iii The following sales of irrigation equipment were made during the year Sales

Iii the following sales of irrigation equipment were

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(iii) The following sales of irrigation equipment were made during the year: Sales to clients in Harare $27 000 Sales to clients in South Africa on 1 July 2010 (at 31 December 2010, the amount had not yet been received) $30 000 A deposit was received from a client in Mutare for equipment that is to be delivered in February 2011 $ 5 000 (iv) The company sold a residential stand in Nyanga which it had $60 000 originally acquired in 2009 at a deceased estate auction. One of the directors had noted the low reserved price tag at the time of the auction, and recommended for its purchase. The directors hoped that it in 1 or so years it could be sold for a good profit. In the event that a profit would appear unlikely in 3 or so years, a holiday home would be built on it. (v) The schedule of income shows exchange gains of $20 000 relating to sales to South Africa during the year. Of the amount, $2 000 was on translation of debtor balances on the company s books as at 31 December 2010. The balance of $18 000 related to sales which had been fully paid for at the end of the year. (vi) During the year the company noted that it could still pay the Commissioner of Taxes a 2006 tax liability in Zimbabwe Dollars. As the company no longer had such currency in its coffers, the Finance Manager paid off the amount from his personal Zimbabwe Dollar account. The amount was restated in the United States Dollar equivalent and shown in the books of accounts as a donation equalling $10 000. The Finance Manager stated that he would not be claiming the amount or its equivalent. (vii) Tactics Limited earned $8 000 in interest. Of this amount, $3 000 was bank interest and the balance of $5 000 was on a loan to an associate company. (viii) The company purchased fuel for use in the business for $1 000 during the year and when they tried to pay the creditor she insisted that the company did not owe her any money. She wound up her business operations during the middle of December 2010 and emigrated. There are no real prospects that there will be a demand for the amount. Calculate the company s gross income in respect of the transactions listed above and comment on each of the transactions where appropriate. (25 Marks)
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4 4. Individuals/Corporate Tax (Marks will be awarded for quoting relevant case law) (i) Outline the meaning of each of the underlined words/phrases in the following definition of gross income: (12 marks) Gross income means the total amount received by or accrued to or in favour of a person or deemed to have been received by or to have accrued to or in favour of a person in any year of assessment from a source within or deemed to be within Zimbabwe excluding... (ii) What is the source of the following? (8 marks) a. rent from immoveable property b. dividends c. royalties for a trade mark d. interest e. annuity from a trust f. income from business operations which extend beyond the boundaries of Zimbabwe (iii) In the following scenario, determine the gross income for the 2 years ending 31/12/2010 and 31/12/2015. (5 marks) Pretty leased a building under an agreement to Loveness. The period of lease is for 20 years. The lease commenced on the 1st day of January 2010. Under conditions
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