4 CTAX120 Sept /Nov 2021 QUESTION 2 (24 marks, 29 minutes) Thandiwe is to be promoted to the position of regional manager on 1 January 2021. Her employer has offered her a choice of one of two possible benefits. She can either receive a monthly travel allowance or she can receive the right use of a company motor vehicle. Based on accurate estimates that she provides, Thandiwe has asked you to calculate the tax consequences of each benefit for the period from 1 January 2021 until the end of the 2021 year of assessment. Travel allowance option Thandiwe could use her own vehicle for work-related travel, and receive a travel allowance of R8 000 per month from 1 January 2021 until the end of the year of assessment. During that period, Thandiwe estimates that she will travel a total of 2 200 kilometres. She also estimates that 70% of that travel will be work related Thandiwe originally purchased her vehicle at a cost of R270 000 (VAT exclusive) on 1 June 2019. Thandiwe further estimates that her vehicle's total expenses, from 1 January 2021 until the end of the year of assessment, will amount to the following: 0 Maintenance costs - R900 o Fuel costs - R1 800 o Interest charges on a loan used to finance the acquisition of the vehicle - R9 000 o Capital repayments on a loan used to finance the acquisition of the vehicle - R3 000 Right of use of motor vehicle option Thandiwe could alternatively receive the right of use of an employer-owned motor vehicle from 1 January 2021 until the end of the year of assessment. Her employer originally purchased the vehicle on 1 November 2019 at a cost of R360 000 (VAT exclusive). The vehicle is subject to maintenance plan and Thandiwe would not be required to pay for the vehicle's fuel. During that period, Thandiwe also estimates that she will travel a total of 2 200 kilometres in the company car. She estimates that 70% of her travel will be work related. REQUIRED: MARKS a) Based on the estimates provided, calculate the tax consequences of each benefit for the period ended 28 February 2021. [23] b) Solely from a tax perspective, advise Thandiwe which benefit to choose, based on the above calculations. [1] 4 CTAX120 Sept /Nov 2021 QUESTION 2 (24 marks, 29 minutes) Thandiwe is to be promoted to the position of regional manager on 1 January 2021. Her employer has offered her a choice of one of two possible benefits. She can either receive a monthly travel allowance or she can receive the right use of a company motor vehicle. Based on accurate estimates that she provides, Thandiwe has asked you to calculate the tax consequences of each benefit for the period from 1 January 2021 until the end of the 2021 year of assessment. Travel allowance option Thandiwe could use her own vehicle for work-related travel, and receive a travel allowance of R8 000 per month from 1 January 2021 until the end of the year of assessment. During that period, Thandiwe estimates that she will travel a total of 2 200 kilometres. She also estimates that 70% of that travel will be work related Thandiwe originally purchased her vehicle at a cost of R270 000 (VAT exclusive) on 1 June 2019. Thandiwe further estimates that her vehicle's total expenses, from 1 January 2021 until the end of the year of assessment, will amount to the following: 0 Maintenance costs - R900 o Fuel costs - R1 800 o Interest charges on a loan used to finance the acquisition of the vehicle - R9 000 o Capital repayments on a loan used to finance the acquisition of the vehicle - R3 000 Right of use of motor vehicle option Thandiwe could alternatively receive the right of use of an employer-owned motor vehicle from 1 January 2021 until the end of the year of assessment. Her employer originally purchased the vehicle on 1 November 2019 at a cost of R360 000 (VAT exclusive). The vehicle is subject to maintenance plan and Thandiwe would not be required to pay for the vehicle's fuel. During that period, Thandiwe also estimates that she will travel a total of 2 200 kilometres in the company car. She estimates that 70% of her travel will be work related. REQUIRED: MARKS a) Based on the estimates provided, calculate the tax consequences of each benefit for the period ended 28 February 2021. [23] b) Solely from a tax perspective, advise Thandiwe which benefit to choose, based on the above calculations. [1]