't aortionate.

[00:43:12]You only a portion where you apply section 11 the general entity.

[00:43:23]Here we say yeah where an asset was partly used for private purposes you are portion where an asset was not used for the whole year you are portion.

[00:43:35]So that one is false.

[00:43:48]Uh the definition of asset in paragraph one of the earth schedule includes which of the following is incorrect?

[00:44:04]property of whatever nature movable or immovable, currency, uh, tangible and intangible assets, rights or interest of whatever nature in such a property.

[00:44:28]Uh, what is the definition of an asset? Which one of the following is incorrect? Which one is incorrect here?

[00:44:54]Isn't it?

[00:44:58]>> Yeah, I think it's B. I think it's be like current.

[00:45:09]Yeah. Cuz looking at uh the other three um of which they include property or immovable assets um I presume uh those are a def those would fall under the definition of um assets.

[00:45:28]>> Yes, definitely.

[00:45:34]Uh let's look at question 15.

[00:45:39]Uh beverage private limited >> an office.

[00:45:47]Okay. What did I say? Okay. B. Sorry. Uh so thanks Beverage Limited purchased an office building on 1 2008 and subsequently sold it on 30 November 2024 for 5.8 million rand. All costs incurred for this building are as follows.

[00:46:19]uh purchase price, transfer, duty, valution costs, repairs and maintenance.

[00:46:28]Which of the following cost will not be included in the base cost?

[00:46:39]Which one will not be included in the base cost for capital gains tax purposes?

[00:46:56]Repairs and maintenance definitely will not be included in grossing car.

[00:47:09]Repairs and maintenance that is the one which is not going to be repairs and maintenance.

[00:47:18]does not form part of base cost. They don't increase the value of an asset.

[00:47:26]The rest like a transfer due you can take it into account like okay but repairs and maintenance. Remember an asset should be where it is to work.

[00:47:38]If the something happens it has to be repaired to work for it to be brought into use. Uh so if you repair repairs should not form part of base cost.

[00:47:52]Uh how much is the amount on repairs?

[00:47:57]160,000 rand. Option A.

[00:48:03]Uh that is it. Any question before we move on to another part.

[00:48:08]How far are you guys with the provisional tax? Should we do provisional text?

[00:48:15]question. I'm sure we we can quickly run through to remind you.

[00:48:24]Yeah, I say um I think since this uh is probably the last session before we write the exam um we can run through it.

[00:48:34]I'm not too sure if he saying so yeah there is there are some two recordings which I did on provisional text but let's run through it to remember uh so that at least question two >> hello do you have a question >> I was just going to ask about maybe doing question five cuz It's not that long as well cuz I don't think we've ever done um tax liability with you >> or turn over text.

[00:49:15]>> Question five. Yeah.

[00:49:17]>> Uh didn't we do it last week?

[00:49:22]>> I think last week CGT.

[00:49:26]>> Oh, turn over text. We didn't do turnover text last week together with CGT.

[00:49:32]We did.

[00:49:35]>> We did this one. Yeah. But we are going to do it so long. It's fine.

[00:49:45]Uh let's quickly do professional text and then we move on to here.

[00:50:00]Let not let's do professional text uh beverage manufacturer uh every drinks the manufacturing process has been approved by SARS and the company is not a small business corporation as defined in the income tax act beverage box CA of assessments end on 31 January 2025. The following information is available.

[00:50:35]The notice of assessment for the 2024 year of assessment was issued on 25th July 2024 and it reflected a taxable income of 847,526 rand. The notice of assessment for the 2023 of assessment was issued on 15th May 2024 and it reflected a taxable income of 785,259 rand. So here we go.

[00:51:06]Uh first professional text what is the payment date of your we have to see what is the company's financial year end it ends on 31 January remember first professional Tax is payable 6 months into the year. What is the payment date? Say yeah the payment date for first professional tax remember payment date is very important.

[00:51:53]So if the company's financial year end is 31 January 2025, it means the year began on 1 February 2024, isn't it?

[00:52:06]So let's count 6 months from 1 February 2024.

[00:52:13]So we're going to say February, March, April, May, June, July. So it was its payable on one July 2024.

[00:52:30]So let's look at the basic amount.

[00:52:35]So remember the basic amount is the amount which you should use uh to calculate first provisional tax. H generally it it's based on previous taxable income provided that it was assessed and assessed in more than 14 days before the payment date. So if we are calculating first professional tax for 2025 we should quickly look at the immediate uh previous year of assessment which is the 2024 year of assessment.

[00:53:15]So we see the 2024 year of assessment was issued.

