Applied Skills

TX – BWA
Taxation
– Botswana
(TX – BWA)
Tuesday 3 December 2019

TX BWA BICA EN

Time allowed: 3 hours 15 minutes

This question paper is divided into two sections:

Section A – ALL 15 questions are compulsory and MUST be attempted

Section B – ALL SIX questions are compulsory and MUST be attempted

Tax rates and allowances are printed on pages 2–5.

Do NOT open this question paper until instructed by the supervisor.

Do NOT record any of your answers on the question paper.

This question paper must not be removed from the examination hall.

The Association of Chartered

Certified Accountants

The Botswana Institute of

Chartered Accountants
SUPPLEMENTARY INSTRUCTIONS:
1. Calculations and workings need only be made to the nearest P.
2. All apportionments should be made to the nearest month.
3. All workings should be shown in Section B.

TAX RATES AND ALLOWANCES:

The following rates of tax and allowances are to be used when answering the questions.

Rates of tax
2018/2019 tax year
Resident companies On taxable income
Standard rate 22%
Manufacturing company rate 15%

Resident individuals
P0 – P36,000 P0 + 0%
P36,001 – P72,000 P0 + 5%
P72,001 – P108,000 P1,800 + 12·5%
P108,001 – P144,000 P6,300 + 18·75%
P144,001 + P13,050 + 25%
Non-resident individuals, trusts and estates
P0 – P72,000 P0 + 5%
P72,001 – P108,000 P3,600 + 12·5%
P108,001 – P144,000 P8,100 + 18·75%
P144,001 + P14,850 + 25%

Capital gains – individuals

P0 – P18,000 P0 + 0%
P18,001 – P72,000 P0 + 5%
P72,001 – P108,000 P2,700 + 12·5%
P108,001 – P144,000 P7,200 + 18·75%
P144,001 + P13,950 + 25%

Capital gains – companies

Net aggregate gains are taxable at the company rates of tax.

Valued added tax (VAT) rate 12%

Basis of valuation of benefits

Individual’s vehicle benefit
Employee’s Fuel cost
Vehicle cost benefit adjustment
P1 – P50,000 P2,500 P1,000
P50,001 – P100,000 P5,000 P2,000
P100,001 – P150,000 P7,500 P3,000
P150,001 – P200,000 P10,000 P4,000
Benefit on the excess of P200,000 will be 15% thereof with a maximum fuel benefit of P5,000.
Where the cost of fuel is paid for by the employee the fuel cost adjustment is deducted from the benefit, but where the
cost is borne by the employer the full benefit is taxable.

2
 Medical contributions
The employer’s contributions to a medical benefit fund on behalf of his employee up to an amount equal to 100% of
the required contributions shall not become taxable in the hands of the employee.

Individual’s housing benefit

If rated :
10% of the property’s rateable value prorated by occupation and reduced by any charge borne by the employee.
If not rated:
The lower of (a) or (b) prorated by occupation and reduced by any charge borne by the employee:
(a) Gross floor area x P250 per sq. metre x 8%
(b) 25% of taxable employment income before housing benefit

Individual’s furniture benefit

10% of furniture cost in excess of P15,000 by usage.

Capital allowances
The annual allowance on plant and machinery is between 10% and 25% of the cost incurred. The following are the
rates fixed by the Commissioner General of Taxes as fair and reasonable having regard to the expected lives of the assets
listed.
Capital allowances
Furniture and fittings 10%
Office equipment and machinery 15%
Plant and machinery including farming 15%
Motor vehicles, boats and aircraft 25%
Heavy plant and machinery 25%
Computer hardware 25%
Industrial and commercial buildings
Industrial building – initial allowance 25%
Industrial building – annual allowance 2·5%
Commercial building – annual allowance 2·5%

Withholding tax rates

Residents Non-residents
Interest 10% 15%
Dividends 7·50% 7·50%
Entertainment fee – 10%
Management and consultancy fees – 15%
Commercial royalty – 15%
Rent 5% 5%
Commission or brokerage 10% 10%
Construction contracts 3% 3%
Note: Withholding tax on interest paid to residents is calculated at 10% of interest paid to a resident in excess of
P1,950 in a quarter of a year.

