Question 4 28 MARKS Susan Rose is 30 years old and has been employed by JT Timbers Ltd ("JT Timbers") since 1 January 2018. She is married and has a son On 1 October 2018 she gave birth to a baby daughter. She was on maternity leave from 1 October 2018 until 31 January 2019. JT Timbers did not pay her any maternity benefits as it is their policy to only pay maternity benefits to employees who are employed for more than one year. Susan received the following from JT Timbers: 1. Salary of R40 000 per month (March to Sept 2018 and February 2019) 2. JT Timbers gave Suzie a wooden cot from their inventory when the baby was born. The cost price of the cot is R1 500 (including VAT), and the market value R3 700 (including VAT). 3. To assist with all the extra expenses a baby brings forth, JT Timbers gave Susan a loan of R15 000 on 1 September 2018 at an interest rate of 4% per year. She only paid it back on 1 April 2019. Assume official interest rate is 7.75%. 4. Susan is a member of the JT Timbers Provident fund and contributes 7% of her salary per month to the fund. JT Timbers contributes 10% of her salary per month to the fund. Both Susan and JT Timbers still contributed during the months she was on maternity leave. 5. On 1 October 2018 Susan purchased an annuity of R2000 per month for herself, for which he paid an amount of R216 000. The annuity will be paid for the rest of her life. Her life expectancy as per table assume to be 16.042 6. The company expect Susan to visit customers on a regular basis and pays her a travel allowance of R9 800 per month. Susan has a VW Jetta that she had purchased on 1 February 2017 for R245 000 (including VAT). He has travelled 28 000 kilometres in total for the 2019 year of assessment, of which 16 000 kilometres was for work purposes (per her logbook). Other information: 1. She contributed R2 000 per month to the RMB Retirement Annuity Fund. 2. While she was on maternity leave, she received R5 700 per month from the UIF fund. 3. Since March 2017 Susan invests R30 000 on 1 March every year in the Alex Ford Tax free investment. Interest for the 2019 year of assessment amounted to R8 600 REQUIRED: a) Calculate Susan's Income Tax Payable for the 2017 year of assessment (25 Marks) b) State the components of general deduction formula (s11(a)). (3 Marks) Taxable income RO - R195 850 R195 851 - R305 850 R305 851 -R423 300 R423 301 -R555 600 R555 601 - R708 310 R708 311 - R1 500 000 R1 500 001 and above Rates of Natural persons and special trusts - 2019 Rates 18% of taxable income R35 253 + 26% of taxable income exceeding R195 850 R63 853 + 31% of taxable income exceeding R305 850 R100 263 + 36% of taxable income exceeding R423 300 R147 891 + 39% of taxable income exceeding R555 600 R207 448 + 41% of taxable income exceeding R708 310 R532 041 + 45% of taxable income exceeding R1 500 000 Tax Rebates (Rand) 2019 2018 Primary rebate (Persons under 65) 14 067 13 635 Secondary rebate (Persons 65 and under 75) 7 713 7479 Tertiary rebate (Persons 75 and above) 2 574 2 493 Annual interest exemption Rand 2019 2018 Persons under 65 23 800 23 800 Persons 65 and above 34 500 34 500 Where the value of vehicle is RO -R85 000 R85 001 -R170 000 R170 001 - R255 000 R255 001 - R340 000 R340 001 -R425 000 R425 001 - R510 000 R510 001 - R595 000 Exceeding R595 000 Travel Scale of values (2019 year of assessment) Fixed Cost (R) Fuel Maintenance cost cost (c/km) 28 352 95.70 34.4 50 631 106.80 43.1 72 983 116.00 47.5 92 683 124.80 51.9 112 443 133.50 60.9 133 147 153.20 71.6 153 850 158.40 88.9 153 850 158.40 88.9 Subsistence allowance Rand 2019 2018 Meals and incidental costs 416 397 Incidental costs only 128 122 S 7 