CAS3701
ASSIGNMENT 11 2024
UNIQUE NO.
DUE DATE: 13 SEPTEMBER 2024
, CAS3701
Assignment 11 2024
Unique Number:
Due Date: 13 September 2024
Capstone in Accounting Sciences
QUESTION 1
TASK 1
a) Registration of Non-Facilitator Employees as Taxpayers
Under South African tax law, any individual who earns income, whether through
employment or otherwise, is required to be registered as a taxpayer. According to
Section 1 of the Income Tax Act No. 58 of 1962, individuals earning above the tax
threshold must be registered for income tax. For the 2023/2024 tax year, the annual tax
threshold is R95,750 for individuals below the age of 65. The five non-facilitator
employees each earn a gross salary of R15,000 per month, which amounts to R180,000
per year, well above the tax threshold. Therefore, these employees are required by law
to be registered as taxpayers.
Furthermore, LearnCo. is obligated to withhold Pay-As-You-Earn (PAYE) tax on their
salaries, as stipulated by Paragraph 2(1) of the Fourth Schedule to the Income Tax
Act. This provision mandates employers to deduct tax from any remuneration paid to an
employee. By not deducting PAYE from the salaries of these employees, LearnCo. is
non-compliant with its legal obligations.
In addition, the Tax Administration Act No. 28 of 2011 requires that all taxpayers be
registered and provide a valid tax number. Employers must ensure that employees are
registered with the South African Revenue Service (SARS) and submit the necessary
, information regarding tax deductions, including UIF contributions, which are also a
statutory requirement under the Unemployment Insurance Contributions Act No. 4
of 2002.
b) Recommended Treatment of Employee Salaries
To comply with the relevant tax laws, LearnCo. must rectify its treatment of the non-
facilitator employees' salaries in both its financial and non-financial records:
1. Financial Records:
o The salaries of the non-facilitator employees should be recorded under
employee costs in the income statement and not as general expenses.
The current classification misrepresents the nature of these costs and
could lead to incorrect financial reporting.
o PAYE, UIF, and other applicable deductions must be calculated
retrospectively from the time these employees started receiving their
salaries. This may involve paying backdated tax amounts and penalties if
necessary.
2. Non-Financial Records:
o The non-facilitator employees must be added to the official employee
database in Revolve X, and their salaries should be processed through
the payroll system.
o LearnCo. must assist these employees in registering with SARS for tax
numbers and include them in the regular payroll cycle, ensuring that all
statutory deductions are made correctly.
o This will also ensure compliance with UIF regulations, providing these
employees with the necessary coverage and benefits.
TASK 2