3 [P.T.O.
 Capital gains tax
Indexation allowance
Paragraph 8 of the Tenth Schedule to the Income Tax Act 1995.
Table of factors from the National Cost of Living Indices.

1982 1983 1984 1985 1986 1987 1988

January 104·1 113·5 119·9 133·9 147·4 157·8
February 104·8 113·5 120·7 135·5 148·5 158·7
March 105·5 115·2 122·0 135·5 148·9 160·8
April 106·6 116·0 124·1 136·8 151·9 163·4
May 108·3 116·9 126·6 138·0 153·6 164·0
June 108·4 118·3 128·6 140·9 154·1 165·5
July 100·0 109·0 119·1 130·1 141·2 154·9 168·0
August 101·2 110·2 120·1 129·8 141·8 156·6 169·3
September 101·2 110·2 119·8 131·1 142·7 156·7 171·0
October 102·1 110·7 120·7 131·5 143·4 157·1 172·6
November 103·3 111·7 119·7 131·8 144·7 157·5 173·9
December 103·8 112·3 119·5 132·0 146·3 158·1 174·4

1989 1990 1991 1992 1993 1994 1995

January 176·9 196·6 220·5 248·5 291·0 324·2 357·9
February 178·0 199·0 221·4 250·4 293·1 326·8 361·0
March 180·1 200·5 223·5 256·6 295·8 328·3 364·1
April 182·7 204·1 225·8 262·1 301·1 332·7 368·6
May 184·1 205·1 227·3 265·5 303·3 337·3 370·5
June 186·2 206·0 229·0 269·4 306·0 340·3 374·9
July 187·3 207·2 232·0 273·3 308·7 343·2 377·8
August 188·7 209·2 234·2 275·0 311·4 345·3 381·6
September 190·2 210·7 237·2 277·6 315·0 347·0 384·3
October 191·1 212·6 239·5 280·1 317·6 348·4 386·0
November 191·5 216·0 242·4 283·0 320·1 351·4 387·9
December 194·2 217·6 245·1 285·4 321·5 353·1 391·3

1996 1997 1998 1999 2000 2001 2002

January 395·5 431·6 464·8 495·1 530·8 581·4 613·1
February 398·1 435·5 466·0 499·7 536·8 582·1 613·9
March 402·2 439·7 469·9 504·3 538·8 587·2 622·1
April 405·6 443·6 476·0 507·5 545·5 589·9 629·6
May 408·8 448·7 477·9 509·2 548·9 596·9 631·3
June 413·9 451·2 478·9 513·3 552·0 598·6 634·0
July 417·0 454·2 481·0 514·3 568·6 601·3 654·0
August 419·1 455·1 484·0 517·7 569·8 603·0 662·4
September 421·6 457·6 484·4 521·1 571·4 605·4 666·7
October 423·8 459·7 486·9 523·5 576·0 608·5 670·7
November 426·0 460·9 489·5 524·0 577·5 610·2 677·6
December 428·7 461·9 491·2 525·2 578·7 611·0 679·3

4
 2003 2004 2005 2006 2007 2008 2009
January 683·2 721·3 779·2 877·4 942·9 1022·2 1152·7
February 689·0 728·6 781·7 884·0 948·5 1034·4 1151·1
March 692·2 735·8 783·8 891·5 949·5 1043·1 1165·0
April 701·4 743·6 789·4 901·4 957·7 1064·7 1172·8
May 705·8 754·0 801·4 909·6 968·1 1085·0 1176·0
June 715·0 721·3 813·2 915·0 974·5 1115·1 1193·4
July 714·5 758·9 821·2 918·6 988·5 1136·7 1204·8
August 698·0 761·3 834·8 924·2 991·2 1140·6 1209·7
September 707·0 765·7 842·3 930·8 994·1 1133·8 1213·0
October 715·9 770·7 857·1 936·4 1004·3 1135·5 1213·3
November 717·9 772·4 859·7 935·4 1007·2 1159·0 1217·2
December 718·9 774·9 863·1 936·4 1012·8 1151·2 1218·4

