QUESTION 1 (40 marks)

Linda, a 68-year-old South African resident, has been a full-time employee at Aqua Limited (‘Aqua’) since 2005. She works at Aqua’s Gauteng branch. The following information relates to Linda’s 2024 year of assessment:

1. Linda earned a monthly salary of R57 000 from Aqua for the period 1 March 2023 to 29 February 2024 (247 working days). Linda was obliged to work for a client of Aqua in America for a continuous period from 1 April 2023 until 31 August 2023 (113 working days).

2. After Linda returned from America, Aqua provided Linda with temporary residential accommodation in Gauteng from 1 October 2023 to 31 December 2023 before she relocated to Cape Town, South Africa, on 1 January 2024. Aqua rented a furnished,
4-bedroom property for R13 000 per month for Linda. Linda was responsible for covering the electricity cost. Linda’s remuneration proxy for the 2024 year of assessment is R500 000.

3. Linda was transferred to Aqua’s branch in Cape Town, South Africa on

1 January 2024. Linda signed an agreement to lease a house in Cape Town from

1 February 2024 for a period of two years. Linda arrived in Cape Town on 1

January 2024 and stayed in a hotel from that date until

31 January 2024, while waiting to move into her rental house. Aqua agreed to pay the hotel fees of R18 000 as well as the transport cost of R11 000 for Linda’s belongings, which were kept in storage.

4. Linda’s daughter, Susan, commenced her studies at the University of Johannesburg, a recognised educational institution, on 1 January 2024. Susan enrolled for an NQF level 6 qualification degree. Aqua awarded Susan with a bone fide study bursary of R45 000 on 1 January 2024. Linda’s remuneration proxy amounts to R500 000 for the 2024 year of assessment and her remuneration has not been reduced as a result of the granting of the bursary.

5. Aqua provides coffee and tea to all their employees at the different Aqua branches during business hours. The value of the coffee and tea that Linda enjoyed during the 2024 year of assessment during working hours at the office amounted to R8 000.

6. Linda must contact Aqua clients on a regular basis, Aqua therefore paid R10 000 to Telkom for all the calls Linda made during the 2024 year of assessment. Linda is not required to reimburse Aqua for her personal phone calls. Linda’s itemised billing indicates the following usage:

• Aqua client calls 820 minutes

• Personal calls 2 900 minutes

• Total usage 3 720 minutes

7. Linda is the main member of Medi-Health Medical Scheme, a registered medical scheme under the Medical Schemes Act of 1998. Medi-Health Medical Scheme recognises both Linda and Susan as registered dependents in accordance with the rules of the medical scheme. During the 2024 year of assessment, Linda contributed R1 700 per month to the Medi-Health Medical Scheme in respect of herself and Susan for the full 2024 year of assessment. Aqua also contributed R1 700 per month to Medi-Health Medical Scheme on behalf of Linda and Susan. Medi-Health Medical Scheme covered and/or reimbursed all Linda and Susan’s medical expenses they incurred during the 2024 year of assessment.

8. Linda holds 1 200 shares in an Australian company which declared and paid a dividend of R12.50 per share on 31 December 2023 to all registered shareholders on that date.

9. Linda received the following interest amounts during the 2024 year of assessment:

• Interest of R14 500 on a current bank account in America.

• Interest of R12 000 on a current bank account in South Africa.

10.In terms of an annuity contract concluded with First Insurance on 1 August 2023, Linda will receive R6 800 per month for the next 10 years. She paid R800 000 to First Insurance on 1 August 2023 and received the first payment on 1 September
2023. The total capital portion of the annuity received is R14 350 during the 2024 year of assessment.

11.On 20 December 2023 Linda donated R7 000 to the House of Angels, a qualifying section 18A Public Benefit Organisation.

REQUIRED:

Calculate Linda’s taxable income for the 2024 year of assessment as per the appropriate tax framework applicable to natural persons.

QUESTION 2 (11 marks)

Joseph, a 48-year-old South African resident, has been an employee of Pay Pick for several years. He earns a monthly salary of R17 000. 20% of Joseph’s salary is deducted as employees’ tax. In April 2020, Joseph started a side hustle to earn extra income. Joseph did not form a registered company, but he traded under the name “JosephJobs”. For the 2024 year of assessment, Joseph made a monthly profit of R6550 from this side business.

The following information relates to Joseph for the relevant years of assessment:

• Joseph estimates that his earnings for the 2024 year of assessment will be

R200 000.

• He submitted his 2021 tax return on 1 May 2023.

• He submitted the 2022 tax return on 31 October 2023.

• He was assessed for his 2021 tax year and received a letter verifying this on 22 June 2023.

• The assessed tax for the 2021 year of assessment was R270 000.

• The 2022 tax year was assessed on 24 December 2023 and was R210 000.

REQUIRED:

2.1What is the due date for submitting an individual’s first provisional tax return? (1 mark)

2.2Calculate what Joseph’s first provisional tax payment would be for the 2024 year of assessment if the payment were based on the basic amount and not on an estimate.
Show all your calculations and round your answers to the nearest rand.(10 marks)

QUESTION 3 (14 marks)

Marius, a 36-year-old South African resident, works as a sales representative at Tyre Ready (Pty) Ltd (‘Tyre Ready’). Marius received a travel allowance of R8 500 per month from Tyre Ready for the full 2024 year of assessment. During the 2024 year of assessment, he used a second-hand vehicle purchased by Tyre Ready for R250 000 (excluding VAT). He used the vehicle for a total of 249 days and did not keep accurate records of costs incurred. He travelled 24 700 km, and his logbook showed that 11 340 km were for business purposes.

REQUIRED:

Calculate the taxable amount of Marius’s travel allowance for the 2024 year of assessment.
Show all your calculations and round your answers to the nearest rand.

QUESTION 4 (35 marks)

Thabo is a South African resident who retired at the age of 60 on 31 August 2023. As a result of his retirement, he received the amounts below during the 2024 year of
assessment:

R

Lump sum from pension fund 620 000

Cash regarding accumulated leave 32 000

Monthly annuity from pension fund starting from 1 December 2023 8 000

Retirement lump sum from employer 85 000

Additional information:

• Thabo was a member of the pension fund for 33 years. All of his contributions were allowed as a deduction in the past.
• From the age of 55 years, Thabo has contributed an annual amount of R7 500 to a retirement annuity fund. He will retire from this fund when he turns 65 years old. Thabo contributed an additional R35 000 to the retirement annuity fund in December 2023 because of the large lump sums he received. Disallowed deductions up to 28 February 2023 totalled R34 000.
• Thabo earned a monthly salary of R12 700 when he retired. On 1 January 2023, his salary increased by 15%.
• Thabo’s only source of income for the 2024 year of assessment was his employment. The only deductions from his salary were his pension contributions of 7.5% and monthly medical aid contributions of R910 per month.
• Thabo incurred other qualifying medical expenses of R40 000 for the 2024 year of assessment. He was the only member of the medical aid fund. Thabo incurred no additional medical expenditure in the 2024 year of assessment and continued to pay medical aid contributions after his retirement.

REQUIRED:

Calculate Thabo’s tax liability for the 2024 year of assessment ending 29 February 2024 as per the appropriate tax framework applicable to natural persons.

Answers to Above Questions on Taxation

Answer 1: The calculation of Linda’s taxable income for the 2024 year of assessment as per the appropriate tax framework applicable to natural persons is performed as follows:

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