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Calculate taxable income of SLK (Pty)

Calculate taxable income of SLK (Pty)

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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SLK (Pty) Ltd has a net income from operations (before the sale of the capital assets) of R400 000. The company brought forward an assessed capital loss of R540 000 from the previous year of assessment. The company's financial year-end 31 December 2018. The following information pertains to the disposal of SLK (Pty) Ltď's capital assets: • Office building SLK (Pty) Ltd sold an office building on 30 December 2018 for R4 500 000. This office building was acquired on 30 December 2005 for R3 200 000. In addition to the acquisition cost, a transfer cost of R72 000 was paid to the lawyer. The following costs were incurred while the company owned the asset: R 740 000 Improvements Interest paid on mortgage bond (deducted for normal tax purposes) Property tax (deducted for normal tax purposes) 890 000 350 000 1980 000 The building did not qualify for section 13quin allowance as it was erected before 1 April 2007. Manufacturing asset SLK (Pty) Ltd bought a used manufacturing asset on 1 October 2000 for R500 000. The asset qualified for the section 12C allowance at 20%. On 1 November 2016, the company made improvements to the asset at a total cost of R800 000. These improvements qualify for their own allowance at 20% in terms of section 12C. The asset was sold on 30 September 2018 for R2 500 000. The total base cost of this asset at the time of disposal was R345 641. • Delivery vehicle During the 2018 financial year, SLK (Pty) Ltd realised a capital loss of R360 000 from the disposal of a delivery vehicle. Required: Calculate taxable income of SLK (Pty) Ltd for the current year of assessment. NB: VAT implications for this question must be ignored. Round off your calculations to the nearest whole number.
Transcribed Image Text:SLK (Pty) Ltd has a net income from operations (before the sale of the capital assets) of R400 000. The company brought forward an assessed capital loss of R540 000 from the previous year of assessment. The company's financial year-end 31 December 2018. The following information pertains to the disposal of SLK (Pty) Ltď's capital assets: • Office building SLK (Pty) Ltd sold an office building on 30 December 2018 for R4 500 000. This office building was acquired on 30 December 2005 for R3 200 000. In addition to the acquisition cost, a transfer cost of R72 000 was paid to the lawyer. The following costs were incurred while the company owned the asset: R 740 000 Improvements Interest paid on mortgage bond (deducted for normal tax purposes) Property tax (deducted for normal tax purposes) 890 000 350 000 1980 000 The building did not qualify for section 13quin allowance as it was erected before 1 April 2007. Manufacturing asset SLK (Pty) Ltd bought a used manufacturing asset on 1 October 2000 for R500 000. The asset qualified for the section 12C allowance at 20%. On 1 November 2016, the company made improvements to the asset at a total cost of R800 000. These improvements qualify for their own allowance at 20% in terms of section 12C. The asset was sold on 30 September 2018 for R2 500 000. The total base cost of this asset at the time of disposal was R345 641. • Delivery vehicle During the 2018 financial year, SLK (Pty) Ltd realised a capital loss of R360 000 from the disposal of a delivery vehicle. Required: Calculate taxable income of SLK (Pty) Ltd for the current year of assessment. NB: VAT implications for this question must be ignored. Round off your calculations to the nearest whole number.
APPENDICES Appendix 1: Turnover tax rates (1 March 2018 - 28 February 2019) Taxable turnover (R) 0- 335 000 335 001 - 500 000 500 001 - 750 000 750 001 and above Rate of tax 0% 1% of the amount above R335 000 R1650 + 2% of the amount above R500 000 R6 650 + 3% of the amount above R750 000
Transcribed Image Text:APPENDICES Appendix 1: Turnover tax rates (1 March 2018 - 28 February 2019) Taxable turnover (R) 0- 335 000 335 001 - 500 000 500 001 - 750 000 750 001 and above Rate of tax 0% 1% of the amount above R335 000 R1650 + 2% of the amount above R500 000 R6 650 + 3% of the amount above R750 000
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