[00:53:24]Yes. Remember the basic amount that taxable income should have been assessed? Was it assessed? Yes. On which date? 25th July. Remember we said it should have been assessed in how many days?

[00:53:40]more than 14 days >> before payment date. So our payment date is 31 July 2024 but this one was assessed on 25th July 2024. So we can write uh the 2024 taxable income may not be used uh let me say cannot be used uh as it was assessed in less than 24 days less than no less than 14 days uh before payment date.

[00:54:35]uh which would usually uh we can say from 25th July 2024 to 31 July 2024.

[00:55:01]uh it's less than way less than 14 days.

[00:55:08]Remember the rule the rule is simply that previous year taxable income.

[00:55:16]It should have been assessed more than 14 days on payment date before the payment date.

[00:55:27]So if we can't use the 2024 taxable income, we go to the 2023 taxable income.

[00:55:39]Uh do we have the 2023 taxable income?

[00:55:46]Yes.

[00:55:48]Was issued on 24th May.

[00:55:55]Mhm.

[00:55:59]So this one can be used uh should it be adjusted? Remember we can only adjust it if it is older than 18 months on payment date. If you are standing on 31 July 2024, how old is the 2023 taxable income? So let's count the number of months from year end 2023 that is from 31 January 2023 to 31 July 2024. I'm sure it's exactly 18 months, isn't it? It's exactly 18 months. You don't adjust if the previous year taxable income is is not older than 18 months. It's exactly 18 months. So no adjustments should be made. Uh so we can use the 2023 taxable income. How much is it?

[00:57:16]785,259 rand.

[00:57:20]Uh before we can say it's final, let's see if there is no taxable capital gain in the amount.

[00:57:29]Uh the rule says if that pre taxable income includes taxable capital gain, the taxable capital gain must be subtracted.

[00:57:43]I'm sure you might have seen some questions like that where there is taxable capital gain. So if there's taxable capital gain in it, it must be subtracted or if it is for natural persons amounts like lump sums. So why are we removing taxable capital gain from a previous year taxable income? I'm sure you can guess the reason.

[00:58:16]The reason is if it includes taxable income, taxable capital gain, it is not accurate as such because you don't sell assets each and every year. I'm sure you know that taxable capital gain is from the disposal of fixed assets.

[00:58:34]So if we are using it for provisional tax, we have to subtract that taxable capital gain because the company or the taxpayer is not going to sell assets each and every year. Even if they do sell assets every year, they don't they not going to sell them at the same amount.

[00:58:56]So if the so in simple terms if the basic amount includes taxable capital gain then taxable capital gain should be subtracted so that you have got an amount excluding taxable capital gain. I'm sure you can hear me loud and clear.

[00:59:24]Okay. So now let's calculate tax at 27%.

[00:59:31]How much is 27% of the amount? Somebody to calcate for me uh quickly 212,000 and 20 rand and then remember first provisional tax you have to pay half remember it's payable after 6 months you must pay half of that it's going to be 212,000 and 20 rand multiply by 50% you must pay half of the estimated tax. How much is the amount?

[01:00:50]The first professional tax which uh beverage box should pay on 31 July 2024 is 106,000 and 10 rand.

[01:01:06]That is it for first professional tax.

[01:01:08]Uh any question?

[01:01:11]Anyone with a question?

[01:01:30]Okay, I was just quick. I did not see the framework they say here, but anyway, it's fine.

[01:02:03]So the reason which you can put here when answering this using this format.

[01:02:09]Yeah.

[01:02:12]Uh this one we are not going to use the 2025 estimated taxable income because for first professional tax you use basic amount and then uh 2024 I'm sure we have said it the reason why we are not going to use it as the basic amount it's because the date of the date of assessment And the notice of assessment was issued in less than 14 days before payment date.

[01:02:49]And then we arrived to used uh the 2023 taxable income.

[01:03:00]That's what we used.

[01:03:08]Then let's look at B. Part B uh said calculate second professional tax payment that beverage beverage box limited must make for its 2025 year of assessment in order to avoid becoming liable for penalties and interest. Also indicate the date by which the payment must be made.

[01:03:51]is payable on which date second professional tax should be paid by the financial year end by the end of the year of assessment. So meaning is payable on 31 July uh 31 January sorry >> 31 January 2025.

[01:04:18]So let's try and see. They said use this format.

[01:04:41]Let me try and use the format and see how far we will go.

[01:05:10]What the Uh let's see taxable income uh date of assessment.

[01:05:57]And then reason 2025.

