South Africa SARS Tax/Graduate-in-Training Recruitment Assessment

Which of the following elements is NOT a requirement of the general definition of 'gross income' in Section 1 of the Income Tax Act 58 of 1962 for a South African tax resident?

• AThe source of the amount must be within South Africa
• BThe amount must be received by or accrued to the person
• CThe amount must be in cash or otherwise
• DThe amount must not be of a capital nature

In South African tax case law, which landmark case confirmed that an amount 'accrues' to a taxpayer when they acquire a vested right to it, representing an entitlement to claim payment?

• ACIR v People's Stores (Southend) Pty Ltd
• BLategan v CIR
• CCIR v Golden Dumps Pty Ltd
• DCIR v Genn & Co Pty Ltd

To be deemed a tax resident under the physical presence test in South Africa, an individual must be physically present in the Republic for more than 91 days in the current tax year, more than 91 days in each of the five preceding tax years, and how many days in total over those five preceding years?

• AMore than 915 days
• BMore than 183 days
• CMore than 365 days
• DMore than 730 days

Which Appellate Division case is regarded as the leading modern South African authority on when an individual is 'ordinarily resident', holding that a person is ordinarily resident in the country of their usual or principal residence — their real home?

• ACIR v Kuttel
• BCohen v CIR
• CStott v CIR
• DCIR v Leydenberg Platinum Ltd

Under the Income Tax Act, where is a company incorporated outside South Africa deemed to be a South African tax resident?

• AIf its place of effective management is located in South Africa
• BIf the majority of its shareholders reside in South Africa
• CIf it earns more than 50% of its revenue from South African customers
• DIf its registered office or public officer is physically in South Africa

Which of the following is the leading case that established that when determining whether a transaction is capital or revenue in nature, the taxpayer's subjective intention (both at acquisition and disposal) is the dominant factor?

• ACIR v Stott
• BCIR v Visser
• CCIR v Nel
• DCIR v Lever Brothers & Unilever Ltd

What did the court determine in the landmark case of CIR v Lever Brothers & Unilever Ltd regarding the source of income?

• AThe source of income is the originating cause of the income, which is the rendering of se…
• BThe source of interest is always where the debtor is resident or registered.
• CAll services rendered outside South Africa are deemed to be from a South African source i…
• DThe source of dividend income is the country where the underlying profits were earned.

In terms of Section 9 of the Income Tax Act, under what condition is income from services rendered by an employee outside South Africa deemed to be from a South African source?

• AIf the services are rendered for or on behalf of the South African government or a consti…
• BIf the employer is a South African tax resident and pays the salary into a South African…
• CIf the employee spends more than 183 days in South Africa during that year
• DIf the employment contract was concluded within South Africa

A taxpayer under the age of 65 receives local interest of R30,000 during the tax year. What portion of this interest is exempt from normal income tax under Section 10(1)(i)?

• AR23,800
• BR30,000
• CR34,500
• DR0 (Interest is fully taxable)

To qualify for the foreign employment income exemption under Section 10(1)(o)(ii), a South African tax resident must work outside South Africa for a minimum of how many days during any 12-month period?

• AMore than 183 days in total, including at least 60 continuous days
• BMore than 183 days in total, with no requirement for continuous days
• CMore than 91 days in total, including at least 30 continuous days
• DMore than 365 days in total, including at least 183 continuous days

Under Section 7(3) of the Income Tax Act, if a parent makes a donation to their minor child, and that minor child receives investment income from the donation, who is taxed on that income?

• AThe parent who made the donation
• BThe minor child
• CThe minor child's legal guardian, other than the donor parent
• DThe income is exempt from tax because the child is a minor

How is a partnership taxed under South African tax law?

• AA partnership is not a separate taxpayer; its taxable income is calculated and allocated…
• BA partnership is taxed as a company at a flat corporate rate of 27%.
• CA partnership is taxed as a trust at a flat rate of 45%.
• DA partnership pays tax on its profits, and partners pay dividends tax on their distributi…

Under the gross income definition, what must be the nature of a receipt for it to be excluded from gross income under the general rule?

