Question 1

Lucy Dawn is a young and influential female with a high appetite for entrepreneurship. She lost her job due to the Covid-19 Pandemic. Lucy Dawn experienced anxiety and got overwhelmed by fear and uncertainty about her future endeavors. After taking three (3) consecutive “Me days” of indulging in unhealthy eating and other bad habits of spreading fake news on WhatsApp and negativity she got to a crossroad where she had to decide about her bad behavior over the three (3) days and her future.

Lucy Dawn recovered well and came out much stronger with a brilliant business idea and opened a laundry business called Lucy Laundry (Pty) Ltd in Windhoek. The business commenced on 1 May 2021 and is currently operational from the private residence of Lucy Dawn. The company is registered as a VAT vendor as they reached the N$500 000 taxable supply criteria within the first two months since commencing with business.

Lucy Laundry (Pty) Ltd has concluded the following transactions for the year of assessment ended 30 April 2022 and requires your advice on the correct tax treatment of each of the transactions below: All amounts include VAT unless otherwise specified.
Question 2

Mary Angula, aged 53, resigned from NUST on 31⁵‘ January2022 after being employed for 16 years. She hopes to fulfil her lifelong dream to travel throughout Africa with a Unimog.

NUST issued a tax certificate with number A5708625011. Her personal tax number is 5708625011 and her ID number is 8042100542.

Her receipts and accruals for the current year is provided below:

• Basic Salary of N$423
• Housing allowance of N$6 000 per month. NUST has an approved housing scheme in place.
• Medical Aid contribution by NUST, N$24 200.
• Pension fund contribution by NUST, N$29 610.
• Pension fund contributions made by Mary, N$29 610.
• Mary donated N$10 000 towards a registered welfare organisation, and N$1000 to the church
• Proceeds from study policy, N$50 000. Mary’s daughter, aged 21, bought a car for N$35 000 and paid her tuition fees of N$15 000. She is studying at Unam.
• Lumpsum from NUST (consist of leave pay-out), N$44 000.
• Employees tax deducted by MUST, N$110 100

Question 3
“Steri Yebo” produces milk drinks in a range of colorful flavors. The Statement of Profit and Loss for the year ending 28 February 2022 shows a net profit of NS909 000. He bookkeeper is not familiar with the tax treatment on non-current assets and asked your advice. Amongst the expenses in the statement is a depreciation expense of N$345 750. You can assume the remaining entries in the net profit calculation are correct for tax purposes.

The entity is registered for VAT and all amounts include VAT at the current rate. The bookkeeper provided you with a Fixed Asset Register and explanatory notes, as on 28 February 2022.

Asset	Date Acquired	Original Cost     Accumulated depreciation	Current Depreciation	Net     Book Value
Ford        Ranger LDV	January 2019	N$290 000    119 000	58 000	116 000
Manufacturing	Machine A March 2020	N$900 000     1 135 000	114 750	650 250
Manufacturing Machine B	October 2021	N$1020 000      0	153 000	867 000
Various furniture	February 2018	N$210 000	84 000	20 000	106 000

 

Notes:

Depreciation on vehicles — 20% pa, not apportioned, on the straight line method. No residual value provided for.

Depreciation on machinery 15% pa on the diminishing balance method. No residual value provided for.

Depreciation on furniture — 10% pa not apportioned on the straight line method. One piece of furniture with an original cost of N$10 000 was sold for N$2 300. The transaction was concluded on 15 February 2022.

Machine A caught fire during July 2021 and was completely destroyed. The insurance company, OUTsurance, settled the claim with a payment of N$570 000.

Required:

Show the tax calculation for the year ending 28 February 2022, commencing with the net profit of N$909 000. Provide workings and explanations where applicable. Round all amounts of to the nearest N$. Answer this question in your answer book.