Question

The statement of profit or loss for Blue Cross (Pty) Ltd for the financial year ended 28 February 2019 is as follows:
R
Sales (note 1) 2000 000
Cost of sales (800 000)
Gross profit 1200 000
Salaries (450 000)
Depreciation (note 3) (100 000)
Repairs (15 000)
Profit from the sale of machinery (note 4) 30 000
Local dividends received 35 000
Interest received 28 000
Profit before tax 728 000
Note 1
Blue Cross (Pty) Ltd received a payment in advance of R40 000 from a customer. At year-end the goods still had to be delivered to the customer. This amount has not yet been recognised as revenue for accounting purposes.
Note 2
Blue Cross (Pty) Ltd entered into learnership agreements that qualify for allowances in terms of s 12H. The allowance amounts to R60 000.
Note 3
The equipment qualified for an accelerated allowance of R150 000 in terms of s 12C during the 2019 year of assessment.
Note 4
The machinery was sold for R320 000 on 30 August 2018. The recoupment of allowance for tax purposes amounted to R20 000. A capital gain of R50 000 arose on the disposal.
Page 6 of 7
Calculate the normal taxable payable by Blue Cross (Pty) Ltd for year of assessment ended on 28 February 2019.

Answer 1

Calculation of normal tax payable by Blue Cross (PVT) Ltd for the assessment ended on 28 february 2019 is as under:-

first we have to calulate taxable income:-

particulars	amt in 000	amt in 000
sales	2000
less :- received in advance	(40)
net sales		1960
less :- cost of sales		(800)
less :- salaries		(450)
less:- operating expense (repair)		(15)
less :- deprication (100-50 allowances)		(50)
add:- non operating income
(1) profit on sale of machinary	30
less:- allowance for tax	(20)	10
(2) local dividends		35
(3) capital gain from sale of machine		50
(4) intrest income		28
TAXABLE INCOME		768

SO TAXABLE INCOME IS R768000.

Tax Slab Rate for a domestic company is taxable at 30%.

so noemal taxpayable by company is = 768000*30%

=R23040.

Blue Cross (PVT) Ltd for the assessment ended on 28 february 2019 is R23040.