TAX2601/2025/S2/ Assessment 1
Page 5 of 5
QUESTION 3 (continued)
7. Assets register
The following capital assets were acquired or sold during the year:
7.1 A new robotic arm machine used in the manufacturing process and costing R520 000 was
purchased and brought into use on 1 April 2022. The machine experienced continuous issues
and was eventually sold on 1 July 2024 to another tech company for R350 000.
7.2 Four second-hand laptops, each costing R12 500, were purchased and brought into use on
1 September 2024.
7.3 A delivery vehicle that was purchased and brought into use for an amount of R256 000 on 1 April
2023, was sold to a non-connected person for an amount of R120 000 (an arm’s length price) on
30 September 2024 (Provide a brief reason).
8. Legal fees
8.1 R22 000 to recover unpaid sales invoices from a client.
8.2 R8 000 to defend a director in a personal civil case. The amount was credited to the
director’s loan account. (Provide a brief reason).
9. Factory
TT purchased part of a newly erected factory building in Sandton to expand its robotic production
capabilities. The factory was purchased and brought into use on 15 November 2024 at a cost of
R5 500 000.
Binding General Ruling: No. 7 allows for the following write off periods for assets (where applicable):
• Laptop computers 3 years
• Delivery vehicles 4 years
REQUIRED MARKS
Calculate Titan Tech (Pty) Ltd’s normal tax liability for its 2025 year of assessment.
Notes:
• Ignore any capital gains tax consequences.
• Show amounts that are deductible in terms of different sections of the Income Tax Act
in separate lines in the answer.
• TT always elects to utilise any available options in terms of the Income Tax Act to
legally minimise its normal tax liability.
• Provide brief reasons in the body of your calculation (not as a separate note elsewhere
in your answer) for the treatment of transactions 3, 7.3, 8.2
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