TAX 399 SUMMARIES
Alexandra Shtein
THIRD YEAR
,Table of Contents
GENERAL ................................................................................................................................................ 2
GROSS INCOME ..................................................................................................................................... 8
DEDUCTIONS & ALLOWANCES ...........................................................................................................23
VALUE ADDED TAX (VAT)................................................................................................................57
CAPITAL GAINS TAX....................................................................................................................... 124
TRADING STOCK................................................................................................................................ 186
FOREIGN EXCHANGE ......................................................................................................................... 196
DIVIDENDS TAX................................................................................................................................ 209
INTEGRATION OF SECTIONS ......................................................................................................... 213
, GENERAL
YEAR OF ASSESSMENT:
NP and trust: 1 March 2020 – 28 Feb 2021
Company: financial year ends in 2021 calendar year
eg: 1 July 2019 – 30 June 2020
eg: 1 Jan 2020 – 31 Dec 2020
DEALING WITH A COMPANY!
• Progressive tax table ð not applicable to company (NOT a natural person)
• NO REBATES:
- no section 6(2) rebates
- section 6A/6B rebates (cannot be main member of medical scheme)
GROSS INCOME GROSS INCOME
Salary / Services rendered / Commission par(c) of gross income definition in s1(1)
Services rendered
Local dividends par(k) of gross income definition in s1(1)
Foreign dividends par(k) of gross income definition in s1(1)
South African source interest General definition of gross income definition in s1(1)
Foreign interest
Dividends from tax-free investment
Interest from tax-free investment
Uniform
Study Bursary
Relocation costs
Employer’s contribution to provident fund
Excessive salary excess amount
Other 7th schedule benefits
Severance Benefit must be shown in COLUMN 3, all other amounts in column 1
LESS: EXEMPTIONS LESS: EXEMPTIONS
remember: REIT dividend is not exempt:
Local dividends
proviso (aa) to s10(1)(k)
Foreign dividends participation exemption s10B(2)(a):
Participation exemption, if TP holds ≥10% of shares and voting rights in foreign company declaring
dividend
Foreign dividends ratio exemption dividend x 25/45 (natural person)
South African source interest s10(i)(ii): exemption limit:
R23 800 = younger than R65 000
R34 500 = older than 65
Dividends from tax-free investment
Interest from tax-free investment
, Uniform s10(1)(nA): full exempt unless not required by employer to wear uniform
Study Bursary s10(1)(q):
Relocation costs
Foreign remuneration
INCOME: SUBTOTAL 1 INCOME: SUBTOTAL 1
Less: s11(a) deductions only if the 6 requirements are met:
1) Expenditure and losses
2) During the YoA
3) Actually incurred
4) In the production of income
5) Not of a capital nature and
6) Laid out for trade purposes
NB: excessive expenditure – can only deduct the FAIR amount
note: for foreign rental income
limit = 100 000 + (foreign dividend – exemption)
SUBTOTAL 2 SUBTOTAL 2
Less: Assessed loss from a previous year of BALANCE of assessed loss
è look if ring-fencing applies
assessment s20
SUBTOTAL 3 SUBTOTAL 3
Add: other amounts included in ‘taxable travel / subsistence allowances
income’
SUBTOTAL 4 SUBTOTAL 4
Add: Taxable Capital Gain
SUBTOTAL 5 SUBTOTAL 5
Less: Section 11F Deductions s11F(2): deduction limited to the LOWER of:
(contributions to any retirement or - R350 000
provident funds) - subtotal 4 * must have receipt
- higher of :
§ 27,5% of remuneration
§ 27,5% of subtotal 5
SUBTOTAL 6 SUBTOTAL 6
Less: Section 18A Deductions LOWER OF:
contribution or limited to a max of 10% of taxable income subtotal 6
(contributions to a PBO)
TAXABLE INCOME TAXABLE INCOME
normal tax payable on column 3 amounts must be shown BEFORE the rebate!
