Class question
Sam Sammy, 35 years old is a sheep and maize farmer. He is an ordinary resident
of the Republic. The following information sets out his activities for 2025 year of
assessment.
1. Sheep movements during the year were as follows:
Description Rams Ewes Wethers Weaned
lambs
Number of sheep on hand at 28 40 2000 500 1500
February 2025
Sales – normal (note 3) 200 300 600
Sales – abnormal (note 3) 500 200 300
Purchase (note 4) 2 600
Births 1500
Transfers 3 500 197 (700)
Donations received (note 5) 200
Thefts 50 10
Deaths 50 4 100
Donation made to a local school 7
Slaughter for domestic use 20
Slaughter for rations 36
2. The following unit values pertain to the category of sheep as detailed above for the
2025 year of assessment
Description Standard Average Market value
value cost price
Rams 6 1400 2500
Wethers 6 270 600
Ewes 6 540 900
Weaned lambs 2 225 300
3. Normal sales were transacted at market value (see above), all livestock sales took
place in the Republic
Sale of livestock – abnormal. These sheep were sold due to the severe drought
conditions which occurred during the 2025 year of assessment. The wethers were
sold for R400 each, weaned lambs for R250 each and ewes for R600 each. Sam
Sammy earned interest on an investment was R17 500 for 2025 year of
assessment.
4. Two rams were purchased for R5 000 each and 600 ewes for R800 each.
5. After the drought Sam received 200 ewes as a gift from his father.
6. Produce (stock, consumption and disposal)
Value of growing crops – 28 February 2024 500 000
Value of crops reaped but not sold – 28 February 2024 (at cost 50 000
of production to date)
Value of growing crops – 28 February 2025 750 000
Value of crops reaped but not sold – 28 February 2025 (at cost 150 000
of production to date)
Consumption of produce (at cost of production)
• Sam Sammy 6 000
• Labourers 30 000
• Livestock 250 000
(The market value of produce is 200% of its cost)
Sale of produce 330 000
7. Government subsidies received
Interest paid 5 000
Prevention of soil erosion costs 7 500
Erection of pumping plant 4 000
8. Sundry revenue consists of the following
Interest received from SWK on the retention of portion of the 15 000
purchase price of maize supplied to SWK by Sam Sammy
Sale of wool 25 000
Profit share from restaurant business 75 000
9. Farming and other expenditure are the following:
Animal feeds 120 000
Pumping plant cost 20 000
Interest paid 15 000
Prevention of soil erosion costs 22 500
Insurance premiums paid over the farm property and equipment 5 000
Sinking of boreholes 25 000
Seeds and fertilizer 30 000
Veterinary expenses
• Livestock 10 000
• Pets 1 000
Wages 340 000
Medical expenses
• Sam Sammy 12 000
• Labourers 18 000
Unredeemed capital development expenditure at 1 March 2024
40 00
10. Details of Fixed assets:
COST
Farm plough purchased on 1 May 2024 100 000
Farm tractor purchased on 1 June 2023 370 000
Farm fire fighter purchased on 1 September 2022 10 000
Office furniture purchased on 1 August 2024 15 000
Farm tractor sold on 1 May 2024 for R55 000, which had a Nil 50 000
Tax value on 1 March 2024
The commissioner of inland revenue approved a write-off period of 6 years on the
assets which qualify therefore
Required
Calculate Sam Sammy 2025 taxable income. All the items mentioned above must
appear in your solution to show its inclusion in or omission from your calculation.
Give reasons to support your answer.