May-16
(a) SOLUTION TO QUESTION 1 PART A
BONGANI
NET NORMAL TAX
Salary (R) 60 000
Commission (R ) 400 000
Right of use (R )
(160 000 x 1.14 x 0.85 x 6 x 3.5%) 32 558
Less reduction
Business travel 15000/18000 x 32 558 -27 132
Fuel 3 000 x 1,068 -3 204
Taxable Fringe benefit 2 223 2 223
Fringe benefit - life policy 3 200
Low interest loan - (official interest - rate paid) x loan (R )
(7%+1% - 2%) x 50 000 x 90/365 740
Fringe benefit of property (1 300 000 - 1 200 000) (R ) 100 000
Low interest loan 1 200 000 x (10% - 6%) X 28/365 3 682
Foreign dividends - 8 000 8 000
Less: Exempt 25/45 X 8,000
Foreign interest -4 444
Local interest 32 000
Exemption -23 800
Subtotal 605 400
Contribution 42 000
Limited to lesser of 350 000
1) 350000 and
2) Greater of:
i) 27,5% of remuneration (27,5% x 600 000) 165 000
ii) 27,5% of taxable income subtotal 166 485
Therefore use R42 000 -42 000
Taxable income 563 400
Tax 3702 May/June 2016
(a) SOLUTION TO QUESTION 1 PART A
BONGANI
NET NORMAL TAX
Salary (R) 60 000
Commission (R ) 400 000
Right of use (R )
(160 000 x 1.14 x 0.85 x 6 x 3.5%) 32 558
Less reduction
Business travel 15000/18000 x 32 558 -27 132
Fuel 3 000 x 1,068 -3 204
Taxable Fringe benefit 2 223 2 223
Fringe benefit - life policy 3 200
Low interest loan - (official interest - rate paid) x loan (R )
(7%+1% - 2%) x 50 000 x 90/365 740
Fringe benefit of property (1 300 000 - 1 200 000) (R ) 100 000
Low interest loan 1 200 000 x (10% - 6%) X 28/365 3 682
Foreign dividends - 8 000 8 000
Less: Exempt 25/45 X 8,000
Foreign interest -4 444
Local interest 32 000
Exemption -23 800
Subtotal 605 400
Contribution 42 000
Limited to lesser of 350 000
1) 350000 and
2) Greater of:
i) 27,5% of remuneration (27,5% x 600 000) 165 000
ii) 27,5% of taxable income subtotal 166 485
Therefore use R42 000 -42 000
Taxable income 563 400
Tax 3702 May/June 2016