[01:06:22]Uh let's see. Let's see. Let me do this.

[01:06:32]The lecture wants to punish us by drawing some tables, some necessary tables.

[01:07:12]estimated.

[01:07:19]Then what was the reason? Let's go to the next one.

[01:07:57]So for second provisional tax for second provisional tax the amount you should use it depends on on the estimated deductible income.

[01:08:14]We ask do we have the estimated deductible income? Yes, it's 850,000 rand. So if the estimated deductible income for the year is below a million, the amount used for calculating a second provisional tax is the lower amount between uh the latest assessed taxable income which would be in this case for 2024 and the estimate So the lower amount should be used.

[01:09:06]Mhm.

[01:09:08]Uh not to be used.

[01:09:16]Mhm.

[01:09:21]It's more than Uh, how much is the 2024 taxable income?

[01:09:59]847,526.

[01:10:04]Uh let's just look at the uh 2023 785,259.

[01:11:11]May 2025 2024. Sorry. And this one as well.

[01:11:41]So we said this one can be used Not to be used, not the latest assessed taxable income.

[01:12:27]before payment date that is the reason remember we use the most latest one h the 2024 we couldn't use it for first provisional tax uh because of the date issue. But at 31 January, the 2024 taxable income is now way more than 14 days is now way more than 14 days. It can qualify to be used. Uh but since the we do have the estimated the amount which we should use is the lower amount between the basic amount and the estimated taxable income. Our basic amount basic amount is the lower amount.

[01:13:16]Therefore, that's what we are going to use the 24 taxable income. Okay, let's do the calculation.

[01:13:39]Which is the basic amount? We said is it amounts to how much?

[01:13:44]It's 847,526 takes 8 27%. How much is 27% of this amount?

[01:14:02]somebody to calculate for me.

[01:14:11]I'm getting 228,832 rand.

[01:14:17]Mhm. Uh remember we've already paid the first provisional tax. We can now subtract uh the first professional tax.

[01:14:32]which was paid. How much is the first professional tax which we paid? Uh it's 106,16,000 and 10 rand.

[01:14:52]Okay.

[01:15:15]So, how much is the tax? How much is the second professional tax payable?

[01:15:31]So here is the second professional tax payable.

[01:15:35]I'm sure we are fine with the second professional text.

[01:15:43]Uh any question? Any question we might have? I'm sure you do have some questions.

[01:15:51]Pat questions are good.

[01:15:55]No, I'm okay.

[01:15:57]>> You're okay. Uh, do you understand every step which we went through?

[01:16:05]>> Yes, I do.

[01:16:09]>> Okay. Thanks. How about >> um sir with regards to the second provisional tax? Um I was a bit lost because um now we we had to use the table. Uh we had to obviously follow the instruction. So um I got lost as to um how you went about getting that 122,000.

[01:16:36]>> Can you please maybe explain that?

[01:16:38]>> This one you say which one are you worried about?

[01:16:45]The 122,000.

[01:16:48]>> Yes. the the second provisional text. I I I remember we did the first uh provisional text and um you showed us the steps. So with the second provisional text, I'm I'm not too sure.

[01:17:01]Can you please explain? Uh >> okay. Yeah. Now I was now following the instructions which they said we must use.

[01:17:10]uh where I said but the general rule is uh which amount are you going to use for second provisional tax for the first we said you use the basic amount from the previous year provided it was assessed but for the second you have to look if there's any estimated taxable income yes it's there so the rule is if the estimated taxable income for the year, remember it's for 2025, for the year is less than a million rand.

[01:17:48]The amount which you should use in determining your second professional tax is the lower amount between the that estimated taxable income and the basic amount. The basic amount is the most recent assessed taxable income.

[01:18:08]So between these two you can see the recent assessed taxable income can be used should be used because it's lower than the estimated taxable income and we said the 2023 we can we can now we cannot use it because you use the most recently assessed taxable income provided that it qualify. we can only jump to the 2023 taxable income if the 2024 taxable income does not qualify to be used just like what we did with the first provisional tax.

[01:18:49]So after we have determined that this is the amount which we should use uh the 2024 taxable income uh the 24 taxable income uh again we cannot adjust it because you look at then how old is it from 2024 to 2025 it's only 12 months you adjust it if it is older than 18 months. So yes, if we are going to use it, it's simple. This is the amount which we going to use. We simply calculate tax at 27% the rate for companies.

[01:19:28]This is the rate.

[01:19:30]After we get the tax for the year, this is the estimated tax for the year for the whole year.

[01:19:38]But we should keep in mind that we after 6 months we had already paid first professional tax.

