QUESTION 1 (36 marks)
Billy Khumalo is a 66-year-old South African resident who received the following income for the period 1 March 2022 to 28 February 2023:
- A monthly annuity of R22 500 from Golden Investment The capital portion that is calculated in terms of section 10A amounts to R5 100 per monthly annuity.
- Dividends of R11 000 for shares held in an American
- Dividends of R28 000 for shares held in a South African company.
- Interest income of R63 000 earned on a fixed deposit account held at a South African The fixed deposit account does not qualify as a tax-free investment.
- R9 000 which Billy Khumalo won at the Sun City casino. He visited the Sun City resort for a week while on holiday and decided one evening to gamble for the fun of it.
REQUIRED:
- Calculate Billy Khumalo’s income for the 2023 year of assessment. Include the applicable section of the Income Tax Act as part of your answer and show all If an amount is excluded, state this fact and provide a brief reason for your answer. (25 marks)
- Assume that Billy Khumalo had a taxable income of R242 189 for the 2023 year of
- Determine each of the following for Billy Khumalo, using the tax tables and information in Addendum A:
- His tax (1 mark)
- His net income tax payable to (7 marks)
- His marginal tax (1 mark)
- His effective tax (2 marks)
Competency Framework Reference:
| E1.3 | Application of tax legislation to calculate tax obligation |
| a) | Analyse the taxpayer’s tax profile. |
| c) | Apply the relevant law to the facts, determine the tax position and compute the tax
payable (VAT or normal tax) for individuals and companies. |
QUESTION 2 (8 marks)
Robert is a 36-year-old South African resident. He plays poker and bingo (popular gambling games) online. Robert used to be a waiter, however, after he discovered that he has a talent for gambling, he decided to quit his waitering job and pursue gambling full-time. He has now been a professional gambler since 2022. Robert is of the opinion that he does not have to declare the gambling winnings of R230 000 which he made during the 2023 year of assessment on his tax return.
REQUIRED:
Advise Robert if it is a lawful act (“the right thing to do”) to not declare his gambling winnings in his tax return for the 2023 year of assessment.(8 marks)
Competency Framework Reference:
| E1.3 | Application of tax legislation to calculate tax obligation |
| c) | Apply the relevant law to the facts, determine the tax position and compute the tax
payable (VAT or normal tax) for individuals and companies. |
| I1 | Personal ethics |
| a) | Act honestly and demonstrate integrity, accountability and trustworthiness whilst
interacting with others. |
| b) | Carry out work in a manner that protects public interest, the client, employer and
other relevant stakeholders, and put these before one’s own interest. |
| I2 | Business ethics |
| c) | Display ethical behaviour whilst interacting with the organisation’s stakeholders. |
| I3 | Professional ethics |
| g) | By way of general conduct, demonstrate a commitment to the ethical values
upheld by the profession. |
QUESTION 3 (29 marks)
The following four scenarios are all separate, unrelated scenarios:
Scenario 1
On 31 December 2022, Moses Rabele (a 43-year-old South African resident) was retrenched by his employer, Sweet & Salty (Pty) Ltd. Moses Rabele knows many Sweet & Salty (Pty) Ltd customers in the local community.
If a competing employer in the same region would employ Moses Rabele, it will be possible for him to persuade these Sweet & Salty (Pty) Ltd customers to become customers of his new employer. Sweet & Salty (Pty) Ltd therefore paid Moses Rabele R1 500 000 to restrain him from working for a competitor for five years.
Scenario 2
James Dean lives and works in Johannesburg. He inherited a house to the value of R2 255 000 from his late father. The house is situated in Cape Town, and since he will not move to Cape Town, he decided to sell the house. He sold the house for R2 450 000.
Scenario 3
Thabo Modise, a non-resident, received South African interest on 28 February 2023. During the 12 months preceding 28 February 2023 Thabo spent 184 days in South Africa. The rest of the time he travelled overseas for business purposes.
Scenario 4
Natasha Komane, a South African resident, works as a waitress at a restaurant in Cape Town. She is required to wear black pants and a white shirt when she is on duty as a waitress. During the 2023 year of assessment, she received R4 000 from the restaurant owner to purchase black pants and white shirts.
REQUIRED:
- With regards to Scenarios 1 and 2, discuss whether the amounts awarded will be included in gross income. Support your answer with references to the Income Tax
- Scenario 1 (5 marks)
- Scenario 2 (9 marks)
- With regards to Scenarios 3 and 4, discuss whether the amounts or benefits received are exempt from normal tax. Support your answer with references to the Income Tax Act.
- Scenario 3 (8 marks)
- Scenario 4 (7 marks)
Remember to clearly identify the relevant sections of the Income Tax Act applicable to the scenario, then provide the requirements of the Income Tax Act, whereafter you apply the Income Tax Act requirements to the facts of the scenario.
No calculations are required.
Competency Framework Reference:
| E1.3 | Application of tax legislation to calculate tax obligation |
| a) | Analyse the taxpayer’s tax profile. |
QUESTION 4 (27 marks)
During the 2023 year of assessment, Sandy Adams emigrated from South Africa. For the first 184 days (until 31 August 2022) of the 2023 year of assessment, she was ordinarily resident in South Africa and then not ordinarily resident for the remainder of the 2023 year of assessment. On 31 August 2022, she emigrated from South Africa.
The following is applicable to her past years of assessment:
- In the 2022 year of assessment Sandy Adams was physically present in South Africa for 365 days (and absent from South Africa for no days).
- In the 2021 year of assessment Sandy Adams was physically present in South Africa for 365 days (and absent from South Africa for no days).
- In the 2020 year of assessment Sandy Adams was physically present in South Africa for 366 days (and absent from South Africa for no days).
- In the 2019 year of assessment Sandy Adams was physically present in South Africa for 365 days (and absent from South Africa for no days).
- In the 2018 year of assessment Sandy Adams was physically present in South Africa for 365 days (and absent from South Africa for no days).
REQUIRED:
Discuss whether Sandy Williams qualifies as a resident of South Africa for the 2023 year of assessment in terms of the requirements of the physical presence test according to the Income Tax Act.
In your answer, remember to first state the requirements of the physical presence test, whereafter you apply the facts in the scenario to the requirements of the physical presence test.
(27 marks)
Competency Framework Reference:
| E1.3 | Application of tax legislation to calculate tax obligation |
| c) | Apply the relevant law to the facts, determine the tax position and compute the tax
payable (VAT or normal tax) for individuals and companies. |
Get Completed Answers on Taxation Assignment Above from Experts
Answer 1: The calculation of Billy Khumalo’s income for the 2023 year of assessment is performed as follows:
Hire the accounting assignment help experts of Student Life Saviour in South Africa to get assistance in all the above taxation questions.
Content Removal Request
If you believe that the content above belongs to you, and you don’t want it to be published anymore, then request for its removal by filling the details below. It will only be removed if you can provide sufficient evidence of its ownership.