• AIt must be of a capital nature
• BIt must be of a revenue nature
• CIt must be received in a foreign currency
• DIt must be an unrealized gain

In CIR v Visser, the court used a famous botanical analogy to distinguish between capital and income. In this analogy, what represents capital?

• AThe tree
• BThe fruit
• CThe soil
• DThe seed

What is the tax treatment of local dividends received by a South African resident individual from a South African company?

• AThey are exempt from normal tax under Section 10(1)(k), but are generally subject to Divi…
• BThey are fully included in taxable income and taxed at the individual's marginal tax rate.
• CThey are subject to normal tax but qualify for a flat 50% rebate.
• DThey are exempt from both normal tax and Dividends Tax.

If a taxpayer receives a cash gift from a relative on their birthday, why is this gift excluded from gross income?

• AIt is of a capital nature
• BIt is exempt under Section 10
• CIt is not received by or accrued to the taxpayer
• DIt is not in cash or otherwise

Which statutory provision in the Income Tax Act specifically includes recoupments of previously allowed capital allowances or deductions back into a taxpayer's gross income?

• ASection 8(4)(a)
• BSection 11(a)
• CSection 23(g)
• DSection 10(1)(o)

What is the standard tax year of assessment for natural persons (individuals) in South Africa?

• AFrom 1 March of one year to the last day of February of the following year
• BFrom 1 January to 31 December of the calendar year
• CFrom 1 April of one year to 31 March of the following year
• DAny 12-month period selected by the taxpayer and approved by SARS

In the case of CIR v Genn & Co (Pty) Ltd, what principle was established regarding receipts that are accompanied by an obligation to return them, such as borrowed funds?

• ABorrowed funds do not constitute gross income because they do not accrue to the taxpayer…
• BAll loans are deemed to be taxable income in the year they are received and deductible wh…
• CLoans from connected persons are treated as dividends.
• DOnly the interest component of a loan is exempt from tax.

Under the physical presence test, how can an individual who has met the day-count requirements prevent being classified as a South African tax resident?

• ABy being outside South Africa for a continuous period of at least 365 days
• BBy renting out their primary residence in South Africa to a third party
• CBy registering as a tax resident in another country and obtaining a tax clearance certifi…
• DBy submitting a written declaration to SARS stating they do not intend to remain in the c…

Which statutory provision contains the 'General Deduction Formula' in South Africa, allowing taxpayers to deduct expenditure incurred in the carrying on of a trade?

• ASection 11(a)
• BSection 23(g)
• CSection 12C
• DSection 8(4)

In Port Elizabeth Electric Tramway Co Ltd v CIR, what test did the court establish to determine whether expenditure is 'in the production of income' under Section 11(a)?

• AWhether the expenditure is closely connected with the income-producing operations and is…
• BWhether the expenditure directly increases the taxpayer's gross turnover in the current y…
• CWhether the expenditure was subjective in nature and intended to generate capital growth.
• DWhether the expenditure was approved by the Board of Directors prior to being incurred.

Under South African tax principles, how does the court case New State Areas Ltd v CIR help distinguish between capital and revenue expenditure?

• ACapital expenditure relates to the income-earning structure, whereas revenue expenditure…
• BCapital expenditure is any amount over R100,000, while revenue expenditure is below R100,…
• CCapital expenditure is only deductible over five years, whereas revenue expenditure is fu…
• DRevenue expenditure must always result in the acquisition of a tangible asset.

Section 23(g) of the Income Tax Act prohibits the deduction of any expenditure to the extent that it was NOT laid out or expended for what statutory purpose?

• AFor the purposes of trade
• BFor the production of exempt income
• CFor the acquisition of capital assets
• DFor the payment of corporate dividends

Under Section 11(e), the wear-and-tear allowance for capital assets (excluding buildings) is calculated using which method, unless the taxpayer elects otherwise and receives SARS approval?

