Taxation Quiz

Jasper offers engineering consultancy services. His invoices for these services totalled

R940,000 for the last 12 months.

He recently renovated his office, selling all the current equipment for R70,000 and purchased new

equipment for R150,000.

He is not currently registered for value added tax (VAT). He anticipates a similar volume of work

for the coming 12 months but will be increasing his fees by 7%. Which of the following statements is CORRECT?

• Jasper has taxable supplies exceeding R1 million and became liable to register for VAT at the end of the month in which the threshold was exceeded.

• Jasper must only register for VAT if, in the income tax year of assessment, he exceeds the R1 million threshold. He must then register for VAT for the start of the next year of assessment.

• Jasper must register for VAT as his anticipated turnover for the coming 12 months will exceed the R1 million threshold.

• Jasper must wait until he crosses the R1 million threshold and only then will he be liable to register for VAT at the end of the month in which the threshold is exceeded.

Archway Ltd purchased a commercial building in the 2021 year of assessment for R14,000,000.

It comprised of four storeys.

The company built a further three storeys on to the building at a cost of R4,000,000 per storey and

rented each of the seven floors to separate tenants.

In the 2022 year of assessment, a sectional title register was opened, and the top (new) storey

was sold to the tenant on the first day of the 2022 year of assessment for R5,000,000.Which of the following options reflects the correct recoupment and commercial building capital allowance for the 2022 year of assessment?

• Recoupment R200,000

  Allowance

  R400,00

• Recoupment

  R200,000

  Allowance

  R1,100,000

• Recoupment

  R60,000

  Allowance

  R180,000

• Recoupment

  R60,000

  Allowance

  R120,000

During a routine employees' tax audit conducted on Bee Ltd by the South African Revenue Service (SARS), it was found that for the last six months, insufficient employees tax was withheld from the amounts paid to employees. No employees tax certificates have yet been issued in respect of these amounts. Which of the following statements is CORRECT?

• The employer and employee are jointly and severally liable for the employees tax not withheld and owing to SARS.

• The employer is liable to SARS for the employees tax not withheld. The employer then has a claim against the employee.

• If SARS believes that there was an intention by the employer to evade tax, the employer is absolved from the liability as the amount can be recovered from the employee.

• The employer can issue the employees tax certificates even if the employee has not refunded the employer for the employees' tax not withheld.

Naledi runs a hobby business in addition to her part-time employment. Her hobby business is registered with the South African Revenue Service (SARS) as a micro business. During the 2022 year of assessment, she earned: R400,000 from her employment; foreign dividends of R4,000; and R320,000 in turnover from the hobby business. On 1 April 2021, she refunded R15,000 to a customer for a defective product purchased from her during the 2021 year of assessment. Naledi also sold a machine used in her business for R10,000 on 1 May 2021. It had a base cost of R25,000. What is Naledi's taxable turnover in respect of her hobby business for the 2022 year of assessment?

• R310,000

• R334,000

• R290,000

• R320,000

Dial Ltd has excess cash resources and would like to use some of the cash to repurchase some of its shares from the shareholders, in proportion to their shareholdings. Which of the following statements is CORRECT?

• No shares may be repurchased as an unlisted company may not buy back its shares

• The shares may be repurchased and held as a capital asset for resale for tax purposes

• The shares may be repurchased, but the shares repurchased must be cancelled

• The shares may not be repurchased, but the company can declare a dividend and return some of the contributed tax capital

Andile's daughter, Lerato, turned 18 on 15 July 2021. On that date, Andile gave her Krugerrands (gold coins). The coins had an original cost of R224,000 when purchased on 1 May 2010. They are now worth R560,000. Donations tax of R92,000 was paid by Andile on this donation. What is Andile's total capital gain before any exclusions are applied?

• R0

• R280,800

• R244,000

• R336,000

Lend Ltd made a loan of R1,000,000 on 1 April 2021. The loan is repayable on 31 May 2023 with an amount of R1,162,500. All interest due is paid on redemption of the loan, no interest payments are required during the term of the loan. Lend Ltd has a year of assessment ending 31 March each year. Which of the following statements correctly reflects how the gross income for the 2022 year of assessment from the loan will be determined?

• There is no gross income as no amount is received in the 2022 year of assessment.

• The R162,500 will be recognised evenly over the loan period.

• The full amount is capital in nature and generates no gross income. A capital gain of R162,500 will be recognised in 2023.

• The interest will be calculated on a yield to maturity basis and recognised as gross income over the period of the loan.

Nhlanhla runs a value added tax (VAT) registered business consulting practice. During the current VAT period, he earned R150,000 in fee income. He also incurred the following expenditure: General office expenses - R30,000, Exhibition booth at a business conference to hand out promotional materials - R10,000, Taking clients to dinner during the conference - R9,000, Hotel accommodation and his own meals during the conference - R3,000, University fees for his research degree which is of direct relevance to his consulting business - R11,000. He has retained all necessary supporting documents. All amounts above are exclusive of VAT charged. What is Nhlanhla's VAT liability payable to the South African Revenue Service (SARS) for the current VAT period?

• R14,700

• R16,050

• R16,500

• R13,050

Josephine works in the finance section of a manufacturing company, ABC (Pty) Ltd. She annually prepares the company's tax return before it is reviewed by the financial director and submitted. She prepares no other tax returns and is in full time employment with ABC (Pty) Ltd. Which of the following statements is TRUE?

• Josephine must register as a tax practitioner as she assists in preparing a tax return

• Josephine need not register as a tax practitioner as long as the financial director to whom she reports is registered as a tax practitioner

• Josephine and the financial director must register as tax practitioners

• Neither Josephine nor the financial director must register as tax practitioners

Certain periods of absence from a primary residence may be deemed to qualify as periods of ordinary residence in a primary residence. Which of the periods of time described below would NOT be deemed to be a period of ordinary residence in a primary residence?

• The property was flooded during a natural disaster and was left vacant for one year while the taxpayer had repairs carried out.

• The taxpayer is seconded overseas for four years and rents the property out. The taxpayer had lived in the property for more than one year, both before and after the rental period.

• The taxpayer had used the property as a place of business exclusively for one year before using it as a primary residence.

• The property was empty for five months as the taxpayer had moved to a new primary residence and was struggling to sell this property.