Summary TAX MAY SOLUTION

(a) SOLUTION TO QUESTION 1 PART A


CASSIM
NET NORMAL TAX FOR THE 2014 YEAR OF ASSESSMENT

Salary (R ) 620 000

Purchased annuity
Annuity 30 000
Less capital portion (250000/2500x12x29,54)x30000 (8 463)
21 537 21 537
Bursary (R )
Exempt - Taxpayer will refund employer if studies not complete -

Travel allowance (R )
Allowance 7 500 x 10 75 000
Less reduction 111 665
Limited to zero (36 665) -
Reduction is greater of:
Actual 85 644
Deemed 111 665

Total kms 17 500
Private kms 6 100
Business kms 11 400
Deemed cost/km
Determined value (cost plus VAT) 520 000

Fixed cost 153 850
Total km/s 17 500
Total days 304

Fixed cost/km(153 850/17 500)x304/365 7.322
Fuel cost/km 1.584
Maintenance cost/km 0.889
Total cost/km 9.795
Total deemed travel cost (Bus kms x rate) 111 665

Actual cost/km

Wear and tear (520000/7)x304/365 61 871
Finance charges 56 800
Running costs 12 800
Total cost 131 471
Total cost/km (131471/17500) 7.513
Total actual cost (Bus kms x rate) 85 644