, QUESTION 1 (continued)
To calculate Saul's net normal tax for the year of assessment ended 28 February
2023, we need to determine his taxable income by subtracting allowable deductions
from his gross income. Then we can apply the appropriate tax rates to his taxable
income to calculate his tax liability, before taking into account any tax credits or
rebates.
1. Income from salary:
Salary earned for the year: R833 400
Add:
- Travel allowance: R72 000
- Bonus: R60 000
- Fringe benefit (vehicle): R210 000/1.15 = R182 608
- Employer contributions to pension fund: R30 000
- Employer contributions to medical scheme: R13 000
Total gross income: R1 161 008
2. Deductions:
- Contributions to pension fund: R30 000
- Contributions to retirement annuity fund: R180 000
- Medical scheme contributions: R26 000
- Qualifying medical expenses not reimbursed: R7 000
Total allowable deductions: R243 000
3. Taxable income:
Total gross income: R1 161 008
Less: Total allowable deductions: R243 000
Taxable income: R918 008
4. Tax liability:
Apply the tax rates for the 2023 year of assessment:
To calculate Saul's net normal tax for the year of assessment ended 28 February
2023, we need to determine his taxable income by subtracting allowable deductions
from his gross income. Then we can apply the appropriate tax rates to his taxable
income to calculate his tax liability, before taking into account any tax credits or
rebates.
1. Income from salary:
Salary earned for the year: R833 400
Add:
- Travel allowance: R72 000
- Bonus: R60 000
- Fringe benefit (vehicle): R210 000/1.15 = R182 608
- Employer contributions to pension fund: R30 000
- Employer contributions to medical scheme: R13 000
Total gross income: R1 161 008
2. Deductions:
- Contributions to pension fund: R30 000
- Contributions to retirement annuity fund: R180 000
- Medical scheme contributions: R26 000
- Qualifying medical expenses not reimbursed: R7 000
Total allowable deductions: R243 000
3. Taxable income:
Total gross income: R1 161 008
Less: Total allowable deductions: R243 000
Taxable income: R918 008
4. Tax liability:
Apply the tax rates for the 2023 year of assessment:
