TAX1501_ (Taxation of salaried persons) EXAM PACK.

TAX1501_ EXAM PACK. Calculation of the tax liability or (tax refund) Salary (170 000 x 12) Foreign dividends 62000 Less exemption(26/41 x62 000) (39317) Local interest 15000 Less exemption 23800 limited to (15000) 15000 Less Deductions Retirement Annuity fund contributions (50 400 + 1500 +60 000+ 500)=R112 400 Limited to the greater of 27.5% x 2062 683 =R567 238 Or 27.5% x 2040 000 =R561 000 Deduction limited to the lesser of R 567 238 And R 350 000. deduction actual contributions Taxable income Normal tax as per tables +41% x(-) Less rebate Less medical scheme fees tax credit [(286 x 2)+192]x12 Additional Qualifying medical expense tax credit Medical aid contributions: Employee 36 000 Employer - Less 3 x 9168 (27 504) Excess contributions 8946 Add Qualifying medical expenses 22000 30 496 Additional qualifying medical expense credit 33.3% x 30496 Net normal tax payable Less employees tax paid Tax liability R 2040 000 22683 - 2062 683 (112 400) 19 50 283 (13500) (9168) (10155) 686 224 () Downloaded by: ntlesco | Distribution of this document is illegal S - The study-notes marketplace 5 QUESTION 2 Reimburse allowance (not a benefit) Travel allowance (12000 x12) less business travel : business km =42100km deemed cost/km vehicle value x 1.14 =461 700 fixed cost = =2.270 55200 fuel 132 /100 = 1.320 maintenance 64/100 = 0.640 4.230 Actual cost /km Wear and tear 461 700 = 65 957 7 Fuel =12110 Service fee = 3000 Finance charges =65848 Capital repayments(*not allowed) Cost /km 146 915 55 200 2.661 .;. use the deemed cost Business travel 4.230 x42100 No benefit Subsistence allowance Received R1 300 x5 Tax free allowance 1500 x5 (7500) No taxable benefit - Residential Accommodation (A+B)x C X D 100 12 () X 19/100 x9/12 35625 Less consideration paid (1500 x9) (13500) - 144 000 (178 083) 0 6500 - 22125 - Downloaded by: ntlesco | Distribution of this document is illegal S - The study-notes marketplace 6 b) Gross income is: The total amount in cash or otherwise R230 000 is the amount which could be realized from the sale of the penguin (otherwise) Received by or accrued to or in favor of a resident the amount will be received by Maurice During the year of assessment: December 2015 is in the 2016(current) year of assessment Not of a capital nature: Maurice is not in the business of selling penguins and therefore the amount will be capital in nature Conclusion: The amount is capital and should not be included in gross income QUESTION 3 a) Calculation of the taxable capital gain/loss Primary residence proceeds less base cost valuation date value (calculation 1) add costs incurred on/after 1 October 2001 improvements selling cots capital gain less business portion (25% x 2013 329) Less primary residence exclusion R2000 000 Limited to R1509 997 Capital gain Taxable capital gain at 40% 2013 329 (50 3332) R 3100 000 (1086 671) (745 671) (320 000) (21 000) 503 332 1509 997 (1509 997) - 503 332 201 333 Calculation 1: proceeds 3100 000 expenditure (+32000+21 000) .;. Paragraph 26 is used: Valuation date value is the highest of : Market value =R or Time Apportionment base cost = R745 671 or 20% Rule =20% x(-21 000) =R .;. VDV =745 671 Downloaded by: ntlesco | Distribution of this document is illegal S - The study-notes marketplace 7 Question 3 b) Profit =net selling price –tax Net selling price = () 3079 000 Less tax paid (24 000) Possible donation amount 3055 000 c) For a donation to be deductible, the done should issue a section 18A receipt to the donor. The donation will be limited to 10% of the donor’s taxable income Taxable income (160 000) Less donation R3000 000 limited to 10%x160 000 = 16 000 (16 000) .; .the donation can only be limited to R16 000 Question 4 Part A Output VAT Sales(1200 000 x14/100) Input VAT Purchase(500 000 x14/100) Interest paid (exempt financial service) Salaries(not a supply) Furniture(5200 x14/114) Telephone expenses(3000 x14/100) Vat payable() 168 000 168 000 76 806 70 000 - - 6386 420 91 195 Question 4 PART B 1. Not deductible 2. Deductible 3. Not deductible(prohibited) 4. deductible Downloaded by: ntlesco | Distribution of this document is illegal S - The study-notes marketplace 8 OCT/NOV 2016 memo Question 1 Part A: Calculation of net normal tax Salary Bonus Local dividends Less exemption Foreign interest Less deductions Pension fund contribution 26400 limited to the Higher of :27.5%x 392 200 =107 855