[01:19:46]So this professional first professional tax paid should now be subtracted from the estimated tax for the year for us to be able to get the second professional tax payable.

[01:20:01]So I'm sure you can doubting the difference between here we said 50% remember we must pay half after 6 months. Why now are we not saying divide by two? Because this is after 6 months we pay half and second professional tax is after 6 month after 12 months. This is for the whole year but we should subtract what we have paid after 6 months to get the amount which is which we owe to S as second provisional tax payable.

[01:20:34]Is it now better?

[01:20:37]Yeah, makes sense.

[01:20:39]>> Yeah, just ask a few if there's anything which you feel like here and there we try to strengthen up here can help us as well.

[01:20:52]So if it makes sense, I'm also very happy.

[01:20:58]I'm sure we all like to do this question. We haven't do done it in a few h we haven't done it to quickly run through it unless you guys says we are fine we want to to do stable capital gain but anyway we will simply run through it and we have done a number of exercises by now uh let's do question Three.

[01:21:42]Party A Beverage Limited manufacturing process has been approved by SAS and the company is not a small business corporation. The year end on 31 January 2025.

[01:22:07]And where should our should we start our question from? Calculate the taxable income of beverage boxy LTD for The year of assessment ended on 31 January 2025.

[01:23:09]Okay.

[01:23:16]Uh the question simply says ignore taxable capital gains tax.

[01:23:24]Uh you must commence with sales. Uh don't start with profit before tax but start with your sales which is fine.

[01:23:38]provide reasons for any amount that is not taxable or deductible.

[01:23:45]Okay, like they said, we know the financial year end. Uh we know that the company is not a small business corporation.

[01:23:55]So they said we must start with sales.

[01:23:59]On sales, we don't have any note. We know sales must be included in gross income. uh sales have to be included uh which is 6,255,000 rand. That's where what we should start with.

[01:24:14]Number two on cost of sales.

[01:24:22]Uh we need to know how we account for cost of sales. A lost on here it's subtraction subtraction subtraction.

[01:24:31]Remember we start with the statement and then we run to the notes. We go to the statement and then we run to the notes.

[01:24:43]Uh cost of sales. We know the components of cost of sales. It's in vendor for the year opening stock and closing stock.

[01:24:54]Those are the components. So let's go to the notes on the cost of sales. We are seeing opening stock. H generally for text purposes opening stop for the year must be subtracted but should be subtracted the lower amount between cost and market value.

[01:25:17]What we see is the cost. Do we have any market value here? uh market value we are seeing is in respect of closing stock but we want opening stock which we say must be subtracted. Well, we simply subtract it as given at cost.

[01:25:39]Let me remove it. Cost because they don't it's fine. We must subtract it.

[01:25:46]How much should we subtract as opening stock? 2 million 565,500 rand must be subtracted.

[01:25:57]Uh purchases you should just know that purchases are subtracted.

[01:26:04]Uh purchases is stock that was purchased during the year.

[01:26:10]Uh yes, the purchases must be subtracted. Uh the amount on purchases as we see is 1,855,000 rand.

[01:26:21]Here we go. 1,855,000 rand.

[01:26:28]Uh then we've got closing stock.

[01:26:32]What should we do with the closing stock? Say >> we add it.

[01:26:38]>> Yes. Uh but at what value?

[01:26:42]>> Market value.

[01:26:44]>> At the lower amount between the two. At the lower amount between the two.

[01:26:51]>> Sorry.

[01:26:52]>> Which one is the lesser amount?

[01:26:56]Uhhuh.

[01:26:58]at cost. Uhhuh.

[01:27:03]Uh-huh.

[01:27:05]Uh the cost price is less than or let me say it's lower than the market value.

[01:27:25]Aha. So now we are going to add how much? 2 million uh 384,600 rand. Yes, we don't put in brackets. We saw that the market value is more so we account at the lower amount at the lower value. I'm sure we are all happy here.

[01:28:03]Uh we go to add the income.

[01:28:15]Remember to follow if this you are given a statement of comprehensive income like this you just have to follow it.

[01:28:25]Uh on other income I'm seeing there's interest and there's dividends uh interest income must be included and that we don't have any exemption. How much is the interest income?

[01:28:46]556,000 rand interest must be included as income must be added.

[01:28:56]Dividends South African dividends also is part of gross income they must be included and added at what value? 325,400 rand.

[01:29:14]But remember what we have discussed on top we said all South African dividends are fully exempted. Isn't it? We said South African dividends are exempted.

[01:29:29]So when we talk about exempted it means we got grace.

