Martinez Hair Studio CC is a hairdressing salon. The salon is run from a shop that is situated in a shopping centre. The salon pays monthly rental for the shop of R10 000 on the 28th of each month. Apart from the set monthly rental, it also pays a 2% rental based on the annual turnover for the period 1 April 2015 to 31 March 2016 if the turnover exceeds R500 000.

The turnover for the current year of assessment, as at the end of February 2016, amounted to R485 000.

Required:

Discuss the deductibility of both the rentals in terms of the general deduction formula

for the current year of assessment (29 February 2016). List all the requirements

where necessary.