erato Modise is a resident for South African income tax purposes. She is $45$ years old

and works as a reporter for a local newspaper company, Today Limited. Her duties

include researching potential stories for reporting and writing front$-$page news articles on

these stories.

Lerato Modise started to work for Today Limited on $1$ March $2022.$ According to her

employment contract with Today Limited, her remuneration package for the $2023$ year of

assessment is made up as follows:

$$ A cash salary of R$26000$ a month.

$$ She contributes $7,5\%$ of her monthly cash salary to Today Limited$$s pension fund.

Today Limited contributes, on a rand$-$for$-$rand basis, the same amount to the

pension fund.

$$ An entertainment allowance of R$1200$ a month. Her duties regularly and

necessarily involve entertaining to seek potential front$-$page news stories.

$$ The free use of a motor car that was purchased by Today Limited for R$460000$

$($including value$-$added tax at $15\%).$ Today Limited bears the full cost of

maintenance. She is$,$ however, required to pay for the fuel for her private use of

the motor car. Lerato has maintained full records of her use of the company motor

car. The logbook that she kept indicates that she travelled only $5500$private$$

kilometres in the company motor car out of a total of $19500$ kilometres travelled

in the company motor car during the $2023$ year of assessment.

$$ The free use of a fully furnished three$-$bedroomed flat owned by Today Limited.

Although she does not pay any rent for the use of the company flat, she is obliged

to pay for the electricity and water. Her $$remuneration proxy$$ is R$215000.$ She

incurred R$48600$ in the $2023$ year of assessment for electricity and water.

$$ The use of a cellular telephone that cost Today Limited R$10350($including valueadded

tax at $15\%).$ Rental and call charges paid by the company during the $2023$

year of assessment were R$6750.$ She is on call when she is not in the office and

the cellular telephone is essential to fulfil that obligation. Her private use of the

cellular telephone is incidental to her business use.

$4$ HTAX$230-1-$Jan$-$June$2023-$SuppSA$1-$ELK$-$V$3-16082022$

$$ She was invited to participate in Today Limited$$s share incentive scheme. On $1$

June $2022$ she was offered and agreed to purchase, $12000$ shares in Today

Limited at their current market value of R$6$ each. There are no restrictions attached

to these shares. The shares vested in her and she settled the full purchase price.

She received dividends of R$1\mathrm{.}50$ per share for the $2023$ year of assessment.

$$ Since she sometimes carries out Today Limited$$s work from her home office, the

company purchased a personal computer, at a cost of R$19000$ to be kept at her

home, and solely for her use. She has estimated that she uses this computer to

the extent of $35\%$ to write work$-$related articles.

$$ So that she could access her work e$-$mails from her home, Today Limited also

provided her with a communication service. This communication service cost the

company R$300$ a month. She has enjoyed the benefit of this communication

service since $1$ December $2022.$ She has estimated that she uses this

communication service to the extent of $70\%$ for her work.

Lerato Modise$$s other receipts, accruals, contributions, and expenses for the $2023$

year of assessment are as follows:

o Contributions of R$2100$ per month to Today Limited$$s medical scheme. On

a rand$-$for$-$rand basis, the company contributes a like amount to this

medical scheme because of her membership.

o She is the sole member of this medical scheme, and her daughter is also a

member of her medical scheme. She also paid $$qualifying medical

expenses$$ of R$31500,$ being her share of the $$qualifying medical expenses$$

that she had incurred.

o She donated R$7800$ to a local charity organisation and obtained a valid

section $18$A certificate for the donation made.

o Local interest of R$26780$ accrued to Lerato Modise from a savings

investment account, not being a $$tax free investment$.$

$5$ HTAX$230-1-$Jan$-$June$2023-$SuppSA$1-$ELK$-$V$3-16082022$

REQUIRED:

Calculate Lerato Modise$$s normal tax liability for the $2023$ year of assessment. Show all

calculations and round all answers to the nearest Rand.

$(60$ marks$)$

Competency Framework Reference:

E$1\mathrm{.}3$ Application of tax legislation to calculate tax obligation

c$)$

Apply the relevant law to the facts, determine the tax position and

compute the tax payable $($VAT or normal tax$)$ for individuals and

companies$\mathrm{.}2023$ tax year $(1$ March $202228$ February $2023)$

Taxable Income $($R$)$ Rates of tax $($R$)$

$122600018\%$ of taxable income

$22600135310040680+26\%$ of taxable income above $226000$

$35310148870073726+31\%$ of taxable income above $353100$

$488701641400115762+36\%$ of taxable income above $488700$

$641401817600170734+39\%$ of taxable income above $641400$

$8176011731600239452+41\%$ of taxable income above $817$

Tax Rebates $2023$

Primary $16425$

Secondary $(65$ and older$)9000$

Tertiary $(75$ and older$)299$