Joe Majola (aged 52) is a resident of the Republic. He is employed as a Human Resources Manager at a large firm in Johannesburg, Joe owns a Kia Sportage which cost R460 000 (including VAT of R60 000). He uses his own car for business purposes on a regular basis as he travels between the company's head office and local branches regularly. All costs in respect of the car are paid for by Joe, but he has not kept a record of the expenses paid. Joe received a travel allowance of R7 500 per month from his employer for the 2020 year of assessment. He used his car for business purposes for the full year of assessment. He is uncertain of the tax consequences that will arise from this allowance as it is the first year that he has received such an allowance. Joe maintained a logbook which reflects that during the 2020 year of assessment, his opening odometer reading on 1 March 2019 was 65,250 kilometres and his closing odometer reading on 29 February 2020 was 96,430 kilometres. The logbook also reflects that he travelled 13,250 kilometres for business purposes. Required 1. Calculate the taxable portion of Joe's travel allowance for the 2020 year of assessment, (8) 2. Calculate the amount of the travel allowance to be included in Joe's monthly "remuneration" as defined, for employees' tax purposes, (2) TAXATION TABLES AND RATES COMPANIES AND CLOSE CORPORATIONS 2019/2020 year of assessment 28% SMALL BUSINESS CORPORATIONS (SBC) Financial years ending on any date between 1 April 2019 and 31 March 2020: Taxable income (R) Rate of Tax (R) 0 - 79 000 0% of taxable income 79 001 - 365 000 7% of taxable income above 79 000 365 001 - 550 000 20020 +21% of taxable income above 365 000 550 001 and above 58 870 + 28% of the amount above 550 000 Financial years ending on any date between 1 April 2018 and 31 March 2019: Taxable Income (R) Rate of Tax (R) 0 - 78 150 0% of taxable income 78 151 - 365 000 7% of taxable income above 78 150 365001 - 550 000 20080 + 21% of taxable income above 365 000 550001 and above 58 930 + 28% of the amount above 550 000 TURNOVER TAX FOR MICRO BUSINESSES 2019 & 2020 years of assessment Taxable turnover (R) Rate of tax (R) 0 - 335 000 0% of taxable turnover 335001 - 500 000 1% of taxable turnover above 335 000 500 001 - 750 000 1 650 + 2% of taxable tumover above 500 000 750 001 and above 6 650 + 3% of taxable tumover above 750 000 VALUE-ADDED TAX (VAT) From 1 April 2018 15% Prior to 1 April 2018 14% RATES OF TAX FOR INDIVIDUALS 2019 tax year (1 March 2018 - 28 February 2019) & 2020 tax year (1 March 2019-29 February 2020) Taxable income (R) Rates of tax (R) 1 - 195 850 18% of taxable income 195 851 - 305 850 35 253 + 26% of taxable income above 195 850 305851 - 423 300 63 853 +31% of taxable income above 305 850 423 301 - 555 600 100 263 + 36% of taxable income above 423 300 555601 - 708 310 147 891 + 39% of taxable income above 555 600 708 311 - 1 500 000 207 448 + 41% of taxable income above 708 310 1 500 001 and above 532 041 + 45% of taxable income above 1 500 000 Tax Rebates Tax Rebate Younger than 65 65 and older 75 and older 2019 R14067 R21 780 R24 354 2020 R14 220 R22014 R24615 Exempt Income (2019 & 2020 year of assessment) Total interest exemption including foreign interest Below 65 R23 800 65 and over R34 500 Medical Scheme Credit (monthly) Main member Main member with one dependant Main member with two dependants 2019 R310 R620 R829 2020 R310 R620 R829 Each additional de pendant qualifies for a further rebate or credit of R209(2019 : R209) per month. Travel allowance - cost scale - 2019 and 2020 years of assessment Value of the vehicle including VAT (R) Fixed cost (Rp.a) Fuel cost (c/km) Maintenance cost (clkm) 0 - 85 000 28 352 95.7 34.4 85 001 - 170 000 50 631 106.8 43.1 170 001 - 255 000 72 983 1 16.0 47.5 255001 - 340 000 92 683 124.8 51.9 340001 - 425 000 112 443 133.5 60.9 425001 - 510 000 133 147 153.2 71.6 510001 - 595 000 153 850 158.4 88.9 more than 595 000 153 850 158.4 88.9 CAPITAL GAINS TAX (CGT) 2019 & 2020 years of assessment Inclusion rates Individuals, special trusts and individual policyholder funds 40% Other taxpayers 80% Exclusions Individuals (annual non-cumulative): R40 000 Individuals in year of death: R300 000 Primary residence exclusion on the disposal of a primary residence: R2milion (gain/loss) Small business assets (when a person is at least 55 years of age): R1.8 million when a small business with a market value not exceeding R10 milion is disposed of