Question

Question 4
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) R2000 000
Cost of sales R(800 000)
Gross profit R1200 000
Salaries R(450 000)
Depreciation (note 3) R (100 000)
Repairs R(15 000)
Profit from the sale of machinery (note 4) R30 000
Local dividends received R35 000
Interest received R28 000
Profit before tax R728 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.

Calculate the normal taxable payable by Blue Cross (Pty) Ltd for year of assessment ended on 28 February 2019.

Answer 1

	R
Profit before tax	7,28,000
Add: Advance received to be taxed	40,000
Less: Allowance deduction	-60,000
Add: Depreciation as per P/L A/c	1,00,000
Less: Accelerated Allowance	-1,50,000
Less: Profit on sale of machinery	-30,000
Add: Capital gain on disposal of machine	50,000
Taxable Income	6,78,000
Tax Payable (Assumed tax rate is 30% ( 678000 x 30%))	2,03,400