2010 2011 2012 2013 2014 2015 2016

January 1223·2 1320·0 1436·1 1544·3 1611·2 1670·7 1715·4
February 1225·4 1330·2 1440·0 1546·9 1618·7 1664·2 1714·5
March 1234·6 1338·9 1446·5 1555·4 1624·3 1669·8 1721·0
April 1256·2 1359·0 1460·4 1565·6 1637·1 1687·5 1735·9
May 1268·6 1373·6 1480·0 1570·2 1641·0 1690·3 1737·8
June 1285·3 1386·4 1487·3 1573·8 1645·6 1696·8 1741·5
July 1289·7 1380·6 1492·1 1576·7 1647·5 1698·7 1744·3
August 1290·6 1403·4 1496·7 1580·4 1652·1 1701·5 1747·1
September 1297·9 1409·0 1508·9 1584·3 1654·8 1704·2 1751·7
October 1300·6 1415·0 1515·4 1587·9 1656·8 1708·9 1755·2
November 1304·2 1424·0 1530·2 1593·5 1661·4 1709·8 1758·7
December 1309·1 1428·8 1534·8 1598·1 1657·7 1708·9 1760·5

2017 2018
January 1769·2 1823·5
February 1772·7 1828·8
March 1781·5 1832·3
April 1795·5 1856·8
May 1799·0 1858·6
June 1802·5 1858·6
July 1804·3 1860·3
August 1806·0 1860·3
September 1807·8 1860·3
October 1807·8 1872·6
November 1811·3 1879·6
December 1816·5 1881·3

5 [P.T.O.
Section A – ALL 15 questions are compulsory and MUST be attempted

Please use the grid provided on page two of the Candidate Answer Booklet to record your answers to each multiple choice
question. Do not write out the answers to the MCQs on the lined pages of the answer booklet.
Each question is worth 2 marks.

1 Kaelo sold his shares in Kgalagadi Music Stores (Pty) Ltd for P842,000 during the 2018/2019 tax year. The original
cost of the shares was P273,000. He incurred costs amounting to P89,052 in relation to this. He also has a loss
brought forward from the prior year amounting to P67,382 which arose on the sale of shares listed on the Botswana
Stock Exchange.

How much is Kaelo’s net disposal gain for the 2018/2019 tax year?
A P426,750
B P309,424
C P412,566
D P501,618

2 Pula Pumps (Pty) Ltd’s (PPL) financial year end is 30 April 2019. PPL submitted its 2018/2019 income tax return on
28 November 2019 and also paid the tax owing for that tax year of P45,362 on that date.

How much penalty and interest will PPL have to pay for late submission and payment?
A P10,941
B P10,271
C P10,972
D P11,622

3 Compass Properties (Pty) Ltd is a property company which earns commercial rental income of P25,000 per month and
wishes to voluntarily register for value added tax (VAT).

What is the minimum amount of taxable supplies per annum which is required before a person can voluntarily
register for VAT?
A P0
B P250,000
C P1,000,000
D P500,000

4 Idah suffered the following amounts of tax withheld from her 2018/2019 income sources:
P
Commission 11,062
Bank interest 7,426
Dividends 4,893
Rent 26,791

How much can Idah claim as a credit against her 2018/2019 tax liability?
A P37,853
B P50,172
C P45,279
D P42,746

6
5 Trumpet Interiors (Pty) Ltd (TIL) sold a used machine during the 2018/2019 tax year. The details are as follows:
P
Original cost 365,000
Fair value adjustment 125,000
Sale price 280,000
Capital allowances claimed 198,750
Rollover relief applied to original cost 100,000

How much is the balancing charge/(allowance) which TIL should declare in the 2018/2019 tax year?
A P88,750
B (P11,250)
C P113,750
D P213,750

6 In addition to his salary of P600,000 for the 2018/2019 tax year, Ronald received the following employment benefits:
P
Medical aid contributions 16,000
House rent allowance 52,000
School fees 27,000
Company car Cost 340,000

How much is Ronald’s taxable income for 2018/2019?

