May-17 Paper 1
(a) SOLUTION TO QUESTION 1 PART A
KENNETH
NET NORMAL TAX
Salary (R) 780 000
Travel allowance
Allowance 100 000
Less reduction 121 933
Limited to zero (21 933) -
Reduction is greater of:
Actual 94 797
Deemed 121 933
Business kms 8 100
Private kms 2 300
Total kms 10 400
Deemed cost/km
Determined value (cost plus VAT) 444 600
Fixed cost 133 177
Total km/s 10 400
Total days 365
Fixed cost/km(133177/10400)x365/365 12.805
Fuel cost/km 1.532
Maintenance cost/km 0.716
Total cost/km 15.053
Total deemed travel cost (Bus kms x rate) 121 933
Actual cost/km
Wear and tear (Determined value/7) 63 514
Finance charges 96 800/4 24 200
Other expenses 34 000
Total cost 121 714
Cost per km = (total cost/total kms) 11.70
Total actual travel cost (Bus kms x rate) 94 797
Residential accommodation
Not owned by the employer, Use lower of cost or formulae
Cost to employer - 9 500 x 10 95 000 95 000
(69 000 x 12 - 78 150) x 18/100 x 10/12 112 478
Restraint of trade - Specific inclusion 900 000
Tax 3702 May
2017 - Paper 1
(a) SOLUTION TO QUESTION 1 PART A
KENNETH
NET NORMAL TAX
Salary (R) 780 000
Travel allowance
Allowance 100 000
Less reduction 121 933
Limited to zero (21 933) -
Reduction is greater of:
Actual 94 797
Deemed 121 933
Business kms 8 100
Private kms 2 300
Total kms 10 400
Deemed cost/km
Determined value (cost plus VAT) 444 600
Fixed cost 133 177
Total km/s 10 400
Total days 365
Fixed cost/km(133177/10400)x365/365 12.805
Fuel cost/km 1.532
Maintenance cost/km 0.716
Total cost/km 15.053
Total deemed travel cost (Bus kms x rate) 121 933
Actual cost/km
Wear and tear (Determined value/7) 63 514
Finance charges 96 800/4 24 200
Other expenses 34 000
Total cost 121 714
Cost per km = (total cost/total kms) 11.70
Total actual travel cost (Bus kms x rate) 94 797
Residential accommodation
Not owned by the employer, Use lower of cost or formulae
Cost to employer - 9 500 x 10 95 000 95 000
(69 000 x 12 - 78 150) x 18/100 x 10/12 112 478
Restraint of trade - Specific inclusion 900 000
Tax 3702 May
2017 - Paper 1
