Calculate taxable profit for the year and current taxation

Assignment Help Taxation

Reference no: EM133647917

Problem

The profit before tax of Barrett Ltd for the year ended 31 December 2021 of R550 000 includes the following items:

1) The original cost of the building was R250 000 purchased on 1 January 2020, depreciation was R20 000 and wear and tear equalled R20 000.

2) Proceeds on sale of building amounted to R280 000.

3) Dividend income of R8 000 (not taxable).

4) Donations of R40 000 (Not deductible).

5) Traffic fines of R50 000 (Not deductible).

6) Prepaid expenses totalled R10 000 in the current year and R5 000 in the prior year.

7) Income received in advance in the prior year was R5 000.

The inclusion rate for capital gains made by companies is 50%. The applicable tax rate is 30% on taxable profits. There were no other temporary differences in the year.

Task

A. Calculate taxable profit for the year, current taxation and deferred taxation.

B. Prepare the taxation note for the year.

Reference no: EM133647917

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