Question 0ne

Daemon Steven is employed by an insurer to sell life insurance policies. He earns a fixed salary of R440 000 a year. He does not earn commission. During the 2023 year of assessment, Daemon also earned R400 000 in his spare time as a freelance computer programmer which was part of his business income. He had earned the following additional income for the year of assessment:

	R (South African Rand currency)
Rental income for a flat on rent	15 000 p/m
Interest income on a fixed deposit at a South African bank	264 600
Casino winnings	150 000

Daemon is not a vendor or registered as a micro business and incurred the following expenses during the 2023 year of assessment to promote his computer programming activities, he had the necessary documentation to indicate that these expenses were incurred in the production of his income:

	R (South African Rand currency)
Annual membership fee at the local squash club	24 000
Drinks and snacks at the club with other members (including Daemon's own costs of R4 000)	21 000
Ballpoint pens advertising his computer-programming services, presented to fellow squash players	3 000

Daemon has been conducting his computer programming business from his home since 1 July 2022. His office at home occupies 10% of the total floor area of his home. He also uses the television room (which occupies 5% of the floor area) as an office during the day. Both rooms have been specifically equipped for business purposes. He incurred the following expenses during the 2023 year of assessment on his home:

	R (South African Rand currency)
Mortgage bond repayments (R23 000 per month relating to capital repayments)	40 000 p/m
Cleaning and maintenance	60 000
New built-in cupboards installed in his office at home	40 000
Electricity, water and rates	66 000
Telephone (80% of its use being for his business). The Commissioner accepts this apportionment as being reasonable in terms of section 23(g)	17 600
Computer equipment purchased on 1 July 2021, which was brought into use immediately. (The acceptable write-off period of the equipment is three years.)	112 500

During the 2023 year of assessment, he incurred legal expenses in connection with:

	R (South African Rand currency)
The recovery of his trade debtors	10 000
Attempting to recover R5 000 in cash stolen from his computer programming receipts by his assistant during December 2022. She earned R30 000 a month for the two months that she was employed.	4 000

Daemon Steven is 40 years old and he, his wife and his four minor children are members of a registered medical scheme. His wife is a person with a "disability" as defined. He contributed R6 500 a month to the medical scheme. He also paid qualifying medical expenses of R10 500 that were not reimbursed by the medical scheme. Daemon's employer does not make a contribution to his medical aid.

NOTE: South African Revenue Service (SARS) 2023 tax year (1 March 2022 - 28 February 2023)

Taxable income (R) (South African Rand currency)	Rates of tax (R) (South African Rand currency)
1 - 226 000	18% of taxable income
226 001 - 353 100	40 680 + 26% of taxable income above 226 000
353 101 - 488 700	73 726 + 31% of taxable income above 353 100
488 701- 641 400	115 762 + 36% of taxable income above 488 700
641 401 - 817 600	170 734 + 39% of taxable income above 641 400
817 601 - 1 731 600	239 452 + 41% of taxable income above 817 600
1 731 601 and above	614 192 + 45% of taxable income above 1 731 600

YOU ARE REQUIRED TO calculate Daemon Steven's tax liability for the 2023 year of assessment.

Use the below format:

		R (South African Rand currency)
	Gross income
Less:	Exempt income (sections 10, 10A and 12T)	(XXXXXX)
Equals:	Income (as defined in section 1)	XXXXX
Less:	Allowable deductions (section 11 read in conjunction with section 23(m) and assessed losses (section 20))	(XXXXXX)
Add:	Taxable portion of allowances (section 8 - such as travel and subsistence allowances)	XXXXX
Add:	Taxable capital gains (section 26 A)	XXXXX
Equals:	Taxable income before retirement fund deduction	XXXXX
Less:	Retirement fund deduction (section 11F)	(XXXXXX)
Equals:	Taxable income before donation deduction	XXXXX
Less:	Donations deduction (section 18A)	(XXXXXX)
Equals:	Taxable income (as defined in section 1)	XXXXX
Multiply by	Tax rate (as per tax table)
Equals:	Tax liability	XXXXX
Less:	Rebates	(XXXXXX)
Equals:	Net normal tax payable	XXXXX
Less:	Prepaid taxes	(XXXXXX)
Equals:	Net tax due/(refundable)	XXXXX