Trading stock 2024

Which of the following is not trading stock?

• Inventory held for sale in the ordinary course of business.

• Shares held for speculative purposes

• Real estate held for rental income.

• Raw materials held for manufacturing purposes.

A person must take trading stock held and not yet disposed off and add it back to to taxable income as closing stock in terms of section _ of the Income Tax Act (ITA).

Shares held as trading stock may be included in closing stock at market value

• True

• False

Assume the write-off period for a laptop is 3 years. The effect on taxable income for Laptops Galore for the 2023 year of assessment is:

• Taxable income of R10 000

• Assessed loss of R10 000

• Assessed loss of R503 333

• Assessed loss of R3 333

• Assessed loss of R170 000

The total laptops on hand as trading stock at the end of the 2024 year of assessment is:

• 58

• 60

• 70

Assuming Laptops Galore is a VAT vendor, the cost that will qualify for a s11(a) deduction for the purchases of 100 laptops should exclude input tax

• True, in respect of s23C of the Income Tax Act

• False

• True, in respect of the gross income definition

• True, in respect of s23C of the VAT Act

Assuming Laptop Galore is a VAT vendor, the effect on the 30 laptops sold at R7 500 (excluding VAT) is as follows:

The gross income amount included is

• R195 652

• R225 000

• R258 750

If the 10 laptops (original cost R5 000) were not donated but distributed as a dividend in specie, the dividends tax effect will be:

• 20% at Market value (R12 000) and Laptop Galore is liable

• 20% at cost (R10 000) and Laptop Galore is liable

• 20% at Market value (R12 000) and the shareholder is liable

• 20% at cost (R10 000) and the shareholder is liable

• No effect as a dividend in specie is not a dividend as defined

If the 10 laptops (original cost R5 000) were not donated but distributed as a dividend in specie, the effect on Laptop Galore's taxable income will be as follows:

• Deduction of R50 000 and Recoupment at cost R50 000

• No effect on taxable income

• s18A deduction of R50 000

• Deduction of R50 000 and Recoupment at market value R60 000

If the 10 laptops (original cost R5 000) were not donated but distributed as a dividend in specie, the VAT effect for Laptop Galore will be:

• Not a supply

• Standard rated supply

• Zero rated supply

• Exempt supply