• AStraight-line method
• BReducing-balance method
• CSum-of-the-years'-digits method
• DUnits-of-production method

Under Section 11(d), what is the primary requirement for expenditure on 'repairs' to be fully deductible?

• AIt must restore the asset to its original condition without creating an improvement or ad…
• BIt must be incurred on an asset that was acquired in the current tax year.
• CThe total cost must not exceed 10% of the asset's original value.
• DThe repairs must be performed by a registered tax entity.

To claim a deduction for a bad debt under Section 11(i), what condition must be satisfied regarding the debt?

• AThe debt must have been previously included in the taxpayer's gross income in either the…
• BThe debtor must be formally declared insolvent by a court.
• CThe taxpayer must have initiated legal action through the high court to recover the debt.
• DThe debt must be outstanding for a period of more than 3 years.

Under the current Section 11(j), a taxpayer that does NOT apply the IFRS 9 accounting model may claim 40% of debt that is 120 days or more in arrears, plus what percentage of debt that is 60 days or more (but less than 120 days) in arrears?

• A25% of the qualifying doubtful debts
• B50% of the qualifying doubtful debts
• C100% of the qualifying doubtful debts
• D10% of the qualifying doubtful debts

Under Section 11A, what is the tax treatment of 'pre-trade expenses' incurred by a taxpayer before they officially commence carrying on a trade?

• AThey are accumulated and deducted in the year the trade commences, but the deduction is l…
• BThey are fully deductible in the tax year they are physically paid, even if the trade has…
• CThey are permanently capitalized and can only be used to calculate base cost for Capital…
• DThey are deductible over a straight-line period of 5 years starting from the year the exp…

Section 23(m) of the Income Tax Act severely limits deductions for taxpayers who receive salary income. Which of the following expenses may a standard salaried employee deduct?

• AContributions to a registered retirement annuity fund under Section 11F
• BCost of traveling between their home and their regular place of work
• CProfessional tax practitioner fees for preparing their annual tax return
• DPurchase of business suits and formal work wear

To qualify for a home office deduction under Section 23(b), which of the following is a mandatory requirement?

• AThe part of the home must be occupied for the purposes of trade and must be specifically…
• BThe employee must work from home for at least one day per week.
• CThe employer must pay the employee a home office allowance that is fully taxed.
• DThe home office space must be larger than 20% of the total floor area of the house.

Under Section 11(c), legal expenses incurred by a taxpayer are deductible only if they are incurred in respect of any claim, dispute, or action at law which:

• AArises in the ordinary course of carrying on the taxpayer's trade and is not of a capital…
• BInvolves a claim against SARS regarding tax assessments.
• CResults in a successful court judgment in favor of the taxpayer.
• DRelates to the acquisition of a capital asset or patent.

A taxpayer makes a donation to a registered Public Benefit Organisation (PBO) that is authorized to issue Section 18A receipts. What is the maximum deduction allowed in the current tax year?

• A10% of the taxpayer's taxable income before the Section 18A deduction and Section 11F ret…
• B100% of the donation amount, with no limit
• CA flat maximum of R100,000 per tax year
• D5% of the taxpayer's gross remuneration

Under Section 11F, what is the annual limit for the deduction of contributions made by an individual to their pension, provident, and retirement annuity funds?

• AThe lesser of R350,000 or 27.5% of the higher of taxable income or remuneration (before t…
• BA flat maximum of R150,000 per tax year
• C27.5% of the taxpayer's gross remuneration, with no monetary cap
• D15% of the taxpayer's non-retirement funding income

Which of the following expenditures is specifically prohibited from deduction under Section 23 of the Income Tax Act?

• AFines and penalties imposed for unlawful activities
• BSalary expenses paid to administrative staff
• CRental expenses for commercial trade premises
• DInterest paid on a commercial bank loan used for trade working capital

Under the Small Business Corporation (SBC) tax incentive in Section 12E, how are plant and machinery acquired by an SBC for manufacturing purposes written off for tax purposes?

