QUESTION 3 (26 MARKS) Hans (61) and Rieta (66) are residents of South Africa and are married in community of property. The following information relates to the 2017 year of assessment Income from South Africa Hans salary of R272 000 Rieta salary of R320 000 Hans - Pension fund annuity of R28 000 Rental income of R140 000 and related expenses of R72 000 from a beach cottage Interest of R34 000 earned on a fixed deposit Foreign income Foreign dividends of 760, from a 3% shareholding in equity shares and voting rights. These dividends are exempted in terms of Section 10B (2) Interest of 64 on an investment inherited from Rieta's niece. The inheritance and its income are excluded from the joint estate. The average foreign exchange rate for the current year was 1:R23. Hans and Rieta elected the foreign earnings to be translated into rand by applying the average rate. Expenditure Rieta contributed R20 000 towards a pension fund and her employer contributed R15000 Hans contributed R30 000 towards a pension fund for the current year and R9 000 for past periods. He retired at the end of January 2017 Hans made a donation of R33 000 to a registered welfare organisation and obtained a Section 18A receipt REQUIRED: Calculate Hans's and Rieta's normal tax liability for the 2017 year of assessment. RATES OF TAX FOR INDIVIDUALS 2017 tax year (1 March 2016 - 28 February 2017) Taxable income (R) Rates of tax (R) 0-188000 18% of taxable income 188 001 293 600 33 840 + 26% of taxable income above 188 000 293 601 - 406 400 61 296* +31% of taxable income above 293 600 406 401 - 550 100 96 264 + 36% of taxable income above 406 400 550 101 - 701 300 147 996 + 39% of taxable income above 550 100 701 301 and above 206 964 + 41% of taxable income above 701 300 * Note: Parliament is processing tax legislation that will change the current amount of 61 289 to 61 296 later in 2017. 2018 tax year (1 March 2017 - 28 February 2018) Taxable income (R) 0-189 880 189 881 - 296 540 296 541 - 410 460 410 461 - 555 600 555 601 - 708 310 708 311 - 1 500 000 1 500 001 and above Rates of tax (R) 18% of taxable income 34 178 + 26% of taxable income above 189 880 61 910 + 31% of taxable income above 296 540 97 225 + 36% of taxable income above 410 460 149 475 + 39% of taxable income above 555 600 209 032 + 41% of taxable income above 708 310 533 625 + 45% of taxable income above 1 500 000 Tax Rebates Tax Rebate Primary Secondary (65 and older) Tertiary (75 and older) 2018 R13 635 R7 479 R2 493 2017 R13 500 R7 407 R2 466 Tax Year 2016 R13 257 R7 407 R2 466 2015 R12 726 R7 110 R2 367 2014 R12 080 R6 750 R2 250 Tax Thresholds 2014 R67 111 R104 611 R117 111 Tax Year Person 2018 2017 2016 2016 Under 65 R75 750 R75 000 R73 650 R70 700 65 an older R117 300 R116 150 R114 800 R110 200 75 and older R131 150 R129 850 R128 500 R123 350 Section 1.01 Interest Exemptions - no changes from last year Interest from a South African source earned by a natural person is exempt, per annum, up to an amount of 2018 2017 2016 2015 Person younger than 65 R23 800 R23 800 R23 800 R23 800 Person 65 and older R34 500 R34 500 R34 500 R34 500 2014 R23 800 R34 500 QUESTION 3 (26 MARKS) Hans (61) and Rieta (66) are residents of South Africa and are married in community of property. The following information relates to the 2017 year of assessment Income from South Africa Hans salary of R272 000 Rieta salary of R320 000 Hans - Pension fund annuity of R28 000 Rental income of R140 000 and related expenses of R72 000 from a beach cottage Interest of R34 000 earned on a fixed deposit Foreign income Foreign dividends of 760, from a 3% shareholding in equity shares and voting rights. These dividends are exempted in terms of Section 10B (2) Interest of 64 on an investment inherited from Rieta's niece. The inheritance and its income are excluded from the joint estate. The average foreign exchange rate for the current year was 1:R23. Hans and Rieta elected the foreign earnings to be translated into rand by applying the average rate. Expenditure Rieta contributed R20 000 towards a pension fund and her employer contributed R15000 Hans contributed R30 000 towards a pension fund for the current year and R9 000 for past periods. He retired at the end of January 2017 Hans made a donation of R33 000 to a registered welfare organisation and obtained a Section 18A receipt REQUIRED: Calculate Hans's and Rieta's normal tax liability for the 2017 year of assessment. RATES OF TAX FOR INDIVIDUALS 2017 tax year (1 March 2016 - 28 February 2017) Taxable income (R) Rates of tax (R) 0-188000 18% of taxable income 188 001 293 600 33 840 + 26% of taxable income above 188 000 293 601 - 406 400 61 296* +31% of taxable income above 293 600 406 401 - 550 100 96 264 + 36% of taxable income above 406 400 550 101 - 701 300 147 996 + 39% of taxable income above 550 100 701 301 and above 206 964 + 41% of taxable income above 701 300 * Note: Parliament is processing tax legislation that will change the current amount of 61 289 to 61 296 later in 2017. 2018 tax year (1 March 2017 - 28 February 2018) Taxable income (R) 0-189 880 189 881 - 296 540 296 541 - 410 460 410 461 - 555 600 555 601 - 708 310 708 311 - 1 500 000 1 500 001 and above Rates of tax (R) 18% of taxable income 34 178 + 26% of taxable income above 189 880 61 910 + 31% of taxable income above 296 540 97 225 + 36% of taxable income above 410 460 149 475 + 39% of taxable income above 555 600 209 032 + 41% of taxable income above 708 310 533 625 + 45% of taxable income above 1 500 000 Tax Rebates Tax Rebate Primary Secondary (65 and older) Tertiary (75 and older) 2018 R13 635 R7 479 R2 493 2017 R13 500 R7 407 R2 466 Tax Year 2016 R13 257 R7 407 R2 466 2015 R12 726 R7 110 R2 367 2014 R12 080 R6 750 R2 250 Tax Thresholds 2014 R67 111 R104 611 R117 111 Tax Year Person 2018 2017 2016 2016 Under 65 R75 750 R75 000 R73 650 R70 700 65 an older R117 300 R116 150 R114 800 R110 200 75 and older R131 150 R129 850 R128 500 R123 350 Section 1.01 Interest Exemptions - no changes from last year Interest from a South African source earned by a natural person is exempt, per annum, up to an amount of 2018 2017 2016 2015 Person younger than 65 R23 800 R23 800 R23 800 R23 800 Person 65 and older R34 500 R34 500 R34 500 R34 500 2014 R23 800 R34 500