Tax Workbook 2017/2018 (LATEST UPDATE EXAM PREDICTION 2021)

explained by using frameworks to calculate the tax liability. The chapter includes definitions in terms of the various Acts to explain the frameworks. These basic frameworks will be applied in practical situations. The goal of this chapter is therefore to help you to orientate yourself where different taxes are concerned. L Exam technique If this Workbook is used properly, it will assist you in mastering taxation at graduate level. Attempt to do all examples on your own and then mark your attempts. This will help you to identify the issues that you do not understand. Refer to the prescribed textbook and study the part that you do not understand. The following technique is recommended when attempting to do the examples and questions: Step 1: Read the required part. At this stage you should identify the following: • The type of question, that is, whether it is a calculation question or a discussion question or a combination of both. At graduate level the focus is more on calculation questions. The verb used (“calculate” or “discuss”) will identify the type of question. When attempting to answer a discussion question, provide one short sentence for each mark. Discussion questions may require calculations as well. Remember, if you are required to discuss something in a question and you only provide calculations, no marks will be awarded. • The outcome expected, for example, if you are required to calculate all the tax consequences for a given period, then all the taxes that might be applicable must be evaluated. Remember that during your studies you will deal with the Income Tax Act 58 of 1962 as amended (which includes normal tax, withholding taxes and donations tax), the Value-Added Tax Act 89 of 1991 as amended, the Estate Duty Act 45 of 1955 as amended and the Tax Administration Act 28 of 2011 as amended. You further have to remember that the Republic does not have a separate capital gains tax and that the taxable capital gain forms part of normal tax. At graduate level this information is usually provided and an indication will be given in the “Required” section, for example, to calculate only the normal tax liability of a taxpayer for a given period. continued Tax Workbook 4 Step 2: Evaluate the way in which the information is provided. • If the question consists of different short parts, it is an indication that you should read through all the information provided before attempting to do the question. If it is a discussion question, you also have to read through all the information. If it is a calculation question with references to notes, you can do the question while reading through the information at the same time. Be on the lookout for notes that contain general information. Step 3: Analyse and interpret the information. • While reading through the information provided, you should start thinking about how to apply the information. Excess information is seldom given. • Establish the critical aspects of the question, for example: – identify the taxpayer/s; – determine the age of a natural person (for example, natural persons who have attained the age of 65 years are treated more favourably and persons who attained the age of 75 qualify for an additional rebate of R2 466); – identify whether the person is ordinarily resident in the Republic or deemed to be a resident for tax purposes (different rules regarding the residence issue apply to the different forms of taxes); – identify whether the taxpayer is registered for VAT purposes; – identify the tax period, for example whether it is a year or period of assessment (normal tax), or VAT period (ranging from one month, two months, four months, six months or yearly periods for VAT purposes). Step 4: Plan the outlay of your solution. • The following outlay is recommended for calculation questions: – divide your page into three or more columns (refer to example 1.9); – in column one, write down the issue at stake. Use column two for calculations/discussions, and in column three provide your final solution (refer to example 1.9); – leave enough space between issues; – always show your calculations. • Start each solution on a new page. • Write neatly. Please remember that the outlay of the solutions in the Tax Workbook is in textbook format to make the use of the Workbook easier and to ensure a uniform style throughout the book. Normally students are not required to explain answers, unless the question specifically asks for it. L Contents In this Workbook we are going to deal with the Income Tax Act 58 of 1962 as amended, the Value-Added Tax Act 89 of 1991 as amended, the Estate Duty Act 45 of 1955 as amended and the Tax Administration Act 28 of 2011 as amended. The table gives an indication of the time that you will need to complete the example or question. The relevant sections or paragraphs, if applicable, that you need to know before attempting the example or question are provided and the level of the example or question gives an indication of the difficulty of the question. Chapter 1 Taxation frameworks 5  Example/Question and time allocation Topic and/or relevant sections Level Example 1.1 (8 minutes) • Taxable income Basic Example 1.2 (8 minutes) • Normal tax liability Basic Example 1.3 (18 minutes) • Normal tax due Intermediary Example 1.4 (15 minutes) • Normal tax payable Intermediary Example 1.5 (8 minutes) • Non-residents Basic Example 1.6 (12 minutes) • Dividends tax and normal tax on companies Basic Example 1.7 (8 minutes) • Donations tax Basic Example 1.8 (5 minutes) • Estate duty Basic Example 1.9 (10 minutes) • Value-added tax Basic Question 1.1 (15 minutes) • Normal tax due or refundable Intermediary Question 1.2 (20 minutes) • Normal tax liability (married in community of property) Intermediary Question 1.3 (25 minutes) • Normal tax Intermediary Question 1.4 (25 minutes) • Normal tax Intermediary