A P710,000
B P674,000
C P726,000
D P658,000

7 Wild Horizons (Pty) Ltd (WHL) is a tourist safari operator and is registered for value added tax (VAT). WHL incurred the
following items of expenditure during the tax period ended 25 April 2019:
(1) Entertainment for tourists
(2) A game-viewing vehicle
(3) Hotel costs for staff
(4) A saloon car

Which of the expenditure items is/are prohibited for the purpose of input VAT credit?
A 2 only
B 3 and 4 only
C 1, 3 and 4
D 1, 2 and 4

7 [P.T.O.
8 Caledonian Catering Services (Pty) Ltd’s (CCS) financial year end is 30 June 2019 and its estimated taxable income
for the 2018/2019 tax year is P2,000,000. CCS has paid the following tax at 30 June 2019:
P
Self-assessment tax (SAT) 250,000
Withholding tax on bank interest received 62,839
Withholding tax on dividends received 21,725
Withholding tax on brokerage payments received 15,803

How much SAT should CCS pay at 30 June 2019 to ensure that no interest is charged?
A P86,197
B P1,633
C P89,633
D P23,358

9 Strategic Outcomes (Pty) Ltd (SOL) sold its financial services division for the sum of P10 million during the 2018/2019
tax year. The sale included the following assets and liabilities:
P
Non-current assets 1,000,000
Inventory 1,200,000
Accounts receivable 3,000,000
Accounts payable (800,000 )
Bank loan (500,000 )

How much is SOL’s net disposal gain?

A P6,100,000
B P4,575,000
C P7,100,000
D P4,350,000

10 Elias Kalake is the managing director of Egret Chemicals (Pty) Ltd (ECL). Elias’ remuneration for the tax year ended
30 June 2019 is as follows:
P
Salary 600,000
Board of directors fees 20,000
Production bonus 75,000
Employer medical aid contribution 24,000
Employer contribution to company pension fund 60,000

How much PAYE should ECL deduct from Elias’ remuneration for the tax year ended 30 June 2019?
A P145,800
B P160,800
C P150,800
D P171,800

8
11 The Botswana Unified Revenue Service (BURS) is considering raising revised assessments on Clancey Jewellers (Pty)
Ltd during 2018/2019.

Which of the following tax years are out of time, at 30 June 2019, for a revised assessment to be raised?
(1) 2009/2010
(2) 2012/2013
(3) 2013/2014
(4) 2014/2015
A 1 only
B 1 and 2 only
C 1, 2 and 3 only
D 1, 2, 3 and 4

12 Tembo Products (Pty) Ltd (TPL), a supplier of building supplies, recorded chargeable income of P3,476,093 for the
2018/2019 tax year. TPL has the following unutilised tax losses brought forward from prior years:
P
2011/2012 46,082
2012/2013 1,207,336
2013/2014 1,380,832
2016/2017 785,498

What is TPL’s taxable income for 2018/2019?

A P102,427
B P2,690,595
C P56,345
D P1,309,763

13 Ophthalmic Laboratories (Pty) Ltd (OLL) made the following payments to residents in 2018/2019:
P
Rent of equipment 364,180
Commission 89,640
Technical fees 200,760
Interest on bank loan 67,930

How much withholding tax should OLL have deducted and paid over in 2018/2019?
A P33,966
B P54,042
C P8,964
D P25,002

9 [P.T.O.
14 Kehumile is a farmer and he incurred the following capital expenses during 2018/2019:
P
Diesel generators 106,280
1 ton truck 180,000
Borehole pumps 68,945
Bridge 96,035

How much deduction can Kehumile claim from his farming income in respect of the above expenditure in
2018/2019?
A P207,922
B P451,260
C P191,980
D P164,980

15 Darton Printers (Pty) Ltd (DPL) has incurred expenditure on the use of patents, trademarks and copyrights.

Over what period can DPL claim a deduction for such expenditure?
A Ten years
B The period for which DPL is entitled to use the intangible assets
C Five years
D The period for which the intangible assets earn income for DPL

(30 marks)

10
Section B – ALL SIX questions are compulsory and MUST be attempted

Please write your answers to all parts of these questions on the lined paper within the Candidate Answer Booklet.

