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Sample Tax Professional (SA) Practice Questions
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1Under South African Income Tax Act Section 45 (Intra-Group Transactions), what is the key tax consequence when an asset is transferred between companies in the same group of companies?
A.Roll-over relief applies: no tax recoupment or capital gain is recognized at transfer date, and the transferee steps into the shoes of the transferor
B.Immediate taxation of all capital gains at 80% inclusion
C.Mandatory 20% Dividends Tax is levied on the asset value
D.The transfer is treated as an arm's-length open market sale subject to immediate 15% VAT
Explanation: Section 45 provides tax roll-over relief for intra-group transactions. The transferor recognizes no gain/recoupment, and the transferee steps into the shoes of the transferor regarding tax base, allowances, and acquisition date.
2Under Section 31 of the South African Income Tax Act (Transfer Pricing), how must cross-border transactions between connected persons be adjusted for tax purposes?
A.The terms and conditions must reflect arm's-length pricing; if non-arm's-length terms reduce SA taxable income, the taxable income must be adjusted and the difference treated as a deemed dividend (or deemed gift)
B.Transactions between connected persons are completely exempt from tax review
C.Transfer pricing rules apply only if transaction value exceeds R10 billion
D.Connected persons can freely set any transfer price to minimize overall global tax
Explanation: Section 31 mandates arm's-length pricing for cross-border connected-party transactions. Any tax benefit resulting from non-arm's-length pricing triggers primary tax adjustments to taxable income and secondary adjustments (deemed dividend or gift).
3Under the Tax Administration Act (TAA) 28 of 2011 Section 104, within how many business days must a taxpayer lodge an Objection against a SARS assessment?
A.80 business days from the date of the assessment
B.30 business days from the date of assessment
C.180 calendar days
D.1 year
Explanation: Under TAA dispute resolution rules (as updated in recent rules), a taxpayer has 80 business days from the date of assessment to lodge a formal Objection using the prescribed ADR1 form.
4Under the South African Value-Added Tax (VAT) Act Section 8(16), what is the VAT treatment when a vendor supplies a business as a going concern?
A.Zero-rated (0% VAT) provided both buyer and seller are registered VAT vendors, the enterprise is an income-earning activity on transfer date, and agreed in writing
B.Standard-rated at 15% VAT
C.Exempt from VAT without input tax recovery
D.Subject to 20% Dividends Tax
Explanation: Section 11(1)(e) zero-rates the supply of a enterprise as a going concern if both parties are registered VAT vendors, the business is an income-earning operation, assets necessary for operation are transferred, and written agreement exists.
5Under South African Income Tax Act Section 42 (Asset-for-Share Transactions), what tax relief is provided when a person transfers an asset to a company in exchange for qualifying equity shares?
A.Tax roll-over relief: deferral of capital gains tax and recoupment, with the company inheriting the transferor's tax base and holding period
B.Immediate taxation of full market value as normal dividend
C.100% tax rebate of all prior corporate income tax
D.Mandatory 15% VAT levy on share issue
Explanation: Section 42 defers tax consequences when assets are transferred for shares, allowing the company to acquire the asset at the transferor's tax base and deferring CGT/recoupment until subsequent asset disposal.
6Under Section 9D of the South African Income Tax Act (Controlled Foreign Companies - CFC), how is the net income of a foreign company taxed in the hands of a South African tax resident?
A.Imputed to South African resident shareholders holding >10% participation rights, in proportion to their holding, unless a qualifying Foreign Business Establishment (FBE) exemption applies
B.Taxed at a flat foreign rate of 0%
C.Exempt from all South African tax reporting
D.Taxed only when cash dividends are physically remitted to South Africa
Explanation: Section 9D imputes the net income of a CFC (where SA residents hold >50% participation/voting rights) to SA resident shareholders holding >=10%, unless exempt under the FBE carved-out exception.
7Under Tax Administration Act (TAA) Section 164 ('Pay Now, Argue Later' principle), what happens to a taxpayer's obligation to pay tax while an Objection or Appeal is pending?
A.The obligation to pay tax is NOT automatically suspended by lodging an objection; the taxpayer must formally apply for a Suspension of Payment under Section 164(2)
B.Payment is automatically frozen until all court appeals are exhausted
C.SARS immediately refunds 50% of disputed tax
D.Tax liabilities are cancelled automatically
Explanation: TAA Section 164 establishes 'pay now, argue later'. Lodging an objection does not suspend tax debt unless SARS grants a formal request for suspension of payment based on statutory risk factors.