Question 4 28 MARKS Susan Rose is 30 years old and has been employed by JT Timbers Ltd ("JT Timbers") since 1 January 2018. She is married and has a son On 1 October 2018 she gave birth to a baby daughter. She was on maternity leave from 1 October 2018 until 31 January 2019. JT Timbers did not pay her any maternity benefits as it is their policy to only pay maternity benefits to employees who are employed for more than one year. Susan received the following from JT Timbers: 1. Salary of R40 000 per month (March to Sept 2018 and February 2019) 2. JT Timbers gave Suzie a wooden cot from their inventory when the baby was born. The cost price of the cot is R1 500 (including VAT), and the market value R3 700 (including VAT). 3. To assist with all the extra expenses a baby brings forth, JT Timbers gave Susan a loan of R15 000 on 1 September 2018 at an interest rate of 4% per year. She only paid it back on 1 April 2019. Assume official interest rate is 7.75%. 4. Susan is a member of the JT Timbers Provident fund and contributes 7% of her salary per month to the fund. JT Timbers contributes 10% of her salary per month to the fund. Both Susan and JT Timbers still contributed during the months she was on maternity leave. 5. On 1 October 2018 Susan purchased an annuity of R2000 per month for herself, for which he paid an amount of R216 000. The annuity will be paid for the rest of her life. Her life expectancy as per table assume to be 16.042 6. The company expect Susan to visit customers on a regular basis and pays her a travel allowance of R9 800 per month. Susan has a VW Jetta that she had purchased on 1 February 2017 for R245 000 (including VAT). He has travelled 28 000 kilometres in total for the 2019 year of assessment, of which 16 000 kilometres was for work purposes (per her logbook). Other information: 1. She contributed R2 000 per month to the RMB Retirement Annuity Fund. 2. While she was on maternity leave, she received R5 700 per month from the UIF fund. 3. Since March 2017 Susan invests R30 000 on 1 March every year in the Alex Ford Tax free investment. Interest for the 2019 year of assessment amounted to R8 600 REQUIRED: a) Calculate Susan's Income Tax Payable for the 2017 year of assessment (25 Marks) b) State the components of general deduction formula (s11(a)). (3 Marks) Taxable income RO - R195 850 R195 851 - R305 850 R305 851 -R423 300 R423 301 -R555 600 R555 601 - R708 310 R708 311 - R1 500 000 R1 500 001 and above Rates of Natural persons and special trusts - 2019 Rates 18% of taxable income R35 253 + 26% of taxable income exceeding R195 850 R63 853 + 31% of taxable income exceeding R305 850 R100 263 + 36% of taxable income exceeding R423 300 R147 891 + 39% of taxable income exceeding R555 600 R207 448 + 41% of taxable income exceeding R708 310 R532 041 + 45% of taxable income exceeding R1 500 000 Tax Rebates (Rand) 2019 2018 Primary rebate (Persons under 65) 14 067 13 635 Secondary rebate (Persons 65 and under 75) 7 713 7479 Tertiary rebate (Persons 75 and above) 2 574 2 493 Annual interest exemption Rand 2019 2018 Persons under 65 23 800 23 800 Persons 65 and above 34 500 34 500 Where the value of vehicle is RO -R85 000 R85 001 -R170 000 R170 001 - R255 000 R255 001 - R340 000 R340 001 -R425 000 R425 001 - R510 000 R510 001 - R595 000 Exceeding R595 000 Travel Scale of values (2019 year of assessment) Fixed Cost (R) Fuel Maintenance cost cost (c/km) 28 352 95.70 34.4 50 631 106.80 43.1 72 983 116.00 47.5 92 683 124.80 51.9 112 443 133.50 60.9 133 147 153.20 71.6 153 850 158.40 88.9 153 850 158.40 88.9 Subsistence allowance Rand 2019 2018 Meals and incidental costs 416 397 Incidental costs only 128 122 S 7