Question 2 (15 marks) Read the following excerpt and answer the questions that follow: You are a tax advisor. You consult with a potential client, Markus, the director of a large company. Markus says that the company's directors want to appoint you as the company's tax advisor, which will result in generous fees for your firm. Markus adds that the mandate of the previous tax advisor was terminated when the advisor refused to submit a 2023 tax return containing incorrect information, including fabricated invoices and simulated transactions, even though Markus agreed to sign the tax return himself. Markus says that his "way of submitting tax" allowed the company to avoid paying an additional R10 million of tax in the 2023 tax year. He also tells you that, in any event, the company will not timeously pay the assessed tax to the South African Revenue Service ('SARS'), because the interest accruing on the company's bank account is greater than the penalty interest rate charged by SARS. Required: 2.1. 2.2. If you accept the company's mandate, discuss your ethical duty as a tax advisor and what ethical behaviour would be required. Explain the effect of submitting fabricated invoices and simulated transactions in the company's 2023 tax return in respect of prescription and the raising of further assessments.
Question 2 (15 marks) Read the following excerpt and answer the questions that follow: You are a tax advisor. You consult with a potential client, Markus, the director of a large company. Markus says that the company's directors want to appoint you as the company's tax advisor, which will result in generous fees for your firm. Markus adds that the mandate of the previous tax advisor was terminated when the advisor refused to submit a 2023 tax return containing incorrect information, including fabricated invoices and simulated transactions, even though Markus agreed to sign the tax return himself. Markus says that his "way of submitting tax" allowed the company to avoid paying an additional R10 million of tax in the 2023 tax year. He also tells you that, in any event, the company will not timeously pay the assessed tax to the South African Revenue Service ('SARS'), because the interest accruing on the company's bank account is greater than the penalty interest rate charged by SARS. Required: 2.1. 2.2. If you accept the company's mandate, discuss your ethical duty as a tax advisor and what ethical behaviour would be required. Explain the effect of submitting fabricated invoices and simulated transactions in the company's 2023 tax return in respect of prescription and the raising of further assessments.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Transcribed Image Text:Question 2
(15 marks)
Read the following excerpt and answer the questions that follow:
You are a tax advisor. You consult with a potential client, Markus, the director of a large
company. Markus says that the company's directors want to appoint you as the
company's tax advisor, which will result in generous fees for your firm. Markus adds that
the mandate of the previous tax advisor was terminated when the advisor refused to
submit a 2023 tax return containing incorrect information, including fabricated invoices
and simulated transactions, even though Markus agreed to sign the tax return himself.
Markus says that his "way of submitting tax" allowed the company to avoid paying an
additional R10 million of tax in the 2023 tax year. He also tells you that, in any event, the
company will not timeously pay the assessed tax to the South African Revenue Service
('SARS'), because the interest accruing on the company's bank account is greater than
the penalty interest rate charged by SARS.
Required:
2.1.
2.2.
If you accept the company's mandate, discuss your ethical duty as a tax advisor
and what ethical behaviour would be required.
Explain the effect of submitting fabricated invoices and simulated transactions in
the company's 2023 tax return in respect of prescription and the raising of further
assessments.
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