SUGGESTED SOLUTION - 5.

4
1.

Travel Allowance
Cannot use actual expenditure, therefore only use deemed expenditure with actual kilometres
Total kms
28 750
Private kms
( 19 750)
Business kms
9 000
Actual mileage with deemed expenditure
Deemed expenditure:
Fixed cost from table
Fixed cost in cents per km

120 997
120 997

/28 750

Maintenance - not all paid for by taxpayer

Fuel
Reduction in cents per km

420.86
0.00
147.90
568.76

Predicted reduction in travel allowance (9 000 x 568.76cents)

51 188

Allowance received
Reduction
Inclusion in taxable income

57 600
( 51 188)
6 412

Entertainment allowance
Allowance received - R1 000 x 12
Amount accounted for
Amount refunded
Inclusion in taxable income
2.

12 000
( 4 950)
( 3 500)
3 550

Fringe benefits
Star contribution to pension fund - not a FB
Star contribution to medical aid
Watch - asset acq at less than actual value
- purchased to give to Jacob therefore use cost
- no reduction as not long service or bravery
Cash lumpsum not a FB

3a. Gross income

Cash Salary
Commissions
Fringe benefits (from 2)
Cash Lumpsum
Other gross income

600 x 12 =

7 200
34 200

R21 000 x 12
R450m x 8/18 x 0.1%
full marks if apportion by months
7 200 + 34 200

3b. Taxable income

Income (same as gross income - no exemptions)
s11(k) pension fund contribution deduction - actual contr
- employer contr not included as not a FB
limited to greater of:

252 000
200 000
41 400
100 000
120 000
713 400

713 400
20 160
1 750

7.5% x 252 000 =

Therefore s11(k) pension fund deduction is
> excess not carried forward to following year
Arrear portion from last year not deductible
- less than R1 800 limit therefore all deductible

18 900
( 18 900)
3 200 - 1 800
( 1 400)

Other allowable deductions

( 42 000)

Entertainment allowance
Travel allowance

3 550
6 412
661 062

less s11(n) RAF deduction

current portion - actual contr
Limited to the greater of:
R 1 750
1 750
R3 500 - 18 900 (current pension contr only) = N/A
0
15% x (661 062 - 252 000 + 20 300) =
64 404
Therefore current s11(n) RAF deduction is
Arrear portion - none carried forward from last year as all deducted (<1800)
Therefore s11(n) RAF deduction is

less s 18A Donations

limited to 10% x 657 823

13 200

13 200
( 13 200)
657 823
50 000
65 782

Taxable income

4.

Tax liability
Taxable income from 3b

607 823

Tax per tables = R140074 + [38% x (R607 823 - R528 000)]

Less Primary rebate
Less s6A rebate

( 50 000)
607 823
607 823

170 407
( 12 726)

(514 + 172) * 12

( 8 232)

Less s6B rebate

Contributions
less 4 x s6A rebate
Qualifying expenses
less 7.5% of taxable income
s6B rebate = 9033 * 25%
Less employees tax
Tax payable/(refundable) by SARS

14 400
( 32 928)
0
54 000
54 000
( 45 587)
8 413
( 2 258)
( 162 424)
( 15 233)