TAX601Y ASSESSMENT 1 2023

FACULTY OF COMMERCE, HUMAN SCIENCES & EDUCATION
DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE
QUALIFICATION : BACHELOR OF ACCOUNTING (CHARTERED ACCOUNTANCY)

QUALIFICATION CODE: 07BACC LEVEL: 6
COURSE: TAXATION 201 COURSE CODE: TAX601Y
DATE: 13 MARCH 2023 SESSION: THEORY & CALCULATIONS

DURATION: 60 MINUTES MARKS: 40
ASSESSMENT OPPORTUNITY 1
EXAMINER: Mr G Jansen
MODERATOR: Mr A Ketjinganda
INSTRUCTIONS TO CANDIDATES
1. This paper consists of 7 pages (including cover page and Annexure A).
2. You are reminded that answers may NOT be written in pencil. NO tippex may be used.
3. The marks shown against the requirement(s) for every question should be regarded as an indication of the
expected length and depth of your answer.
4. Answer the questions by the use of:
- Effective structure and presentation; clear explanations.
- Logical arguments; and clear and concise language.
5. Show all calculations clearly. Round off calculated amounts to the nearest Rand.
Question Mark(s) Time allocated (minutes)
1 15 22.5
2 15 22.5
3 10 15.0
4 2 Bonus
Total 40 60
QUESTION 1 (15 MARKS)
Read the article titled Value-Added Tax Continues to Expand (Annexure A) and answer the following
questions.
a) The process to collect Value Added Tax (VAT) affects the entire supply chain. Provide one
disadvantage to this effect and explain why the collection of VAT is still considered appealing by
revenue collection administrations.
(3)
b) Name one of the world’s earliest examples of a type of “value added tax”. (1)
c) Provide the local name for the equivalent of value added tax in countries such as New Zealand,
Australia and Canada. (1)
d) Explain why the levying of VAT is often perceived to be an unfair tax. Also explain how the less
privilege people could be supported by VAT concessions from revenue collection authorities.
(3)
e) Explain one challenge faced by exporting businesses with significant input tax credits in developing
countries. (1)
f) Compare the South African VAT rate to the current common global VAT rates employed. (3)
g) List one country in the Middle East that adopted VAT in recent times. (1)
h) Briefly discuss the impact of the digital landscape globally on VAT. (2)

Mr. Simon Malwa started a clothing business in 2022 called Malwa Clothing (Pty) Ltd. He purchases
various clothing items in bulk from a supplier in Australia. He then brands the clothing items according
to the needs of different companies and sells it on to them at a profit. He is registered as a vendor for
Value Added Tax (“VAT”) purposes but is not updated with tax laws in South Africa.
Mr. Malwa supplied you with his VAT calculations for the period that ended on 28 February 2023. He
compiled his calculation from a summary of invoices received and issued (all amounts include VAT where
applicable).
2
INPUT OUTPUT
Cash Sales: R440 000 x 15% 66 000
T-Shirts exported to Zimbabwe (R105 000); Exempt supply
Bank charges paid (R1 667): Exempt supply
Credit Losses (Zimbabwe) written off: R14 000 x 15/115 1 826
Purchases from local vendors R109 100 x 15/115 14 230
2nd hand computer and software from a non-vendor
R9 300 and paid for – no VAT payable
Petrol for deliveries: R2 000 - No VAT payable
Purchase of a 4-door station wagon for deliveries
(R230,000 incl. VAT) 30 000
Guard Dog from non-vendor (R2 875x 15/115
notional input vat) 375
Cappuccino machine for the office R7 840 x 15/115 1 023
33 224 80 230
VAT Payable 47 006
REQUIRED:
a) If Malwa Clothing (Pty) Ltd makes taxable supplies of R15million in a year, indicate the VAT
category it would have registered for, provided that one period ended on 28 February 2023.
(1)
b) Indicate when the VAT return for Malwa Clothing (Pty) Ltd is due to be submitted to SARS for the
two-month period ended 28 February 2023. (1)
c) Using the format below, calculate the correct amount of VAT payable for Malwa (Pty) Ltd for the
period ended 28 February 2023. (13)
3
Description Input VAT Output VAT Correct/Incorrect Reason
application in the
original calculation
E.g. Brown Bread - - Incorrect Zero-rated supply.

