QUESTION $1$

$(35$ marks$)$

Michael Peterson, a $58-$year old South African resident, is married out of community

of property to Linda Peterson. Michael has a deep passion for education and has been

employed as a Senior Lecturer at Westbridge College, a recognised institution, for the

past $25$ years. His receipts and accruals during the $2024$ year of assessment were as

follows:

Michael receives a monthly salary of R$60000$ from Westbridge College. Instead

of paying him, the University pays his wife Linda.

Michael owns a townhouse in Green Point, Cape Town. He entered into a lease

agreement with Mr$.$ Ben on $1$ June $2023$ for a period of $12$ months. Michael

rented the house to Mr$.$ Ben, fully furnished. Under the lease agreement, Mr$.$

Ben was required to pay Michael the following amounts:

An upfront lump sum of R$15000$ upon signing the lease agreement.

Monthly rental of R$25000$ payable on or before the $1$st of each month.

A rental deposit amounting to R$50000,$ equivalent to two months' rent,

to cover any damages such as breakage of cutlery, appliances or

furniture. The deposit will be held in a separate trust bank account.

Mr$.$ Ben voluntarily made improvements to the value of R$30000$ to the leased

townhouse.oh

Michael chose to pursue a doctoral degree at Westbridge Coll

REQUIRED:

Calculate Michael Peterson's income for his $2024$ year of assessment.

Include the applicable section of the Income Tax Act as part of your answer and

show all calculations.

If an amount is excluded, state this fact and provide a brief reason for your

answer.

Ignore any capital gains tax implications, if an amount is capital in nature, only

state the fact.ege. The college

awarded him a bona fide bursary of R$70000$ on $1$ January $2024$ to support his

studies. The bursary includes a stipulation: if Michael does not complete his

doctoral degree, he must repay the amount to the college. Committed to

earning his degree, Michael agreed to this condition.

Michael earned interest on a tax$-$free investment, as defined in section $12$T$(1),$

of R$30000.$

Michael received a dividend of R$8000$ from his investment in a company

registered in America. He holds $15\%$ of the equity shares and voting rights of

the company.

Michael began receiving a monthly annuity of R$10000$ starting on the $1^{st}$ of

August $2023.$ The capital portion of the annuity amounts to R$3000$ per month.

Michael received a fully subsidised laptop for working purposes. The laptop

remains the property of Westbridge College, and Michael must return it if he

ever decides to resign. According to the $7$ th Schedule, the cash equivalent of

this benefit is R$15000.$