Stucco Ltd

Stucco Ltd, a tile manufacturer, reported a profit before tax of R5 000 000 for the year ended 31 December 2022.

Included in the profit before tax are the following:

The deferred tax liability in the Statement of Financial Position at 31 December 2021 and 31 December 2022 is R168 000 and R126 000, respectively.

Temporary differences comprise the following:

• On 1 January 2019, the company acquired plant at a cost of R1 000 000. It is the company’s policy to depreciate plant over 5 years using the straight-line method. Capital allowances allowed by SARS on the plant are on the 40:20:20:20 basis.
• The following balances at 31 December 2022:

• SARS grants deductions for expenses when it is paid.

Assume that sufficient future taxable profits will be available against which deductible temporary differences can be utilised.

The company’s tax rate is 28%.

 Source: Adapted from Daniels, J.C. 2023.