ndile Black, aged 45, is a South African resident. He owns a business that deals mainly with brick laying and distribution in Tugela Ferry. The business has two trucks that are used for the distribution of bricks to clients. Andile hired two truck drivers and six general workers. The following expenditure were incurred by Andile on behalf of his business during the 2019 year of assessment: 1. One of his trucks was involved in an accident while delivering bricks to a client. The accident resulted in the injury of two employees and they had to be admitted to a local hospital. Due to this incident, Andile paid R70 000 medical costs on behalf of his employees that were involved in accident. 2. Andile incurred a cost of R30 000 to acquire a vacant land that he requires for parking purposes for the clients of his business. He also currently has no warehouse to store finished bricks and rents the space from Makhubo at a fee of R2 000 on a monthly basis. In addition to the monthly rental fee, Andile is required to pay Makhubo a 1% rental fee of the annual revenue for the period of 1 May 2018 to 30 April 2019 only if his annual revenue exceeds R550 000. Andiles business made a revenue of R630 000 for the period 1 May 2018 to 30 April 2019. 3. Andile paid an amount of R120 000 for salaries and wages of his employees. Andile erected a billboard (costing R35 000) on the pavement next to his business premises for advertisement purposes of his business. He also paid a total advertisement fee of R40 000 to the local newspaper for the advert of his business that will appear on the every Mondays newspaper. He never consulted with the local municipality before he erected the billboard. The municipality instructed him to remove the billboard because it was obstructing pedestrians. He was fined R8 000 by the municipality for this. He also paid R2 000 for the billboard to be removed and put inside his business premises.

MODULE	TAXATION 2A
TOTAL MARKS	60 MARKS

1 REQUIRED: In terms of the general deduction formula, discuss the deductibility of each expenditure incurred by Andile Black for his business for the current year of assessment. Quote relevant case law to support your argument. Question 2 (17 Marks) 2.1 Bob Miller received a travel allowance from his employer amounting to R65 000 for the current year of assessment. He uses his car for business and private travels. He bought this car a year ago for R230 000 (including VAT). Bob travelled a total of 14 500 kilometres during the current year of assessment, of which 9 500 were for private purposes. He also kept an accurate record of expenses incurred in respect of the car for the current year of assessment. The costs are as follows: R

Finance charges	39 555
Maintenance cost	5 500
Fuel cost	11 500
Insurance premiums and licences fees	4 250

Required: Calculate the taxable portion of the travel allowance received by Bob for the 2019 year of assessment. (17 marks) USE THE FOLLOWING INFORMATION TO ANSWER QUESTIONS 3 AND 4 Rueben Nyamayi is 54 years old. He is married and has one 17-year-old child. He had the following income and expenses for the current year of assessment: Income Salary R150 000 Bonus received (non-pensionable) R13 000 Dividends: From a South African company R2 800 Taxable foreign dividend R26 200 Interest received: South African savings account R23 400 Foreign bank account R5 290 Rental income from a source within South Africa R26 000 2 Expenses Medical expenses Rueben belongs to a medical aid scheme. His wife and daughter are listed as dependents. His employer contributes R800 per month to the medical aid scheme in respect of his membership, and Rueben contributes R850 per month. Rueben incurred further qualifying medical expenses of R25 500 during the year of assessment. These expenses were not covered by his medical aid.

Pension fund contribution for the year current Retirement annuity fund contributions on monthly basis current Rueben pays 100% of his contributions to all retirement funds.

8% of salary R350

He made the following donations during the year: Donation to Natal University R500 Donation to AIDS crisis centre (public benefit organisation) R7 500 Local Boy Scout Troop (not a public benefit organisation) R1 500 During the year of assessment, Rueben was obliged to spend four days away from his usual place of residence in the Republic for business purposes. He received an allowance of R2 500 from his employer. He is able to prove that he incurred expenses of R900 on meals and incidental expenditure. In addition to the above amounts, Rueben realised a capital gain of R80 000 and capital loss of R10 000 during the current year of assessment. Prepaid taxes An amount of R10 400 was deducted by his employer from his monthly salary for employees tax. Rueben is a registered provisional taxpayer and he paid provisional tax of R4 000 during the current year of assessment. Question 3 (17 Marks) Calculate Rueben Nyamayi's taxable income before retirement and donation deductions for the 2019 year of assessment. Question 4 (16 Marks) Assuming Ruebens taxable income before retirement fund and donation deductions is R249 282, calculate his taxable income for the 2019 year of assessment (after donation and retirement fund deductions). END OF PAPER 3 APPENDICES Appendix 1: tax table for 2019 tax year (1 March 2018 28 February 2019)

Taxable income (R)	Rates of tax (R)
0 195 850	18% of taxable income
195 851 305 850	35 253 + 26% of taxable income above 195 850
305 851 423 300	63 853 + 31% of taxable income above 305 850
423 301 555 600	100 263 + 36% of taxable income above 423 300
555 601 708 310	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

Appendix 2: Tax rebates for 2019 tax year (1 March 2018 28 February 2019)

Tax Rebate
Primary	R14 067
Secondary (65 and older, but under 75)	R7 713
Tertiary (75 and older)	R2 574

Appendix 3: Medical tax credit rates for 2019 tax year (1 March 2018 28 February 2019)

Medical tax credit rate per month
For the taxpayer who paid the medical scheme contributions	R310
For the first dependant	R310
For each additional dependant(s)	R209

Appendix 4: Deemed cost per kilometer for 2019 tax year (1 March 2018 - 28 February 2019)

Value of the vehicle (R)	Fixed cost per annum (R)	Fuel cost (cent/km)	Maintenance cost (cent/km)
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	116.0	47.5
255 001 - 340 000	92 683	124.8	51.9
340 001 - 425 000	112 443	133.5	60.9
425 001 - 510 000	133 147	153.2	71.6
510 001 - 595 000	153 850	158.4	88.9
more than 595 000	153 850	158.4	88.9