1 Tuli Soap Industries (Pty) Ltd entered into the following immoveable property transactions during the year ended
31 March 2019:
(i) Sold Plot 15324, Gaborone, a residential property, in October 2018 for a sum of P1,850,000. The property had
cost P1,200,000 in May 2014.
(ii) Sold Plot 761, Phakalane, an industrial property, in May 2018 for P11,540,000. The cost of the property is made
up as follows:
P
Land December 2010 2,000,000
Factory building July 2011 3,682,500
Extension February 2016 1,629,632
––––––––––
7,312,132
––––––––––
(iii) Purchased Plot 68, Ramotswa, a vacant industrial property, for P1,425,000 in June 2018. A factory building
costing P15,226,750 was constructed on the land and was completed in February 2019.
(iv) Purchased Plot 67, Ramotswa, a vacant industrial property, for P850,000 in August 2018.
(v) Sold Plot 491, Jwaneng, a commercial property, for P720,000 in April 2018. The original cost was P1,500,000
in August 2011.

Required:
In respect of Tuli Soap Industries (Pty) Ltd for the year ended 31 March 2019:
(a) Calculate the net disposal gain or loss, claiming all available reliefs: (6 marks)

(b) List FOUR requirements for claiming rollover relief. (2 marks)

(c) Show the effect of claiming rollover relief on the base cost of the assets purchased during the year.
(2 marks)

(10 marks)

11 [P.T.O.
2 Macstan Packaging (Pty) Ltd (MPL) supplies packaging and is registered for value added tax (VAT). The company
accountant has entered into various transactions but is uncertain of the correct VAT treatment and has requested your
advice in respect of the company’s VAT return for the tax period ended 31 March 2019.
The provisional standard rated outputs and inputs for the period, prior to making any adjustments, have resulted in
net outputs of P762,950. Unless otherwise stated, the following transactions 1 to 8 have NOT been included in the
provisional outputs and inputs:
1. During the period, MPL traded in a single cab bakkie in exchange for a saloon car. The saloon car would have
cost P225,000 with no trade-in and the trade-in value of the single cab bakkie was P48,000. Both figures are
exclusive of VAT. A net payment of P198,240 was made but has not yet been included in output or input supplies.
2. MPL supplied services during the period to a charitable organisation for P100,000 and this amount has been
recorded as an output. The fair market value of the supply is P140,000.
3. MPL received a deposit from a customer of P50,000 during the period, in respect of a supply which will take place
in the future. The deposit will be considered as a payment when the goods are physically supplied.
4. MPL received services from a foreign supplier amounting to the equivalent of P68,200. The supplier has also
charged foreign VAT on the supply amounting to P6,820.
5. A portion of an irrecoverable debt previously written off was recovered. The amount recovered was P14,560.
6. MPL issued a credit note to a supplier for P20,250, exclusive of VAT, for goods returned.
7. MPL purchased a second hand machine for P35,000. The supplier was not registered for VAT and accordingly did
not charge any VAT.
8. MPL received an indemnity payment from its insurance company relating to stolen goods amounting to P63,000.