Yigit Kozan and his wife emigrated from South Africa to Argentina on 15 November 2021. No double tax
agreement exists between the two countries. He became a resident of Argentina, purchased a house in
the capital city, Buenos Aires in December 2021, and he and his wife established their principal home in
Argentina. He also joined a local church in the city of Buenos Aires. Prior to his emigration Yigit had
never been outside the Republic of South Africa for more than thirty days in aggregate in a particular
year of assessment. When he emigrated, he did not sell his luxury home in Durban. In April 2022, he let
it to a business associate for one week. For the rest of the year ended February 2023 his sons, who were
students at the University of KwaZulu Natal, occupied it, and when he visited Durban, he also occupied
it. It is not his intention to let the property to tenants on an ongoing basis. Yigit Kozan had been
managing director of Wildfire (Pty) Ltd until 15 November 2021.
After emigrating he retained his shares in Wildfire (Pty) Ltd. In addition, he advanced R3,5 million on
loan account to the company. The loan account bears a market-related interest rate. He has remained a
non-executive director of Wildfire (Pty) Ltd. During the 2023 year of assessment Yigit Kozan visited
South Africa on six occasions with the result that he spent a total of 128 days in the country during the
year of assessment. Yigit Kozan is a world-class fisherman and most of these trips had been to compete
in angling competitions. Other trips were to supervise his sons’ education and to attend directors’
meetings of Wildfire (Pty) Ltd. While in South Africa he resided in his “former” home with his sons.
His income from South African sources for the 2023 year of assessment comprises the following:
 Rental income from letting his house for the one week in April 2022 – R15 000.
 Directors’ fees from Wildfire (Pty) Ltd – R60 000.
 A pension of R120 000.
 Interest from his loan granted to Wildfire (Pty) Ltd on 1 January 2023 – R23 100.
 Dividends amounting to R100 000 from his shareholdings in various South African companies.
4
REQUIRED:
Based on the information provided discuss whether Yigit Kozan is a resident as defined for the 2023
year of assessment. Provide legislation and case law (if applicable) to support your answer.
(10)
QUESTION 4 (Bonus) (2 MARKS)

1. Which important international sport event takes place in Cape Town during July 2023. (1)
2. List at least one (1) major highlight of the 2023/2024 budget speech that was presented by the
Minister of Finance and Public Enterprises of Namibia on 22 February 2023. Limit your answer to
items that will come into effect in the 2024 year of assessment. (1)
END OF ASSESSMENT 1

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FACULTY OF COMMERCE, HUMAN SCIENCES & EDUCATION

DEPARTMENT OF ECONOMICS, ACCOUNTING AND FINANCE

QUALIFICATION : BACHELOR OF ACCOUNTING (CHARTERED ACCOUNTANCY)

DATE: 13 MARCH 2023 SESSION: THEORY & CALCULATIONS

QUESTION 2 (15 MARKS)

Cash Sales: R440 000 x 15% 66 000

T-Shirts exported to Zimbabwe (R105 000); Exempt supply

Bank charges paid (R1 667): Exempt supply

Credit Losses (Zimbabwe) written off: R14 000 x 15/115 1 826

Purchases from local vendors R109 100 x 15/115 14 230

2nd hand computer and software from a non-vendor

R9 300 and paid for – no VAT payable

Petrol for deliveries: R2 000 - No VAT payable

Purchase of a 4-door station wagon for deliveries

(R230,000 incl. VAT) 30 000

Guard Dog from non-vendor (R2 875x 15/115

notional input vat) 375

Cappuccino machine for the office R7 840 x 15/115 1 023

VAT Payable 47 006

QUESTION 3 (10 MARKS)

QUESTION 4 (Bonus) (2 MARKS)

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