May-18 Paper 1
SOLUTION TO QUESTION 1 PART A
SIMON
NET NORMAL TAX
Salary (R) 750 000
Subsistence allowance 400
Allowance 3 900
Less reduction (3 500)
Limited to zero 400
Reduction is the greater of:
1) Actual : 2 600 + 600 + 300 = 3 500 3 500
2) Deemed: 416 x 6 2 496
Therefore use actual
Annuity - specific inclusion 60 000
Use of cellphone - private use is incidental -
Loan from employer - low interest loan
(7.75 - 4) x 250 000 x 59/365 1 515
Repo rate plus 1% = official interest
Foreign interest 2 000
Gross foreign dividends 4 000
Exemption 25/45 x 4 000 (2 222)
Provident contribution fringe benefit 20 000
Medical Fringe benefit 12 000
Subtotal 847 693
Provident Fund contributions - Employee 40 000
Provident Fund contributions - Employer 20 000
Retirement contributions 190 000
Total contribution 250 000
Limited to the lesser of:
350000 and 350 000
27.5% of Remuneration (785 900) or 216 123 (233 116)
27.5% of subtotal 233 116
Limit is therefore claim contributions 233 116
Disallowed deductions carried forward into the next year 16 884
Taxable income 614 578
Tax 3702 May
2018 Paper 1
SOLUTION TO QUESTION 1 PART A
SIMON
NET NORMAL TAX
Salary (R) 750 000
Subsistence allowance 400
Allowance 3 900
Less reduction (3 500)
Limited to zero 400
Reduction is the greater of:
1) Actual : 2 600 + 600 + 300 = 3 500 3 500
2) Deemed: 416 x 6 2 496
Therefore use actual
Annuity - specific inclusion 60 000
Use of cellphone - private use is incidental -
Loan from employer - low interest loan
(7.75 - 4) x 250 000 x 59/365 1 515
Repo rate plus 1% = official interest
Foreign interest 2 000
Gross foreign dividends 4 000
Exemption 25/45 x 4 000 (2 222)
Provident contribution fringe benefit 20 000
Medical Fringe benefit 12 000
Subtotal 847 693
Provident Fund contributions - Employee 40 000
Provident Fund contributions - Employer 20 000
Retirement contributions 190 000
Total contribution 250 000
Limited to the lesser of:
350000 and 350 000
27.5% of Remuneration (785 900) or 216 123 (233 116)
27.5% of subtotal 233 116
Limit is therefore claim contributions 233 116
Disallowed deductions carried forward into the next year 16 884
Taxable income 614 578
Tax 3702 May
2018 Paper 1
