Taxation
QUESTION
QUESTION 1 (20 marks, 22 minutes))
Construct (Pty) Ltd (Construct) is a South African resident construction company with a
February financial year-end. It entered into an agreement to construct a building for a customer
at a contract price of R4 000 000. The construction of the building was completed on
15 February 2022 and occupation of the building was given to the customer on the same date.
In terms of the contract, 85% of the contract price is due and payable on completion. The other
15% is retained (held back) until the engineer issues a final certificate four months after the
completion date, which is 15 June 2022. The respective amounts of R3 400 000 and
R600 000 were paid by the customer on 15 February 2022 and 15 June 2022.
REQUIRED: MARKS
Discuss whether the R3 400 000 and the R600 000 will constitute gross
income for Construct (Pty) Ltd for the 2022 year of assessment. List the
requirements of the gross income definition and briefly discuss each
requirement using the given information at hand.
Make a brief reference to relevant case law to strengthen your argument.
20
QUESTION 2 (10 marks, 12 minutes)
Sunshine (Pty) Ltd is not a small business corporation as defined. Its year of assessment
ends on 31 March and its records show the following:
Tax year Taxable
income
Date of assessment
2020 R1 200 000 4 April 2021
2021 R1 354 980 15 September 2021
2022 R1 784 432 (estimated – not yet assessed)
REQUIRED MARKS
(a) Calculate the first and second provisional tax payments for the 2022
year of assessment. Briefly explain why you selected the basic amount
for each of the provisional tax payments and clearly state at which date
the payments must be made.
(b) For the first provisional tax payment for the 2022 year of assessment,
what will the basic amount be if the 2021 assessment was issued on
20 September 2021 and why?
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