Student number: Seat number: Total for Part B Question 1: Part B (a) Tax computation year ended 31 December 2017 - max 8.5 Profit before tax (given) Less Exempt dividend income Add Non-deductible expenses: Fines Donations Add back prior year prepayments 100 000 ~ Less prepayments current year (120 000) ~ Add back current year income received in advance 160 000 ~ Less prior year income received in advance (120 000) ~ Add back current year provision for legal fees Less prior year provision for legal fees Add back depreciation - Factory building (10 mil < / 10 years) - Vehicles (450K ~ /3 ~ years) Less W&T allowances - Factory building - S13 (R10mĂ— Ă— 5%) - Vehicles (450K ?Ă— 20%) R 2 000 000 (7 000) ~ 0.5 10 000 ~ 6 000 ~ 1.0 1.0 1.0 65 000 ~ 1.0 (40 000) ~ 1 000 000 150 000 4.0 (500 000) (90 000) Taxable income 2017 R2 614 000 Current tax payable @ 28% R731 920 Communication marks - Layout 1.0 Available 9.5 NB: Sum of TD = 6 050 000 x 28% = 169 400 deferred tax asset 1
(b) Deferred Tax computation year ended 31 December: 2017 Building Vehicle Prepaid expenses IRIA Prov for Legal fees 2016 Building 9 000 000 ~ Vehicle Prepaid expenses IRIA Prov for Legal fees CA 8 000 000 ~ 150 000 ~ 120 000 ~ - v (160 000) ~ (65 000) ~ CA 300 000 ~ 100 000 ~ (120 000) ~ (40 000) TB 9000 000 ~ 270 000 ~ - V - v TB 9 500 000 ~ (360 000) ~ - V - v - V Available marks = 16.0 Maximum marks 12.0 TD (1000 000) ~ (120 000) ~ 120 000 ~ (160 000) ~ (65 000) ~ TD (500 000) ~ (60 000) ~ 100 000 ~ (120 000) ~ (40 000) ~ Deferred tax movement for 2017 DT (28%) (280 000) (33 600) 33 600 (44 800) (18 200) DR (343 000) ~m DT (28%) (140 000) (16 800) 28 000 (33 600) (11 200) DR (173 600) ~m = 343 000 - 173 600 = 169 400 2
(c) Income Tax Note Paper Limited Notes to the financial statements < for the year ended 31 December 2017~ 1.5 R 10. Income tax expense South African normal tax Current Tax - Current year - Part (a) Deferred Tax - Current year v - Part (a)/(b) Income tax expense Tax reconciliation Accounting profit (2 000 000 x 28%) Tax effect of non-deductible/non-taxable items - Donations (6 000 x 28%) 1 680 - Fines (10 000 ~ x 28%) 2 800 - Dividends received (7 000 x 28%) Income tax expense 0.5 0.5 731 920 ~m 1.0 0.5 (169 400) ~ m 1.0 562 520* 0.5 560 000 1.5 1.5 1.5 (1 960) 1.5 562 520* Available Marks 11.5 Maximum marks 9.0 * If these two amounts agree, award 0.5 marks 3