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HIGHER EDUCATION PROGRAMMESAcademic Year 2 0 2 4 Formative Assessment 1 ( FA 1 ) : NQF Level, Credits:Weighting:Assessment Type:Educator:Examiner:January JuneIntroduction to Taxation ( HIT

HIGHER EDUCATION PROGRAMMESAcademic Year 2024Formative Assessment 1(FA1): NQF Level, Credits:Weighting:Assessment Type:Educator:Examiner:January JuneIntroduction to Taxation (HIT1181)5,1250%Essay QuestionsA. MbendeniA. Mbendeni Due Date: 28 March 2024 Total: 100 Marks Instructions:1HIT1181-Jan - June 2024-FA1-AM-V3-22012024 This paper consists of four (4) questions.It is based on units 1-4 of your textbook.All questions are compulsory.Consult the tax tables provided in Annexures A & B where applicable.Learning outcomes: Calculate tax value, wear and tear and recoupment on sale of a capital asset Calculate taxable lump sum and tax payable Calculate a tax liability as per the sliding scale table Understand the pre-paid taxes system Identify amounts that are specifically included in gross income Identify amounts that would be included in the general definition of gross income Calculate limited deduction in terms of S112 HIT1181-Jan - June 2024-FA1-AM-V3-22012024Question 1[51 Marks]Blue Vido Pty Ltd (Blue V) has the following three (3) employees during the tax year of assessment ending 29 February 2024.Employee 1: 18 marksAndileAndile, 77 years of age, is a Senior Manager at Blue V, a small-medium-sized manufacturing company in the center of Durban. He earned a monthly salary of R32500 until 31 December 2023, when he decided to retire due to health complications. Andile also received monthly local interest of R1250 from his investment and R70000 gross dividends from a foreign company. Andile also received R1000 monthly commission until 31 December 2023 and R13500 once-off bonus from his employer upon retirement. Andile also received R3000 quarterly local dividends.Employee 218 marksNalediNaledi, 35 years of age, is working as a Junior Accountant within a small accounting and taxation department. She earns a cash salary of R26000 per month. Due to the demand for her position, the company decided to increase her salary by 2.7% effective from 01 June 2023. Naledi received monthly local interest of R2000 from her investment and local dividends amounting to R13000. She earned a bonus of R17000 and a monthly commission of R1000. Naledi won R12500 from an accounting competition that was held by SAICA on 15 September 2023.3 HIT1181-Jan - June 2024-FA1-AM-V3-22012024Employee 315 marksVuyiswaVuyiswa, 66 years of age, is working as an Admin Clerk at Petroleum Garage. She earns a monthly salary of R10000 and an annual bonus of R10000. Vuyiswa has earned an annual commission of R8000, local dividends of R19000 and monthly local interest of R2000. Vuyiswa won R15000 in a local modelling competition. Petroleum Garage paid R2500 over to SARS as a provisional tax on behalf of Vuyiswa during the current year of assessment.Required:Calculate taxable income for all three (3) employees for the tax assessment year ending 29 February 2024. Briefly explain with reasons where items are not included/taxable with applicable sections of the Act. Show all your calculations and round off to the nearest Rand. 4 HIT1181-Jan - June 2024-FA1-AM-V3-22012024Question 2[31 Marks]During the 2022 year of assessment, Luyanda resigned and withdrew R2000000 from his pension fund. He transferred 50% of this pension fund to a pension preservation fund. During the 2023 year of assessment, Luyanda received a withdrawal benefit of R380000 from the pension preservation fund. During the 2024 year of assessment, she retired and received a retirement benefit of R800000.Required:Calculate the tax payable by Luyanda for the following years of assessment: Show all your calculations5HIT1181-Jan - June 2024-FA1-AM-V3-22012024 In the 2022 year of assessment In the 2023 year of assessment In the 2024 year of assessment7 marks 11 marks 13 marksQuestion 3[12 Marks]Nthabi is the owner of Brown Dee Limited (BD). BD purchased a delivery vehicle on 1 March 2021 for an amount of R280000. BD was entitled to a S11(e) allowance of 20% p.a, on the delivery vehicle.The delivery vehicle was sold on 1 November 2023 for an amount of R300000.Required:Use the above information to calculate both the tax value and the recoupment for the year ending 29 February 2024.6 HIT1181-Jan - June 2024-FA1-AM-V3-22012024Question 4[6 Marks]Briefly explain your understanding of exempt income and state four (4) types of exempt income provided for by the Income Tax Act.7 HIT1181-Jan - June 2024-FA1-AM-V3-22012024ANNEXURE A:Retirement Lump Sum Benefits2024 tax year (1 March 202329 February 2024) Taxable income (R)155000055000177000077000111550001155001 and aboveRate of tax0% of taxable income18% of taxable income above 55000039600+27% of taxable income above 770000143550+36% of taxable income above 1155000(1 March 201428 February 2023)Taxable income (R)150000050000170000070000110500001050001 and aboveWithdrawal BenefitRate of tax0% of taxable income18% of taxable income above 50000036000+27% of taxable income above 700000130500+36% of taxable income above 10500002024 tax year (1 March 202329 February 2024)Taxable income (R)1275002750172600072600110890001089001 and aboveRate of tax0% of taxable income18% of taxable income above 27500125730+27% of taxable income above 726000223740+36% of taxable income above 10890008HIT1181-Jan - June 2024-FA1-AM-V3-22012024(1 March 201428 February 2023)Taxable income (R)12500025001660000660001990000990001 and aboveRate of tax0% of taxable income18% of taxable income above 25000114300+27% of taxable income above 660000203400+36% of taxable income above 990000 ANNEXURE B:Interest Exemptions 2024 ratesPerson younger than 65 R23800 Person 65 and older R34500 Interest from a South African source earned by a natural person is exempt, per annum, up to an amount of: 9 HIT1181-Jan -

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