Assignment 2 The Taxation of Business Activities and Individuals TAX3761

ASSIGNMENT 2: TAX3761 QUESTION 1 (80 marks, 144 minutes) Gift (45 years old) and Portia (40 years old) are married in community of property. They have two minor children that are still in school. Gift is a South African resident and has been working as a sales representative for the past 20 years, for Organic Production and Distribution, a South African company that produces and distributes organic materials to farmers and nurseries, to enhance the growth process of crops, trees and plants. Gift’s information below is relevant to the 2021 year of assessment: Notes R Income/Receipts Total salary received from employer 600 000 Total commission income received from employer 1 200 000 Entertainment allowance received from employer Loan received from employer 1 2 18 000 300 000 Travel allowance received from employer 3 240 000 Use of employer equipment 4 ? Purchase of materials from employer for use in garden at let residence Gross rental receipts Foreign dividend received (not from a tax-free investment) 5 6 7 ? ? 3 600 Expenses/Contributions Entertainment expenditure Home office expenditure Rental expenditure Medical 1 6 6 8 20 000 ? ? ? Retirement fund contributions 9 ? Notes: 1. Entertainment allowance and entertainment expenditure Gift entertained customers on a frequent basis and received an entertainment allowance of R1 500 per month. He kept accurate records of the entertainment expenses, which amounted to R20 000 for the year of assessmen