QUESTION 2 (30 MARKS) Electro Inc, an engineering firm based in Cape Town, South Africa, offers attractive remuneration packages to the consulting engineers employed by the firm. Mr Boot, a South African resident (48 years old), who is married out of community of property and was head-hunted for the senior electrical engineer position and took up employment with Electro Inc on 1 June 2019. He and his wife and two children (aged 10 and 12) had to relocate from Durban to Cape Town for his new job in the Mother City. He was paid a cash salary of R49 000 a month for the first three months, which increased to R50 000 per month thereafter until 30 May 2020 when the amount would be reviewed again. Membership of the company's provident fund was obligatory from 1 June 2019. Contributions of 8% of his cash salary were made by Mr Boot, and Electro Inc contributed an equivalent amount. Mr Boot has been contributing R 1 800 per month to a retirement annuity fund since 2015. In addition to his salary, Mr Boot was paid (from 1 June 2019) a travel allowance of R12 400 per month. The following information is relevant: 1. Mr Boot is required, in terms of his contract, to entertain clients. He is not an agent or representative. His total expenditure incurred on entertainment of clients amounted to R12 000 during his period of employment. Electro Inc had also instructed him to entertain on their behalf, over and above the allowance he received. He could, however, only produce satisfactory proof to Electro Inc for R6 000, and this amount was refunded to him. 2. Mr Boot travelled a total of 22 000 kilometres for the year ended 29 February 2020 in a motor car, which He had purchased on 1 March 2019 for R163 478 (excluding VAT). Up to now, He has not kept accurate records of any business travel expenses. He has however travelled 1500 kilometers for business purposes. The kilometres travelled between 1 March 2019 and 1 June 2019 amounted to 8 000. 3. As part of Mr Boot's relocation, Electric transport costs of R55 000 and storage costs of R33 000 (for the period 1 June 2019 to 31 August 2019) of his belongings. 4. Electro Inc provided bursaries amounting to R20 000 per annum to Mr Boot's two children to attend Newlands Primary School in Cape Town. 2 5. Mr Boot had to visit a construction site in Mosselbay, where the firm was responsible for all the electrical work to be done. Mr Boot was away for 5 consecutive days during the year. Electo Inc paid Mr Boot a subsistence allowance of R3 000 during the year. Mr Boot did not keep any records of his expenses incurred on the trip to Mosselbay. 6. Mr Boot received South African interest of R45 000 from a local bank and foreign dividends of R14 000 in the current year of assessment. 7. At the end of March 2019, Mr Boot received a long-service award from his previous employer to commemorate his 10th anniversary. He received R5 000 cash and a smart television with a market value of R15 000. 8. Electro Inc paid R187 450 in respect of employees' tax for Mr Boot for the current year of assessment. 9. Mr Boot's cash salary for April and May 2019 amounted to R120 000. He received no other allowances. His previous employer deducted R38 460 as employees' tax for Mr Boot for the said period. REQUIRED: Calculate Mr Boot's tax payable for the year of assessment ended 29 February 2020. Provide brief explanations with your answer for the exclusion or lack of adjustment (where applicable). (30) QUESTION 2 (30 MARKS) Electro Inc, an engineering firm based in Cape Town, South Africa, offers attractive remuneration packages to the consulting engineers employed by the firm. Mr Boot, a South African resident (48 years old), who is married out of community of property and was head-hunted for the senior electrical engineer position and took up employment with Electro Inc on 1 June 2019. He and his wife and two children (aged 10 and 12) had to relocate from Durban to Cape Town for his new job in the Mother City. He was paid a cash salary of R49 000 a month for the first three months, which increased to R50 000 per month thereafter until 30 May 2020 when the amount would be reviewed again. Membership of the company's provident fund was obligatory from 1 June 2019. Contributions of 8% of his cash salary were made by Mr Boot, and Electro Inc contributed an equivalent amount. Mr Boot has been contributing R 1 800 per month to a retirement annuity fund since 2015. In addition to his salary, Mr Boot was paid (from 1 June 2019) a travel allowance of R12 400 per month. The following information is relevant: 1. Mr Boot is required, in terms of his contract, to entertain clients. He is not an agent or representative. His total expenditure incurred on entertainment of clients amounted to R12 000 during his period of employment. Electro Inc had also instructed him to entertain on their behalf, over and above the allowance he received. He could, however, only produce satisfactory proof to Electro Inc for R6 000, and this amount was refunded to him. 2. Mr Boot travelled a total of 22 000 kilometres for the year ended 29 February 2020 in a motor car, which He had purchased on 1 March 2019 for R163 478 (excluding VAT). Up to now, He has not kept accurate records of any business travel expenses. He has however travelled 1500 kilometers for business purposes. The kilometres travelled between 1 March 2019 and 1 June 2019 amounted to 8 000. 3. As part of Mr Boot's relocation, Electric transport costs of R55 000 and storage costs of R33 000 (for the period 1 June 2019 to 31 August 2019) of his belongings. 4. Electro Inc provided bursaries amounting to R20 000 per annum to Mr Boot's two children to attend Newlands Primary School in Cape Town. 2 5. Mr Boot had to visit a construction site in Mosselbay, where the firm was responsible for all the electrical work to be done. Mr Boot was away for 5 consecutive days during the year. Electo Inc paid Mr Boot a subsistence allowance of R3 000 during the year. Mr Boot did not keep any records of his expenses incurred on the trip to Mosselbay. 6. Mr Boot received South African interest of R45 000 from a local bank and foreign dividends of R14 000 in the current year of assessment. 7. At the end of March 2019, Mr Boot received a long-service award from his previous employer to commemorate his 10th anniversary. He received R5 000 cash and a smart television with a market value of R15 000. 8. Electro Inc paid R187 450 in respect of employees' tax for Mr Boot for the current year of assessment. 9. Mr Boot's cash salary for April and May 2019 amounted to R120 000. He received no other allowances. His previous employer deducted R38 460 as employees' tax for Mr Boot for the said period. REQUIRED: Calculate Mr Boot's tax payable for the year of assessment ended 29 February 2020. Provide brief explanations with your answer for the exclusion or lack of adjustment (where applicable). (30)