Question 1 1. Which statements below are correct with regards to partnerships and tax? i. A partnership is recognized as a person for income tax purposes. ii. There is no employer / employee relationship in a partnership and therefore a partner cannot be subject to “fringe benefit” rules. iii. A partner will only ever qualify for capital gains tax exemptions of R300 000 upon death as partners are taxed as individuals. iv. Taxable income of a partnership is calculated by applying normal tax rules. Income is adjusted for items such as interest accrued and capital gains and this income is then allocated to each partner. v. A partnership can register as a VAT vendor. vi. A partner doesn’t qualify for any exclusions or exemptions as this is taken into account when calculating the taxable income of the partnership. All the statements are correct (i); (ii) and (iii) (ii); (iv) and (v) (iii); (iv) and (v) None of the above 1 points Question 2 1. In which business entities are the business owners jointly and severely liable for the business debt. Choose the correct options. i. Partnerships ii. Members in a Close Corporation iii. Beneficiaries in a business trust iv. Trustees in a business trust v. Personal liability companies vi. Shareholder in a company (i); (iv) and (v) (i); (iii) and (v) (ii); (iv) and (vi) (i) and (v) None of the above 1 points Question 3 1. Tom and Jerry are equal partners in a real estate agency and investment group. Tom invested R1 500 000 of his own money in a property development. Jerry is responsible for all real estate transactions. Jerry was defrauded with a transaction and now the partnership owes R980 000 to the bank. Jerry can be held liable for how much of the debt? Choose the correct option. R980 000 R490 000 Due to partners having an equal share. The only other answer it may be is 980000 and that’s if due to the fact that he is responsible for all the transactions and this was his fault. None of the debt. The partnership will be liable for the debt. R1 240 000 None of the above 1 points Question 4 1. Choose the correct statement with regard to a partners of a partnerships eligibility to be a member of a retirement fund. Partners can only make provision for their retirement by contributing to a retirement annuity. In terms of the Income Tax Act partners are allowed to be regarded as employees for the purposes of retirement fund contributions. Page 1009 section 39.3.7 bullet point 3. “Partner is deemed to be an employee for the purpose of pension and retirement fund contributions.” The partnership is allowed to become a member of a retirement annuity for the benefit of the partners. Partners can only effect a buy-and-sell policy that can be used to provide an income for the partners at retirement. None of the above 1 points Question 5 1. Which one of the actions / rules below is not part of or included in a company’s Memorandum of Incorporation (MOI). The number of directors allowed The maximum share capital that can be issued Duties of senior management in the company The prohibition of offering shares to the public can be included in the MOI of a private company. None of the above 1 points Question 6 1. Samantha works for an IT company where she is doing contract work. She only works 15 hours a week at the IT Company leaving plenty of time to build her business making matric farewell dresses and wedding gowns. She employs a lady on a part time basis who helps with the dress making. Samantha is working from a spare bedroom in her house. Will Samantha qualify for a deduction for expenses relating to her business use of her house? Choose the correct statement. No, as her business is too small and she doesn’t have to declare the income from the business. Yes, she will qualify for a deduction because she uses the space to generate an income. No, she will not qualify for a deduction as the room she is using is not specifically equipped and exclusively used for the business. She is using a spare bedroom in her house. Yes, she will qualify for a deduction because her business is growing and she has an employee working for her. None of the above I am unsure of whether the answer is b or c. I am unsure that if you use a spare bedroom which is not solely used for business if this qualifies for a deduction. I believe she uses more than 50% of her working time making dresses and that the room is obviously equipped with the appropriate equipment. So, I believe she should be allowed a deduction. So, my answer would then be B. 1 points Question 7 1. Which of the statements below are correct with regard to shareholder meetings in terms of the Companies Act? i. Private companies are required to hold shareholder meetings every 2 years. ii. Public companies are required to hold annual general meetings. iii. All shareholders must receive notice of the proposed resolution prior to the meeting taking place. iv. At least 65% of shareholders must attend the meeting in order for any decisions to be made. v. A Board may call a shareholder meetings at any time and it is not limited to an annual meeting. vi. If a shareholder cannot attend an AGM they cannot personally vote on any matters under discussion. All the statements are correct (i); (iii) and (v) (ii); (iii); (v) and (vi) (iii); (iv) and (vi) None of the above 1 points Question 8 1. Sundu and his friend Mark has built a profitable business in the manufacturing of machine parts made by 3D printers. During this time the friends accumulated valuable business assets and both also got married. They decide to formalize their business but is worried that their business assets will be included in their estates. In which instance or business entity will business assets not be included in their personal estate? Choose the correct option. Assets in partnership Members interest in a close corporation Where the individuals has a discretionary interest in a business trusts all of the above None of the above 1 points Question 9 1. Fitchamps (Pty) Ltd. is a family-owned gym. Simone has a 45% shareholding while her sister Michelle owns 55% of the shares. Their membership has grown dramatically over the last 2 years and they have expanded their business. A good friend of Michelle, Garth also owns a gym, Very Strong (Pty) Ltd, and Michelle and Simone are considering buying the Very Strong (Pty) Ltd as a going concern through Fithchamps (Pty) Ltd. Both Companies are VAT Vendors. Which statement below is incorrect with regards to buying Very Strong (Pty) Ltd as a going concern? Fitchamps (Pty) Ltd is now responsible for all the employees of Very Strong (Pty) Ltd and also takes over the lease agreement of Very Strong (Pty) Ltd. Fitchamps (Pty) Ltd will be liable for 15% VAT on the transaction. Fitchamps (Pty) Ltd will now own the Very Strong brand as well as all the equipment and other assets of Very Strong (Pty) Ltd. Fitchamps (Pty) Ltd. will be running Very Strong (Pty) Ltd as before, but can also make any changes as they (Michelle and Simone) are now the new owners. None of the above 1 points Question 10 1. After a very profitable year STS (Pty) Ltd. decided to declare a dividend to its shareholders. Jan is a shareholder of STS (Pty) Ltd and is entitled to a gross dividend of R85. What is the amount that Jan will receive as a dividend paid by STS (Pty) Ltd? Choose the correct option. R68, as dividend withholding tax will be deducted from the gross dividend. Gross dividend is calculated before tax. So R85 x 0.8= R68 to be paid after withholding tax has been deducted. R85 and then Jan need to declare this in his annual tax return. R72.25, because 15% dividend withholding tax must be deducted before paying the dividend. R85 because a declared dividend is the final dividend after dividend withholding tax was deducted. None of the above