• A100% of the cost is written off in the tax year the asset is first brought into use.
• BWritten off over 3 years in a 50:30:20 ratio.
• CWritten off over 4 years in a 40:20:20:20 ratio.
• DWritten off over a straight-line period of 5 years (20% per year).

For normal income tax purposes, what is the correct treatment of business entertainment expenditure (e.g. taking a client to lunch) incurred by a trader?

• AIt is deductible under Section 11(a) only to the extent it is genuinely incurred in the p…
• BIt is always fully deductible under Section 11(a) regardless of purpose, because all meal…
• CIt is deductible up to a maximum of 5% of the company's gross profit.
• DIt is never deductible for income tax because the Income Tax Act contains a blanket prohi…

If a taxpayer sells a machine on which they previously claimed a Section 11(e) wear-and-tear deduction, and the selling price exceeds the tax value (but is less than the original cost), what is the resulting tax effect?

• AThe difference is taxable as a recoupment under Section 8(4)(a) and included in gross inc…
• BThe difference is taxed as a capital gain in full.
• CThe difference is exempt from tax because the asset is machinery.
• DThe difference must be deducted from the cost of a replacement machine.

Under Section 11(e), how is the tax value (or 'tax written-down value') of an asset calculated?

• AOriginal cost of the asset less cumulative wear-and-tear allowances claimed
• BMarket value of the asset less cumulative accounting depreciation
• COriginal cost of the asset less accounting depreciation
• DCurrent insurance valuation of the asset

In Joffe & Co (Pty) Ltd v CIR, a engineering company sought to deduct damages paid to the widow of a worker killed due to the company's negligent construction. Why did the court disallow the deduction?

• AThe damages and legal costs were not a necessary concomitant of the trade, as negligence…
• BThe payment was capital in nature because it was a lump sum.
• CThe damages were paid to a non-resident, which is prohibited under Section 23.
• DThe expenditure was prohibited because it was paid under a court order rather than volunt…

Under the Value-Added Tax Act 89 of 1991, what is the mandatory VAT registration threshold for a person carrying on an enterprise?

• AWhen the total value of taxable supplies made exceeds R1 million in any consecutive 12-mo…
• BWhen the total value of taxable supplies made exceeds R50,000 in any consecutive 12-month…
• CWhen the net profit of the business exceeds R500,000 in a calendar year
• DWhen the gross receipts of the business exceed R1.25 million in a tax year

What is the minimum value of taxable supplies a business must make to qualify for voluntary VAT registration in South Africa?

• AR50,000 in a 12-month period
• BR100,000 in a 12-month period
• CR500,000 in a 12-month period
• DR0 (Anyone can register for VAT at any time)

What is the current standard rate of Value-Added Tax (VAT) in South Africa, which became effective on 1 April 2018?

• A15%
• B14%
• C16%
• D18%

Which of the following is an example of a 'zero-rated' supply under Section 11 of the VAT Act?

• ADirect exports of goods to a customer in another country
• BEducational services provided by a registered university
• CRental of a residential apartment to a tenant
• DPassenger transport services by road or rail

Which of the following is classified as an 'exempt' supply under Section 12 of the VAT Act?

• AThe supply of residential rental accommodation
• BThe supply of brown bread and maize meal
• CThe sale of a commercial office building
• DThe export of agricultural machinery

What is the key practical difference between a 'zero-rated' supply and an 'exempt' supply for a registered VAT vendor?

• AA vendor making zero-rated supplies can claim input tax deductions on related expenses, w…
• BExempt supplies are taxed at a rate of 1%, whereas zero-rated supplies are taxed at 0%.
• CZero-rated supplies are not included in the R1 million registration threshold, but exempt…
• DExempt supplies are only available to government departments, whereas zero-rated supplies…

What is the general rule for determining the 'time of supply' under Section 9(1) of the VAT Act?

• AThe earlier of the date an invoice is issued or the date any payment is received
• BThe date the goods are physically delivered to the customer
• CThe date the contract is signed by both parties
• DThe last day of the tax period in which the transaction took place