Joe Majola (aged 52) is a resident of the Republic. He is employed as a Human Resources Manager at a large firm in Johannesburg, Joe owns a Kia Sportage which cost R460 000 (including VAT of R60 000). He uses his own car for business purposes on a regular basis as he travels between the company's head office and local branches regularly. All costs in respect of the car are paid for by Joe, but he has not kept a record of the expenses paid. Joe received a travel allowance of R7 500 per month from his employer for the 2020 year of assessment. He used his car for business purposes for the full year of assessment. He is uncertain of the tax consequences that will arise from this allowance as it is the first year that he has received such an allowance. Joe maintained a logbook which reflects that during the 2020 year of assessment, his opening odometer reading on 1 March 2019 was 65,250 kilometres and his closing odometer reading on 29 February 2020 was 96,430 kilometres. The logbook also reflects that he travelled 13,250 kilometres for business purposes. Required 1. Calculate the taxable portion of Joe's travel allowance for the 2020 year of assessment, (8) 2. Calculate the amount of the travel allowance to be included in Joe's monthly "remuneration" as defined, for employees' tax purposes, (2) TAXATION TABLES AND RATES COMPANIES AND CLOSE CORPORATIONS 2019/2020 year of assessment 28% SMALL BUSINESS CORPORATIONS (SBC) Financial years ending on any date between 1 April 2019 and 31 March 2020: Taxable income (R) Rate of Tax (R) 0 - 79 000 0% of taxable income 79 001 - 365 000 7% of taxable income above 79 000 365 001 - 550 000 20020 +21% of taxable income above 365 000 550 001 and above 58 870 + 28% of the amount above 550 000 Financial years ending on any date between 1 April 2018 and 31 March 2019: Taxable Income (R) Rate of Tax (R) 0 - 78 150 0% of taxable income 78 151 - 365 000 7% of taxable income above 78 150 365001 - 550 000 20080 + 21% of taxable income above 365 000 550001 and above 58 930 + 28% of the amount above 550 000 TURNOVER TAX FOR MICRO BUSINESSES 2019 & 2020 years of assessment Taxable turnover (R) Rate of tax (R) 0 - 335 000 0% of taxable turnover 335001 - 500 000 1% of taxable turnover above 335 000 500 001 - 750 000 1 650 + 2% of taxable tumover above 500 000 750 001 and above 6 650 + 3% of taxable tumover above 750 000 VALUE-ADDED TAX (VAT) From 1 April 2018 15% Prior to 1 April 2018 14% RATES OF TAX FOR INDIVIDUALS 2019 tax year (1 March 2018 - 28 February 2019) & 2020 tax year (1 March 2019-29 February 2020) Taxable income (R) Rates of tax (R) 1 - 195 850 18% of taxable income 195 851 - 305 850 35 253 + 26% of taxable income above 195 850 305851 - 423 300 63 853 +31% of taxable income above 305 850 423 301 - 555 600 100 263 + 36% of taxable income above 423 300 555601 - 708 310 147 891 + 39% of taxable income above 555 600 708 311 - 1 500 000 207 448 + 41% of taxable income above 708 310 1 500 001 and above 532 041 + 45% of taxable income above 1 500 000 Tax Rebates Tax Rebate Younger than 65 65 and older 75 and older 2019 R14067 R21 780 R24 354 2020 R14 220 R22014 R24615 Exempt Income (2019 & 2020 year of assessment) Total interest exemption including foreign interest Below 65 R23 800 65 and over R34 500 Medical Scheme Credit (monthly) Main member Main member with one dependant Main member with two dependants 2019 R310 R620 R829 2020 R310 R620 R829 Each additional de pendant qualifies for a further rebate or credit of R209(2019 : R209) per month. Travel allowance - cost scale - 2019 and 2020 years of assessment Value of the vehicle including VAT (R) Fixed cost (Rp.a) Fuel cost (c/km) Maintenance cost (clkm) 0 - 85 000 28 352 95.7 34.4 85 001 - 170 000 50 631 106.8 43.1 170 001 - 255 000 72 983 1 16.0 47.5 255001 - 340 000 92 683 124.8 51.9 340001 - 425 000 112 443 133.5 60.9 425001 - 510 000 133 147 153.2 71.6 510001 - 595 000 153 850 158.4 88.9 more than 595 000 153 850 158.4 88.9 CAPITAL GAINS TAX (CGT) 2019 & 2020 years of assessment Inclusion rates Individuals, special trusts and individual policyholder funds 40% Other taxpayers 80% Exclusions Individuals (annual non-cumulative): R40 000 Individuals in year of death: R300 000 Primary residence exclusion on the disposal of a primary residence: R2milion (gain/loss) Small business assets (when a person is at least 55 years of age): R1.8 million when a small business with a market value not exceeding R10 milion is disposed of