[01:29:34]It was supposed to be taxed. It was supposed to go to hell. But SARS said no we are going to exempt it from going to hell.

[01:29:44]So we must subtract exemption on the dividends.

[01:29:58]Uh local local dividends are fully exempted. So we must include it and then subtract it in full. That's what we should do.

[01:30:09]That's what the lecture want us to do.

[01:30:12]Don't simply omit it and say it's exempted. I'm going to jump. You must disclose.

[01:30:20]You include because it's part of gross income. Dividends are part of gross income. You and then later on you subtract because it's exempted.

[01:30:34]Uh anything else? That's what we were given.

[01:30:40]Uh then we are fine and then we go to the expenses part. Let's go to the expenses part and we put it a little bit in block. Uh anyone with questions please if you have got questions feel free to ask remember this is one of our last classes so don't just die inwardly please ask uh then we can discuss further if you don't ask I simply assume that everything is clear okay under expenses we Go to contributions to pension funds.

[01:31:42]Uh contributions to pension fund on behalf of employees are allowed as a deduction. However, I am seeing the note. When you see a note, don't ignore a note. Go to the note and see what does the note say.

[01:32:01]The note is saying contributions uh to pension fund were made in respect of all the employees. The contributions were deducted from employees salaries and paid to the fund.

[01:32:18]Are you seeing what are you getting what I'm getting here? The contributions to pension fund were made in respect of all the employees.

[01:32:29]The contributions were deducted from employees salaries and paid to the pension fund.

[01:32:38]So this one is not allow not allowed as a deduction.

[01:32:44]This one is not an expense for the company for beverage because they were deducted from the employees salaries. Hence I'm saying don't ignore the note. If we just memorize like okay when it is like this we're simply going to subtract.

[01:33:07]Remember the contributions that are allowed as a deductions as a deduction are those made by the company on behalf of the employees.

[01:33:21]The contributions were made by what? by beverage on behalf of their employees.

[01:33:28]This one beverage is simply paid salaries to their employees and deduct from their salaries and then pay then it's not an expense for beverage but it's an expense for the employees.

[01:33:46]What is allowed as a deduction? It's an expense by the taxpayer, but this one is an expense of the employees. So, it's not allowed as a deduction. I'm sure it's clear this one.

[01:34:09]So, it was deducted from employees from the employees. Mr. Hello.

[01:34:17]>> Um, according to section 11, I is it I or L?

[01:34:24]>> Mhm.

[01:34:24]>> Um, it says the contributions to employee benefits like pension fund, profit and fund or medical aid are fully deductible.

[01:34:37]>> Yes. But if they were made by the company, that's where the difference is.

[01:34:42]If the company paid them on behalf of the employees, if you have printed my notes, you can add that.

[01:34:53]You can add if they were paid by the company on behalf of employees. Look for those words when you are answering the question.

[01:35:05]>> So here, >> this is where they trick us.

[01:35:09]But here they said deducted from employees salaries meaning it's an expense to me and employee.

[01:35:22]>> Yeah. And it was deducted um from your salary.

[01:35:26]>> From my salary.

[01:35:27]>> We are not deducting it on the companies.

[01:35:30]>> Okay.

[01:35:31]>> Definitely. So this one was it's not by the from the company. is not made by the company on behalf. Look at the word made by the company on behalf of the employees then that one that's the one which is allowed as a deduction.

[01:35:52]Uh net salaries yeah the net salaries will be allowed as a deduction.

[01:36:03]So what we would say we'll just say net remember net salaries is after deducting the other things.

[01:36:14]So what we get is salaries.

[01:36:18]So the salaries would be net plus contributions to fund.

[01:36:42]Uhhuh. Remember net is what was actually paid to employees after tax and other things. So we must take the funding into account and deductive as as full salary uh which is 625,000 rand plus 254,000 rand. That's what will be allowed as a deduction is full salaries.

[01:37:28]Uh yeah, 879,000 rand would be allowed as a deduction. 879,000 rand would be allowed as a deduction.

[01:37:38]Are you also satisfied here?

[01:37:43]What is allowed as a deduction is full sal.

[01:37:48]So where is the other?

[01:37:50]The other one is the that fund.

[01:37:54]Remember we were told that after deducting from so the both must be added together to get the salary uh which is allowed as a deduction in accordance to the general deduction formula.

[01:38:12]Uh let's look at the provisions for doubtful debts.

