(v) Thokozani has had use (since 2008) of a council owned house in one of Kwekwe s low density suburbs. Council provides for depreciation on the house at $800 per annum (straight line method). Annual rentals of similar houses in the area are estimated at $600. He is only required to pay a monthly rental of $10. On 1 February 2009, the house was fully furnished at a cost of $3 000. Required: Calculate Thokozani’s taxable income for the year ending 31 December 2010 (Please show your workings were applicable). (25 Marks)
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22. Value Added Tax (VAT) (i) John, a South African resident regularly brings his vehicle for service at a garage where you are the accountant. During his frequent visits, his family accompanies him and uses the time to do some shopping. The workshop manager asks for your opinion on whether to charge John VAT at the standard rate (15%) or at zero percent. In his opinion the service should be zero rated since John is a non resident. Advise the workshop manager of the VAT status of the transaction citing relevant provisions in the VAT Act. (4 marks) (ii) Mr Munda owns a fleet of buses that ply the Harare/Mutare road and carries fare paying passengers. He is facing viability problems and he decides to hire out some of his buses to Mr Jones who intends to use the buses to ferry fare paying passengers along the Harare/Bulawayo route. He will hire out the buses to Mr Jones without the services of drivers for a fee of $5,000 per month per bus. Advise Mr Munda of the VAT considerations to make. (4 marks) (iii) Your company which is in the transport business has been contracted by a local company with branches in Bulawayo and Botswana to transport goods to its branches. On several occasions, goods are transported to Botswana separately from goods to branches in Bulawayo. However, at times deliveries to Bulawayo are done at the same time (using same trucks) with those to Botswana. You have been asked to advise management of the VAT implications of this arrangement. (4 marks) (iv) A registered operator supplies accommodation to his employees. The employees are obliged, in terms of their conditions of service to reside in the accommodation provided for them. Part of the residence is also used in the making of taxable supplies. What are the VAT implications of this arrangement? (4 marks) [Total marks 16]
33. Corporate Tax Tactics Limited is a Zimbabwean company that earns its income as consulting geologists and by selling irrigation equipment. The following transactions relate to its current year of assessment: (i) It earned consulting fees of $100 000 for surveys carried out in Zimbabwe during the year of assessment. (ii) It was instructed by the chairman of a mining company in Harare to carry out a survey in Botswana at the site of a new coal mine. All the work was carried out in Botswana, but the final report was typed in Harare. The fee paid was $50 000.