Student+Approach+to+Income+tax_Natural+
Persons_Solution.
1
Introduction to taxation
and calculation of net tax
payable
Additional questions
Question 1.4
Gerhard Swarts is 50 years old, unmarried and works on a full-time basis at Green Ltd.
Gerhard earned a salary of R200 000 during the cu...
, Introduction to taxation
1 and calculation of net tax
payable
Additional questions
Question 1.4
Gerhard Swarts is 50 years old, unmarried and works on a full-time basis at Green Ltd.
Gerhard earned a salary of R200 000 during the current year of assessment and a bonus of
R20 000.
Gerhard invested R400 000 with a local collective investment scheme (not a tax free
investment). He elected the reinvestment option. The result of this is that no amount was
paid to him; all the proceeds were reinvested in the fund. During the current year of
assessment, interest amounting to R40 300 and dividends of R50 000 were reinvested.
Gerhard owns a flat in Durban, which he lets during the year. He received rental income
of R80 000 during the current year of assessment and incurred deductible rental costs of
R50 000.
Green Ltd deducted employees’ tax of R29 391 from Gerhard’s salary and bonus. Gerhard
also paid provisional tax amounting to R2 600.
You are required to:
Calculate Gerhard’s net tax liability for the current year of assessment.
Answer 1.4
Calculation of Gerhard’s net tax liability: R
Gross income
• Salary 200 000
• Bonus 20 000
• Dividends 50 000
• Interest 40 300
• Rental received 80 000
390 300
continued
1
,A Student’s Approach to Income Tax/Natural persons
R
Less: Exempt income
• Interest received (23 800)
• Dividends received (50 000)
Income 316 500
Less: Deductions
• Rental costs (50 000)
Taxable income 266 500
Normal tax on taxable income 54 250
(R33 840 + (26% × (R266 500 – R188 000)))
Less: Rebates
• Primary (13 500)
Net normal tax payable 40 750
Less: Prepaid tax
• Employees’ tax (29 391)
• Provisional tax (2 600)
Net tax payable by Gerhard 8 759
2
, Chap
Ch pte
er 2
S lutio
Sol on
n to
oqqu
uesstiion
ns reece
eiv
ved
Q estiion
Que n 2.1
Thhe ph
hysiicall prresencce ttestt (ccou
untiing
g th
he n
num
mbeer oof ddayys iin SSou
uth
h A fricca) is only
ussed
d when
w n th he perrso
on iis not
n ord din
nariily res
r ideent in thee Repuubllic.
Q estiion
Que n 2.6
No, you
N u oonly
y gget tax
xed d att thhe eearlliesst oof rreceeipt o r a ccrrual. SShee w
will nott b e taaxeed
w n th
whe he ammou unt is rrecceiv
vedd ass it waas alre
a eady y ta
axeed wh
when it aacccrueed to hherr.
Q estiion
Que n 2.8
Yes, as lonng as the aamoounnt hhass beeen
n in
nclu
udeed iin tthee grrosss innco
omee an
nd theree is a
lim
mittatiion
n on
n th
he aamo
oun
nt tthaat you cann ta
akee ou
ut of
o tthatt coounntry y you wiill q
quaalify
y fo
or
th
he ded
d ducctio on.
Q estiion
Que n 2.133
1.. N
No, yo ou hav
h ve tto ccon nsidder all thee faactoorss ass yo
ou hhavve to
t ddeccidee onn th
he bal
b lancce ofo
p bab
prob bilitty iif itt iss a rrecceip
pt oof a caapittal or revvennuee naature. If yyou u oonly
y coonssideer
th
he facctorrs th hatt in ndiccatee thhat thee ammooun nt reeceeiveed is
i ccapitall in
n naatu
ure y
youu coulld
a ise yo
adv our cliientt in ncorrrectly y annd wiill llosee mark
m ks in tthee ex xam m.
2.. Iff an
n a mooun nt iss caapiital in naaturre, it w will n ot b be inccluddedd in
n ggrosss i nco
omme bbut it
coulld sstilll bee suubjectt to capittal gai g ins tax x (ssee lateer in
i tthe boook k).
Q estiion
Que n 2.144
No, theere are d
N difffereent rules thhat willl aapp
ply if a ppersson
n iss noot aa reesid
den
nt. Th
hat is
w y itt iss allwaayss im
why mporttantt to o aapp
ply thhe oord
dinaryy reesid dennt tesst aandd p
phyysical
prresencce ttestt to
o deeterrmiinee if a pers
p son n is a resi
r ideent or nott.
Q estiion
Que n 2.166
No, if tthee am
N mou
untt iss onne oof tthee sp
peccial incclu
usio
ons,, yoou do
o noot hhav
ve tto d
disscusss oor
co
onssideer the
t generral defin nitio
on.
1
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