[01:38:32]So for provisions of doubtful deaths uh what do we get as a deduction if there's a on we see provision for doubtful deaths let me read provisions of doubtful deaths is not number Four, the company does not apply if FRS9 for financial reporting purposes and the deps clerk indicated that the list of doubtful debts for the 2025 year and amounted to 678,000 rand and is not in a for more than 100 days but less than 120. The list of doctoral debts for the 2024 year end amounted to 1,358,000 rand and has been in for more than 120 days.

[01:39:31]Okay. For once there is a if there's a doubtful doubtful debts the taxpayer would be entitled to a doubtful debts allowance.

[01:39:42]So there's a doubtful debt allowance.

[01:39:55]So in respect of doubtful debt allowance we have got the allowance for 2024 for the previous year must be added. It must be added. the allowance for the previous year must be added and the company does not apply if S9 to their reporting. So if the company or the taxpayer is not apply the doubtful the allowance will depend on the number of days in areas.

[01:40:38]If that doubtful date is 60 days and above but less than 120 days in aras then the allowance would be 25% on that list of dful debts. But if uh the that list of doctors is in areas for days which you are 120 and above there is an allowance of 40%.

[01:41:12]That is it. If the company is applying FRS9, if the company is not applying FRS9 they reporting. But if the company is applying if FRS9 then the allowance would be based on loss impairment on loss impairment.

[01:41:36]So if the loss impairment is measured according to lifetime credit loss the allowance on that impairment is 40%.

[01:41:47]If it is measured according to lifetime credit loss then the allowance is 40% on that impairment. But if it is not if the impairment is not measured according to lifetime credit loss the allowance would be 25%.

[01:42:09]That is if the company is applying our case our taxpayer here is not applying if S9 to their reporting. So now we look at the number of days in a year the allowance for previous year must be added. it we got it as a deduction in the previous year in 2024. Now in 2025 we must add it.

[01:42:34]We were not given a straight allowance.

[01:42:36]They simply give us the list of daughterful debts. But we can calculate the allowance.

[01:42:43]We said it was 1,358,000 rand.

[01:42:49]How much allowance should we use here?

[01:42:54]What percentage are we going to use for 2024? They were in for more than 120 days. The allowance therefore it's how much?

[01:43:04]>> 40%.

[01:43:07]>> Yeah, 40%. Thanks so much. 40%. So, how much allowance are we going to add?

[01:43:13]>> How much are we going to add?

[01:43:22]Uh it's 543 uh,000 and 200 must be added then yeah doubtful debt allowance for 2025 uh which is the current year. uh we said the number of days in AR are less than 120 are below 120 so the allowance would be 25% isn't it? So it's 678,000 rand multiply by 25%.

[01:44:07]The allowance for the current year must be subtracted. Must be subtracted 169,500.

[01:44:30]So here we go. Uh do we all do we all agree? Are we all happy?

[01:44:43]>> I don't know. This one getting a bit It's getting a bit trickier. I think maybe the principles or Hey.

[01:44:55]Yeah.

[01:44:55]>> What is tricky?

[01:44:59]>> Um I I the the 40% and the 25%.

[01:45:04]Okay. If the doubtful deaths um older than 60 days but not more than 120 days, the allowance is 25% on that list of doubtful debts.

[01:45:28]But if that doubtful date is more than 120 like here the 20 the previous year was more than 120 days old then the allowance would be 40%.

[01:45:45]How is it now?

[01:45:47]>> Oh >> yeah. Um I think maybe I did not catch while you were explaining it but yeah now you say if it's uh less than 60 days if it is less than 60 days it's not doubtful no allowance >> the date becomes doubtful if it is 60 days and above if it is from 60 but less than 120 days, you get an allowance of 25%.

[01:46:27]If that doubtful date is 120 days and above, then you get an allowance of how much is a bank? 40%.

[01:46:36]>> 40%. Okay.

[01:46:38]>> If it is less than 60, no allowance.

[01:46:41]It's not doubtful.

[01:46:48]How is it now? Better.

[01:46:52]>> Yeah, I think I I'm going to have to uh repeat this uh recording so that I can easily understand. Thanks.

[01:47:01]>> Now, but you must understand now. You will rather sleep here and have class tomorrow.

[01:47:07]You just ask any area you feel you don't understand for the benefit. You might be surprised like Ro is also not understanding is also not understanding.

[01:47:26]So you can find different angles. I know sometimes your mind can go deeper than where we are. It's good. You can simply ask so that we provide clarity.

[01:47:39]Okay, we are done with provision of doubtful debts. Uh let's go to the legal expenses.

[01:47:50]So with legal expenses, legal expenses would be allowed as a deduction on two conditions.