a) The person must have reached the age of 55 years;
(SEVERANCE BENEFITS)
b) The loss of office was due to the person becoming ill or incapacitated (unable to work) ; or
c) The loss of office was due to the employer ceasing business, or due to a general reduction
in personnel / certain class
Alexandra Shtein
THIRD YEAR
,Table of Contents
GENERAL ................................................................................................................................................ 2
GROSS INCOME ..................................................................................................................................... 8
DEDUCTIONS & ALLOWANCES ...........................................................................................................23
VALUE ADDED TAX (VAT)................................................................................................................57
CAPITAL GAINS TAX....................................................................................................................... 124
TRADING STOCK................................................................................................................................ 186
FOREIGN EXCHANGE ......................................................................................................................... 196
DIVIDENDS TAX................................................................................................................................ 209
INTEGRATION OF SECTIONS ......................................................................................................... 213
, GENERAL
YEAR OF ASSESSMENT:
NP and trust: 1 March 2020 – 28 Feb 2021
Company: financial year ends in 2021 calendar year
eg: 1 July 2019 – 30 June 2020
eg: 1 Jan 2020 – 31 Dec 2020
DEALING WITH A COMPANY!
• Progressive tax table ð not applicable to company (NOT a natural person)
• NO REBATES:
- no section 6(2) rebates
- section 6A/6B rebates (cannot be main member of medical scheme)
GROSS INCOME GROSS INCOME
Salary / Services rendered / Commission par(c) of gross income definition in s1(1)
Services rendered
Local dividends par(k) of gross income definition in s1(1)
Foreign dividends par(k) of gross income definition in s1(1)
South African source interest General definition of gross income definition in s1(1)
Foreign interest
Dividends from tax-free investment
Interest from tax-free investment
Uniform
Study Bursary
Relocation costs
Employer’s contribution to provident fund
Excessive salary excess amount
Other 7th schedule benefits
Severance Benefit must be shown in COLUMN 3, all other amounts in column 1
LESS: EXEMPTIONS LESS: EXEMPTIONS
remember: REIT dividend is not exempt:
Local dividends
proviso (aa) to s10(1)(k)
Foreign dividends participation exemption s10B(2)(a):
Participation exemption, if TP holds ≥10% of shares and voting rights in foreign company declaring
dividend
Foreign dividends ratio exemption dividend x 25/45 (natural person)
South African source interest s10(i)(ii): exemption limit:
R23 800 = younger than R65 000
R34 500 = older than 65
Dividends from tax-free investment
Interest from tax-free investment
, Uniform s10(1)(nA): full exempt unless not required by employer to wear uniform
Study Bursary s10(1)(q):
Relocation costs
Foreign remuneration
INCOME: SUBTOTAL 1 INCOME: SUBTOTAL 1
Less: s11(a) deductions only if the 6 requirements are met:
1) Expenditure and losses
2) During the YoA
3) Actually incurred
4) In the production of income
5) Not of a capital nature and
6) Laid out for trade purposes
NB: excessive expenditure – can only deduct the FAIR amount
note: for foreign rental income
limit = 100 000 + (foreign dividend – exemption)
SUBTOTAL 2 SUBTOTAL 2
Less: Assessed loss from a previous year of BALANCE of assessed loss
è look if ring-fencing applies
assessment s20
SUBTOTAL 3 SUBTOTAL 3
Add: other amounts included in ‘taxable travel / subsistence allowances
income’
SUBTOTAL 4 SUBTOTAL 4
Add: Taxable Capital Gain
SUBTOTAL 5 SUBTOTAL 5
Less: Section 11F Deductions s11F(2): deduction limited to the LOWER of:
(contributions to any retirement or - R350 000
provident funds) - subtotal 4 * must have receipt
- higher of :
§ 27,5% of remuneration
§ 27,5% of subtotal 5
SUBTOTAL 6 SUBTOTAL 6
Less: Section 18A Deductions LOWER OF:
contribution or limited to a max of 10% of taxable income subtotal 6
(contributions to a PBO)
TAXABLE INCOME TAXABLE INCOME
normal tax payable on column 3 amounts must be shown BEFORE the rebate!
a) The person must have reached the age of 55 years;
(SEVERANCE BENEFITS)
b) The loss of office was due to the person becoming ill or incapacitated (unable to work) ; or
c) The loss of office was due to the employer ceasing business, or due to a general reduction
in personnel / certain class