Required:
(a) Calculate the net VAT payable by Macstan Packaging (Pty) Ltd for the tax period ended 31 March 2019 after
making any applicable adjustments in relation to transactions 1 to 8 above.
Note: You should start your answer with the VAT payable on the net outputs of P762,950 and indicate by the
use of a zero (0) any amounts on which VAT is not chargeable or not reclaimable. (8 marks)

(b) Briefly state the VAT requirements for imports and exports. (2 marks)

(10 marks)

12
 This is a blank page.
Question 3 begins on page 14.

13 [P.T.O.
3 You are preparing the tax return for Thebe Design and Graphics (Pty) Ltd for the financial year ended 30 June 2019
and you have been provided with the following statement of profit or loss for the year then ended:
Notes P
Income
Revenue 8,524,092
Cost of sales (3,383,811 )
––––––––––
5,140,281
––––––––––
Expenses
Advertising 1 108,482
Commission 2 252,291
Interest 3 196,865
Management fees 4 642,810
Marketing fees 5 450,000
Office and staff costs 1,872,906
Technical fees 6 287,400
––––––––––
3,810,754
––––––––––
Profit before tax 1,329,527
––––––––––
Notes:
1. An amount of P36,822 was paid to a non-resident supplier of a trade magazine for an advert. This amount is
included in the figure of P108,482.
2. Commission was paid to:
P
Resident sales staff 87,291
Resident sales company 73,560
Non-resident marketing company 91,440
––––––––
252,291
––––––––
PAYE was deducted from the commission paid to resident sales staff.
3. Interest was paid to:
P
Resident bank 34,095
Resident shareholder 162,770
––––––––
196,865
––––––––
4. Management fees were paid to a resident company.
5. Marketing fees were paid to a non-resident marketing company which received a flat annual fee followed by a
commission based on sales (the commission is included in note 2 above).
6. Technical fees were paid to a non-resident company.
7. The following withholding tax was paid during the year:
P
Commission 4,572
Interest 12,300
Technical fees 22,098
–––––––
38,970
–––––––

14
 Required:
In respect of Thebe Design and Graphics (Pty) Ltd for the year ended 30 June 2019:
(a) State the correct amount of withholding tax which should have been paid, assuming that all expenses were
paid and no expenses were accrued.
Note: You should indicate those items on which no withholding tax is due by the use of a zero (0). (4 marks)

(b) Calculate the taxable income, starting with the profit before tax figure of P1,329,527.
Note: You should only include in your answer any items which require adjustment. (3 marks)

(c) State, in general terms, the date by which withholding tax should be paid over to the Botswana Unified
Revenue Service (BURS) and explain the consequences of late payment. (3 marks)

(10 marks)

15 [P.T.O.
4 Tshepo Ditau earns income from a number of different sources. For the 2018/2019 tax year, he earned the following
amounts of chargeable income and also incurred losses:
Notes P
Business income 1 173,829
Pension income 126,398
Rental loss (47,286 )
Interest income 2 38,994
Dividend income 89,362
Farming loss 3 (90,516 )
––––––––
290,781
––––––––
Notes:
1. Tshepo has a loss brought forward from the year ended 30 June 2018 in respect of his business amounting to
P266,301 made up as follows:
P
Year ended 30 June 2017 51,364
Year ended 30 June 2014 214,937
–––––––––
266,301
–––––––––
2. Interest was received in respect of a loan provided to a business colleague.
3. Tshepo is a partner in a farming venture with his brother and is entitled to 50% of the profit or loss. The overall
loss brought forward at 30 June 2018 in respect of the farming venture is P192,962. The overall farming loss for
the current year ended 30 June 2019 is P181,032.

Required:
In respect of Tshepo Ditau for the 2018/2019 tax year:
(a) Calculate the loss(es) carried forward to the 2019/20 tax year.
Note: Your answer should briefly explain any rules concerning the set off of losses in the current year and the
carry forward of losses from the various types of activity carried on by Tshepo. (7 marks)

(b) Calculate the taxable income.