[01:48:01]One condition, they should have been incurred in the production of income.

[01:48:08]We don't want a taxpayer who would take money from the company to pay legal fees for their employees or for their wife or somebody else outside the business.

[01:48:22]Those legal expenses will not be in the production of income.

[01:48:28]So I said one condition they should be in production of income. They should have been made in the production of income. Two, they should not be capital nature.

[01:48:45]So if they capital nature when we talk about capital nature it's like you in legal costs when you are acquiring fixed assets those legal fees would be capital nature would not be allowed as a deduction if they capital nature or if they are not indicating the production of income they won't be allowed as a deduction. So long. Now let's quickly look at the note. Uh note number five.

[01:49:16]Here are the legal expenses.

[01:49:20]Uh we've got one relating to collection of trade deps.

[01:49:42]relation to the collection of what?

[01:49:45]Trade dctors.

[01:49:50]So this one uh it's allowed it qualifies as a deduction.

[01:49:58]Uh so there is an incurred in the production of income.

[01:50:14]indicating the production of Nik.

[01:50:21]So they will be allowed as a deduction.

[01:50:24]How much is it? 9,650 rand will be allowed as a deduction. Uh then let's look at paid on behalf of of the company's director director.

[01:50:53]Uhhuh. Paid on behalf of the company direct. Uh this one is more like a private not in the production of income.

[01:51:10]Mhm.

[01:51:13]So, it's not going to be allowed as a deduction.

[01:51:24]And once again, it's a loan to him. It's fine.

[01:51:34]Uh are we clear here?

[01:51:37]Uh let's see what does the not say after there's a depreciation.

[01:51:48]uh for tax purposes we don't work with the depreciation when we see fixed assets but we have got capital allowances we have to determine the capital allowances and then it's the capital allowances which would be allowed as a deduction there's machine X uh so once we see assets we talk about capital allowances that is the reason why we have to be careful whether the company is a small business corporation or not.

[01:52:30]Uh let's quickly go to my notes.

[01:52:34]If the company is a small business corporation and an asset is a manufacturing asset, the capital allowance it's 100% in the year the asset has been brought into use.

[01:52:50]But if the ass if it is a non manufacturing asset of a small business corporation write off is in 3 years 50% on the cost in the first year 30% on the cost in the second year 20% on the cost in the third year and you don't aortion it remember I said you only a portion where you apply section 11E.

[01:53:16]Uh so if a company is not a small business corporation that's why you come here.

[01:53:23]Yes it's not a small business corporation and machine. So let's read more about the machinery.

[01:53:32]So it was directly used in the manufacturing process was purchased new on one January 2025 during the year.

[01:53:42]It was brought into the same date. Yes.

[01:53:46]So, machine X capital allowances.

[01:53:57]Uh-huh. It's still in use.

[01:54:02]It's 345,000 rand.

[01:54:06]How much allowance are we applying in?

[01:54:09]Yeah.

[01:54:15]It's a It's machine X.

[01:54:18]The question is, was it purchased new or second hand? It's a manufacturing machine. The process of manufactur was manufacturing was approved. If it was purchased new, you claim your capital allowances in 4 years, 40% in the first year, in its first year and in the remaining 3 years is 20% per. If the manufacturing asset was purchased second, it becomes 20%.

[01:54:47]>> So this one was purchased new was it purchased during the year? Yes. Remember our year is ending in January.

[01:54:56]>> So it was purchased this is the this is the company's first year to use this asset and it was definitely used.

[01:55:04]>> The allowance is going to be 40%.

[01:55:07]Mhm. So, how much is 40 40% of 345,000 rand?

[01:55:21]It's 138,000 rand.

[01:55:38]Uh, now let's quickly go to a new computer. A new computer. New computer.

[01:55:52]We know a new computer is not a manufacturing asset. Uh-huh.

[01:55:58]And we already know that our taxpayer is not a small business corporation and it's a movable non-manufacturing asset.

[01:56:07]We will therefore use the provisions of section 11E where we divide we get our we allowance by dividing the cost by the number of years provided and if the asset was not used for the whole year you are further aortioned by the number of months the computer was used during the year.

[01:56:31]So let's look when it was purchased.

[01:56:34]uh it was purchased during the 2024 year of assessment and was brought into use in the same day. Meaning yes the aortionate in 2024 but during the year this year ah it was used for the whole year we not going to worry about aortioning because it was used for the whole year during the current year.

[01:56:57]So what we simply do is 30,000 divided by the number of years. What is the write off period for computers?

[01:57:06]3 years.

