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THE EXPECTATION OF LIFE AND THE PRESENT VALUE OF R1 PER ANNUM FOR LIFE CAPITALISED AT 12 PER CENT OVER THE EXPECTATION OF LIFE OF MALES AND FEMALES OF VARIOUS AGES 6. Debt benefit On 1 January 2023, Deep Waters had debt of R900 000. Deep Waters used this debt to fund ordinary operating expenses of the swimming club, all of which were tax deductible under section 11(a). Deep Water's creditor discharged the debt of R900 000, due to Deep Water's inability to settle this debt due to cash flow restraints. REQUIRED: Calculate the taxable income of Deep Waters (Pty) Ltd for the 2023 year of assessment. Start with the profit before tax of R4 539600 . Support your answer with reference to the relevant sections of the Income Tax Act. Show all your calculations clearly and round to the nearest rand. Ignore any VAT and Capital gains tax implications. Please use the following structure when answering Question 5: (30 marks) QUESTION 5 Deep Waters (Pty) Ltd ('Deep Waters'), is a local swimming Deep Waters aims to promote swimming as a sport aning club founded in 1996. swimmers of all levels. Deep Waters offers training provide a community for swimmers and programs for young swimmers to leaining programs for recreational During Deep Water's 2023 year of assessment, which ended on 28 February 2023 , Deep Waters carried out the following transactions: 1. Combi purchased On 1 March 2022, Deep Waters purchased a new Combi for R489 000 to assist with the transport of the swimmers to and from the pool. This Combi was brought into use on the same day. The Commissioner allows Combi's to be written off over a five-year period. The Combi was stolen on 1 February 2023. Deep Waters insured the Combi and received an insurance payment of R450000 in the 2023 year of assessment. The amount received was immediately used by Deep Waters to fund the acquisition of a new, similar combi for R500 000. Deep Waters elected the application of par 66 of the Eighth Schedule. 2. Imported sewing machine Deep Waters imported a new sewing machine on 1 January 2023. Deep Waters uses these sewing machines to make custom swimsuits, team gear and to repair the garments of their swimmers. The cash cost of this sewing machine was R100000, which was brought into use on 1 February 2023. In addition to the cash cost, Deep Waters also paid the following expenses in relation to the import of the machine: - Customs and excise duty of R8 000 and - Delivery cost of R3 000 PRESENT VALUE OF R1 PER ANNUM CAPITALISED AT 12 PER CENT OVER FIXED PERIODS solar panels Deep Waters decided to install solar panels to make sure the swimming pools are heated at all times and do not get affected by load-shedding power outages. On 30 June 2022, Deep Waters completed the installation of solar panels at a total cost of R290 000 and immediately brought it into use. The solar panels will generate electricity from photovoltaic solar energy not exceeding one megawatt. 4. Design Logos To have a competitive advantage, Deep Waters realised that they needed to register unique logos for the swimming club. An advertising company was identified to design these logos which will be registered as a trademark under the Trademark Act. On 30 September 2022, Deep Waters paid the advertising company R20 000 to design and register these logos. 5. Administration offices On 1 August 2012, Deep Waters entered into a 10-year lease agreement with a property agent for the lease of land which is located right next to the swimming club on which offices would be erected. Once the lease agreement expires, Deep Waters has the option to pay R500 000 to become the owner of the property. Deep Water exercised this option on 30 September 2022. The lease agreement stipulated that Deep Waters would lease these offices from the property agent and was obliged to: - Pay an annual premium of R80 000 from 1 August 2012 and - Erect a suite of offices on this land at a cost of R2 000000 . Deep Waters commenced with the erection of the suite of offices on 1 August 2012. These offices were completed on 31 January 2013 at a cost of R2 350000 and brought into use by Deep Waters as administrative offices the next day, on 1 February 2013. THE EXPECTATION OF LIFE AND THE PRESENT VALUE OF R1 PER ANNUM FOR LIFE CAPITALISED AT 12 PER CENT OVER THE EXPECTATION OF LIFE OF MALES AND FEMALES OF VARIOUS AGES 6. Debt benefit On 1 January 2023, Deep Waters had debt of R900 000. Deep Waters used this debt to fund ordinary operating expenses of the swimming club, all of which were tax deductible under section 11(a). Deep Water's creditor discharged the debt of R900 000, due to Deep Water's inability to settle this debt due to cash flow restraints. REQUIRED: Calculate the taxable income of Deep Waters (Pty) Ltd for the 2023 year of assessment. Start with the profit before tax of R4 539600 . Support your answer with reference to the relevant sections of the Income Tax Act. Show all your calculations clearly and round to the nearest rand. Ignore any VAT and Capital gains tax implications. Please use the following structure when answering Question 5: (30 marks) QUESTION 5 Deep Waters (Pty) Ltd ('Deep Waters'), is a local swimming Deep Waters aims to promote swimming as a sport aning club founded in 1996. swimmers of all levels. Deep Waters offers training provide a community for swimmers and programs for young swimmers to leaining programs for recreational During Deep Water's 2023 year of assessment, which ended on 28 February 2023 , Deep Waters carried out the following transactions: 1. Combi purchased On 1 March 2022, Deep Waters purchased a new Combi for R489 000 to assist with the transport of the swimmers to and from the pool. This Combi was brought into use on the same day. The Commissioner allows Combi's to be written off over a five-year period. The Combi was stolen on 1 February 2023. Deep Waters insured the Combi and received an insurance payment of R450000 in the 2023 year of assessment. The amount received was immediately used by Deep Waters to fund the acquisition of a new, similar combi for R500 000. Deep Waters elected the application of par 66 of the Eighth Schedule. 2. Imported sewing machine Deep Waters imported a new sewing machine on 1 January 2023. Deep Waters uses these sewing machines to make custom swimsuits, team gear and to repair the garments of their swimmers. The cash cost of this sewing machine was R100000, which was brought into use on 1 February 2023. In addition to the cash cost, Deep Waters also paid the following expenses in relation to the import of the machine: - Customs and excise duty of R8 000 and - Delivery cost of R3 000 PRESENT VALUE OF R1 PER ANNUM CAPITALISED AT 12 PER CENT OVER FIXED PERIODS solar panels Deep Waters decided to install solar panels to make sure the swimming pools are heated at all times and do not get affected by load-shedding power outages. On 30 June 2022, Deep Waters completed the installation of solar panels at a total cost of R290 000 and immediately brought it into use. The solar panels will generate electricity from photovoltaic solar energy not exceeding one megawatt. 4. Design Logos To have a competitive advantage, Deep Waters realised that they needed to register unique logos for the swimming club. An advertising company was identified to design these logos which will be registered as a trademark under the Trademark Act. On 30 September 2022, Deep Waters paid the advertising company R20 000 to design and register these logos. 5. Administration offices On 1 August 2012, Deep Waters entered into a 10-year lease agreement with a property agent for the lease of land which is located right next to the swimming club on which offices would be erected. Once the lease agreement expires, Deep Waters has the option to pay R500 000 to become the owner of the property. Deep Water exercised this option on 30 September 2022. The lease agreement stipulated that Deep Waters would lease these offices from the property agent and was obliged to: - Pay an annual premium of R80 000 from 1 August 2012 and - Erect a suite of offices on this land at a cost of R2 000000 . Deep Waters commenced with the erection of the suite of offices on 1 August 2012. These offices were completed on 31 January 2013 at a cost of R2 350000 and brought into use by Deep Waters as administrative offices the next day, on 1 February 2013

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