Note: You should indicate by the use of a zero (0) any items which are not taxable or which do not result in a
deduction. (3 marks)

(10 marks)

16
 This is a blank page.
Question 5 begins on page 18.

17 [P.T.O.
5 The results of Sandham Engineering Services (Pty) Ltd for the year ended 30 June 2019 are as follows:
Notes P
Income
Gross profit (fully taxable) 5,886,218
Interest received 26,208
Profit on sale of shares 1 32,972
Damages compensation 2 273,882
––––––––––
6,219,280
––––––––––
Expenditure
Administrative expenses (all allowable) 3,742,665
Depreciation 462,896
Loss on sale of equipment 3 72,744
Fair value adjustment 250,000
Provisions 4 224,805
––––––––––
4,753,110
––––––––––
Profit before tax 1,466,170
––––––––––
Notes:
1. The profit on sale of shares in BLM (Pty) Ltd is calculated as:
P
Cost 567,028
Fair value adjustments (200,000 )
––––––––
367,028
Sale price 400,000
––––––––
Profit on sale 32,972
––––––––
2. The company claimed damages against a competitor for unfair trade practices.
3. Loss on sale of equipment is calculated as:
P
Cost 680,637
Depreciation (372,893 )
––––––––
307,744
Sale price 235,000
––––––––
Loss on sale (72,744 )
––––––––
As at 30 June 2018, capital allowances amounting to P482,568 had been claimed on the equipment sold.
4. Provisions are made up as follows:
P
Specific allowance for receivables 46,822
Provision for future legal fees 50,000
Provision for future maintenance costs 127,983
––––––––
224,805
––––––––
5. The current year claim for capital allowances amounts to P502,896.

18
 6. The company has the following tax credits:
P
Withholding tax suffered on interest received 2,621
Self-assessment tax (SAT) paid:
30 September 2018 100,000
31 December 2018 80,000
31 March 2019 90,000
30 June 2019 100,000

Required:
In respect of Sandham Engineering Services (Pty) Ltd for the year ended 30 June 2019:
(a) Calculate the taxable income starting with the profit before tax figure of P1,466,170 and indicating by the use
of a zero (0) any items of income or expenditure referred to in the question which do not require adjustment.
Note: Your answer should clearly indicate how any tax losses are to be dealt with. (8 marks)

(b) Calculate the tax payable or refundable. (2 marks)

(c) Explain the essential features of the self-assessment tax (SAT) system. (4 marks)

(d) State the date by which the income tax return should have been submitted. (1 mark)

(15 marks)

19 [P.T.O.
6 Cecilia Mpetsane is employed by Masunga Pharmaceuticals (Pty) Ltd. In addition, she earns income from other
sources. Cecilia’s earnings for the tax year ended 30 June 2019 are:
P
Gross salary 560,000
Gross interest received from a building society 24,740
Gross interest received from an individual 84,330
Gross dividends received 15,560
Gross royalties received 36,000
––––––––
720,630
––––––––
In addition, Cecilia received the following employment benefits:
(i) Company car costing P275,000. Cecilia must pay the petrol.
(ii) Employer contribution to company pension costing P35,000 per annum.
(iii) Utilities costing P22,500 per annum.
(iv) Free airfare to Europe costing P10,000.
(v) Company housing costing P60,000. The rateable value is P320,000. Cecilia lived in the house for five months of
the year.
You are provided with the following additional information:
1. Tax has been deducted from Cecilia’s earnings:
Tax deducted
P
Gross salary 147,050
Gross interest received from a building society 2,474
Gross interest received from an individual 8,433
Gross dividends received 1,167
2. During the year, Cecilia purchased a truck costing P245,000 which she hired out to third parties. The costs of
hiring the truck were:
P
Driver’s wages 56,352
Running costs 75,922
Insurance 5,736
Building of garage 26,258
Hire income, before deduction of expenses, amounted to P237,308.
3. Cecilia inherited a patent from her late father, valued at P500,000 and which generates royalty income.

Required:
In respect of Cecilia Mpetsane for the year ended 30 June 2019:
(a) Calculate the chargeable income from business.
Note: You should indicate by the use of zero (0) any expenses which are not allowable. (4 marks)

(b) Calculate the taxable income from all sources.

Note: You should indicate by the use of zero (0) any sources of income which are not taxable. (8 marks)

(c) Calculate the tax payable or refundable, clearly showing the treatment of all tax withheld at source from the
various sources of income. (3 marks)

(15 marks)

End of Question Paper

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