[01:57:09]Uh-huh. Therefore, there's 10,000 rand we allowance to be subtracted.

[01:57:17]Are we fine? No aortionment because during the 2025 year of assessment the new that computer was used for the whole year. It was only in the 24 the previous year that's when they areortioned but now we are in the current in the current year we used our computer for the whole year.

[01:57:42]Uh let's look at the delivery vehicle delivery vehicle. So let's see what happened. It's another non manufacturing asset. We see there was a disposal because it was involved in an accident.

[01:58:10]So meaning if there's a disposal there are two implications it's either there's a loss which translate to scraping allowance and the scraping allowance would be allowed as a deduction during the year but if there was any amount received and the amount received was more than the tax value then we we would worry about looking at recoupment a recoupment that must be added when calculating tax payable.

[01:58:44]So we see this disposal on the vehicle because it was scraped off. So what we need to do is to get the tax value. If no money was received from the insurance company then we do have a scraping allowance because the vehicle would have been thrown away with its tax value in it. So let's look at it. cost.

[01:59:09]How much was it purchased before?

[01:59:18]>> How much?

[01:59:19]>> How much?

[01:59:21]>> 365.

[01:59:23]>> 365,000 rand.

[01:59:26]Uh we need to for us to get the tax value, we must subtract all the capital allowances claimed.

[01:59:34]Which year of assessment was this delivery vehicle brought into use?

[01:59:43]>> Which year of assessment was this delivery vehicle brought into use?

[01:59:51]>> Yeah. During the current year, remember we said our 2024 year of assessment is running from 1 February 2024.

[02:00:03]So it's this year that's when it was brought into use for the it's we 2025 which is 365,000 rand divided by how many?

[02:00:22]How many years for delivery vehicles?

[02:00:25]Four. Remember was it used for the whole year? We see that >> we see that when it was purchased it was purchased on November 2024 and then on 31 January it was scraped off after an accident. How many months was it used during the year? It's November, December, January, isn't it? Yeah.

[02:01:00]January. January. So, it was only used for 3 months. Do we all agree? November, December, and January. So, remember what section 11 E says.

[02:01:13]If an asset was not used for the year, you are. So, the allowance we must be aortioned. You multiply by 3 over 12.

[02:01:25]How much do we get?

[02:01:30]Remember, you only do this on movable non manufacturing assets of a company which is not a small business corporation. That's when you aortion the allowance. If the asset was not used for the whole year, >> I'm getting the W and T of 22,813 rand.

[02:02:13]Uh now let's get the text value which was scraped off. Let's get the text value which was this is the tax value.

[02:02:25]So this value was thrown away. A company made a loss here. Remember we said a loss on the disposal of assets would result in scraping allowance section 11 which would be allowed as a deduction.

[02:02:41]So there's a scraping allowance scraping allowance uh of how much which is exactly the same amount as the tax value.

[02:03:00]Yeah, I'm sure we are done. That is all.

[02:03:03]Do we have any other areas which we might have omitted? I'm sure we are done. Yeah, we are done.

[02:03:12]Yeah, I think we need to we need to stop this classes. I don't want you to have a very long recording, isn't it?

[02:03:25]>> Yeah.

[02:03:26]>> Don't want a recording of four hours.

[02:03:30]>> Yeah, it's understood.

[02:03:32]>> So, let's break for how many minutes?

[02:03:34]How many minutes do you need, guys? How many minutes do you need?

[02:03:38]Roa is left David saying how many minutes do you need?

[02:03:42]>> I think it's got to pass now >> 15 >> 10 minutes isn't it?

[02:03:47]>> 15 50 I think at half past we can commence again.

[02:03:51]>> Yeah half past we can commence and then we look at this uh remaining two patients.

[02:03:57]>> Okay.

[02:04:00]Okay. Thanks guys. See you in our next meeting again. See you in our next meeting. Subscribe, share and subscribe.

[02:04:09]>> Okay.

[02:04:10]>> Okay. And share to all those telegrams so that I also have a number of people following me so that everyone can benefit. That's the only way you can repay me.

[02:04:25]So let me add and then we what the lecture wanted here is taxable income. So we are going to add and subtract what is on this column and see how much is the text what we are going to get. It depends if it is a loss. If it is a loss it's going to be an assessed loss.

[02:04:46]If there's a profit if it is positive then it's going to be taxable income.

[02:04:52]It's positive then this is the taxable income.

[02:05:03]taxable income.

[02:05:08]Uh okay, let's break and then at half past 8 we start again after uploading this. Thanks so much guys.

[02:05:17]Next type. Next few minutes.