8Under South African Value-Added Tax (VAT) Act Section 17(2)(a), what is the input tax restriction regarding 'entertainment' expenses?
A.Input tax deduction is explicitly DENIED on goods or services acquired for entertainment (food, beverages, hospitality), unless vendor provides entertainment for reward in ordinary course of business
B.100% input tax is claimable on all client meals and alcohol
C.Input tax is claimable if total annual entertainment spend is under R1 million
D.Entertainment is zero-rated at 0%
Explanation: Section 17(2)(a) denies input tax deduction for entertainment goods/services (meals, drinks, hospitality), except for entertainment operators (restaurants/hotels) or specific statutory welfare exceptions.
9Under South African Income Tax Act Section 44 (Amalgamation Transactions), what tax relief is provided when an amalgamating company transfers all its assets to a resultant company in exchange for equity shares and unwinds?
A.Roll-over relief deferring capital gains tax, recoupments, and dividends tax on the transaction and subsequent liquidation distributions
B.Immediate full taxation of liquidating dividend distributions at 45%
C.Mandatory 15% VAT on asset values
D.100% tax penalty on company directors
Explanation: Section 44 grants comprehensive roll-over relief for qualifying amalgamations: asset transfers occur at tax base value, deferring CGT/recoupments, and liquidating share cancellations are exempt from Dividends Tax.
10Under Double Tax Agreements (DTAs) following the OECD Model Tax Convention Article 7 (Business Profits), when may a Contracting State tax the business profits of an enterprise of the other Contracting State?
A.Only if the enterprise carries on business in the first-mentioned State through a Permanent Establishment (PE) situated therein
B.Whenever the enterprise sells goods into the state, even without physical presence
C.Business profits are always taxed 100% in both states without treaty relief
D.Only if the company board consists of local citizens
Explanation: OECD Article 7 mandates that business profits of a foreign enterprise are taxable in a source state ONLY if the enterprise carries on business through a Permanent Establishment (PE) in that state.
About the Tax Professional (SA) Exam
The SAIT EISA Tax Professional examination is the final qualifying board assessment for the Tax Professional (SA) designation (NQF Level 8). The real assessment is a scenario-based QCTO External Integrated Summative Assessment, not a multiple-choice test. It tests advanced expertise in corporate reorganizations (Sections 41-47), transfer pricing, DTAs, TAA dispute resolution, and VAT.
Assessment
5-hour computer-based EISA scenario assessment testing advanced technical application, cross-border structuring, TAA dispute resolution, and corporate tax advisory.
Time Limit
5 hours
Passing Score
50%
Exam Fee
R4,500 (South African Institute of Taxation (SAIT))
Tax Professional (SA) Exam Content Outline
30%
Advanced Corporate Taxation & Restructuring
Corporate roll-overs (Sections 42-47), GAAR, and Section 23M interest caps.
25%
International Tax & Transfer Pricing
Section 31 transfer pricing, OECD methods, CFCs, and Double Tax Agreements.
25%
Tax Administration Act & Dispute Resolution
TAA objections, suspension of payment, Third-Party notices, and USP penalties.
20%
VAT & Specialised Taxes
VAT Act, going concerns, zero-rating, and electronic services.
How to Pass the Tax Professional (SA) Exam
What You Need to Know
- Passing score: 50%
- Assessment: 5-hour computer-based EISA scenario assessment testing advanced technical application, cross-border structuring, TAA dispute resolution, and corporate tax advisory.
- Time limit: 5 hours
- Exam fee: R4,500
Keys to Passing
- Work through all 100 available questions
- Review every answer and explanation
- Track weak areas and revisit them
- Use our AI tutor for tough concepts
Tax Professional (SA) Study Tips from Top Performers
1Master corporate roll-over rules under Sections 42, 44, 45, 46, and 47.
2Understand Section 31 transfer pricing primary and secondary adjustments.
3Study TAA dispute resolution timeframes (80 days for objection, 30 days for appeal).
Frequently Asked Questions
What is the SAIT EISA Tax Professional exam?
It is the national qualifying board exam for the Tax Professional (SA) designation registered at NQF Level 8.
What topics are tested in the Tax Professional EISA?
The exam covers advanced corporate tax, corporate reorganizations, international tax and transfer pricing, TAA dispute resolution, and VAT.