Mavuno (Pty) Ltd is a registered VAT vendor in South Africa and applies the invoice basis of accounting. The company makes both taxable and exempt supplies. During the tax period, the following transactions occurred:

• Purchased trading inventory for R230,000, inclusive of VAT. Of this inventory, 80% was used to make taxable supplies and 20% was used to make exempt supplies.

• Purchased office equipment for R115,000, inclusive of VAT. The equipment was used exclusively in making taxable supplies.

• Incurred entertainment expenses of R11,500, inclusive of VAT, for a staff year-end function.

Assume all suppliers are registered VAT vendors, valid tax invoices were obtained, and the expenses were incurred during the tax period.

What is the total input tax that Mavuno (Pty) Ltd may deduct for the tax period?

A taxpayer sells an asset for R200,000. The original cost was R180,000 and wear and tear claimed was R50,000. The recoupment is first deducted from proceeds for capital gains tax purposes. What amount will be used as proceeds for Capital Gains Tax?

A tax advisor is reviewing a client’s proposed investment in renewable energy equipment and specialized production assets. To create the most tax-efficient capital allowance strategy, what should the advisor do first?

An asset was acquired by a taxpayer for R350 000 and brought into use immediately. The taxpayer claimed wear-and-tear allowances totalling R140 000 up to the date of disposal equals the recoupment. The asset was subsequently sold for R280 000. Assume that the original cost of the asset qualifies as its base cost for capital gains tax purposes and that no scrapping allowance or other base cost adjustments apply.

What is the capital gain/loss arising from the disposal of the asset for capital gains tax purposes?

Mr Shilongo received a travel allowance of R4,500 per month throughout the 2025 year of assessment. He travelled 25,000 km during the year, of which 7,200 km related to business travel. The deemed cost of operating his vehicle is R4.80 per kilometre.

 A taxpayer acquires a commercial building and spends additional amounts on improvements. The building is then used mainly in an industrial process that qualifies under a specific building allowance provision. Which factor is most important in determining whether the improvement cost may also qualify?

A business is deciding between leasing equipment and purchasing it outright. From a capital allowance perspective, which analysis is most useful when evaluating the after-tax benefit of purchasing?

A company purchases new manufacturing machinery to be used directly in a process of manufacture in South Africa. The tax manager wants to maximize the speed of tax relief while remaining compliant. Which treatment is most appropriate?

Mr Shapwa leases a motor vehicle for R4,500 per month and leases the same vehicle to his employer for R4,500 per month. His employer grants him the right to use the vehicle. He bears all fuel and maintenance costs. During the year, he travels 24,000 km, of which 8,000 km relates to business travel. The deemed costs are:

• Fixed cost component: R60,000 per year
• Fuel cost: R1.70 per kilometre
• Maintenance cost: R0.60 per kilometre

What is the taxable amount of the travel allowance?

A company disposes of a machine for R90,000. The original cost was R120,000 and wear and tear claimed to date is R50,000. What is the recoupment on disposal?