QUESTION FOUR [10] During the 2020 year of assessment Karl Naidoo (unmarried, aged 52), a resident of the Republic, made the following donations: 1. On 25 April 2019, he gave his best friend, Shaun, the lifetime usufruct in his holiday apartment, situated in Cape Town. The value of the usufruct on this date was R1 545 000, 2. On 1 May 2019 he gave his sister a necklace valued at R20 000 as a birthday gift, 3. On 1 July 2019 he gave R45 000 to North West University (an approved Public Benefit Organisation as referred to in Section 10(1)(c) of the Income Tax Act). 4. On 24 December 2019, Karl gave his driver, Abe, a bonus of R25 000. This was to acknowledge his many years of hard work and loyalty to Karl. 5. On 1 January 2020, Karl gave an amount of R60 000 to his widowed mother. The Commissioner of SARS considers this to be a bona fide contribution to maintenance and regards the amount as reasonable. 6. On 10 January 2020 he gave his niece an annuity of R7 000 per annum for 10 years. The Commissioner does not regard this as a bona fide contribution to maintenance. The value of the annuity on this date was R39 550. Required Calculate the donations tax payable on each of the above donations made by Karl during the 2020 year of assessment. Show all workings and where there is an exemption applicable, clearly state as such TAXATION TABLES AND RATES COMPANIES AND CLOSE CORPORATIONS 2019/2020 year of assessment 28% RATES OF TAX FOR INDIVIDUALS 2019 tax year (1 March 2018 - 28 February 2019) & 2020 tax year (1 March 2019-29 February 2020) Taxable income (R) Rates of tax (R) 1 - 195 850 18% of taxable income 195851 - 305 850 35 253 +26% of taxable income above 195 850 305851 - 423 300 63 853 +31% of taxable income above 305 850 423 301-555 600 100 263 + 36% of taxable income above 423 300 555601 - 708 310 147 891 + 39% of taxable income above 555 600 708 311 - 1 500 000 207 448 + 41% of taxable income above 708 310 1 500 001 and above 532 041 +45% of taxable income above 1 500 000 SMALL BUSINESS CORPORATIONS (SBC) ) Financial years ending on any date between 1 April 2019 and 31 March 2020: Taxable income (R) 0-79 000 79 001 - 365 000 365001 - 550 000 550 001 and above Rate of Tax (R) 0% of taxable income 7% of taxable income above 79 000 % 20020 +21% of taxable income above 365 000 58 870+ 28% of the amount above 550 000 Tax Rebates Tax Rebate Financial years ending on any date between 1 April 2018 and 31 March 2019: : Younger than 65 65 and older 75 and older 2019 R14067 R21780 R24 354 2020 R14 220 R22014 R24 615 Taxable income (R) 0-78 150 78 151 - 365 000 365001 - 550 000 550 001 and above Rate of Tax (R) 0% of taxable income 7% of taxable income above 78 150 20080 + 21% of taxable income above 365 000 58930 + 28% of the amount above 550 000 Exempt Income (2019 & 2020 year of assessment) Total interest exemption including foreign interest Below 65 R23 800 65 and over R34 500 TURNOVER TAX FOR MICRO BUSINESSES Medical Scheme Credit (monthly) 2019 & 2020 years of assessment Main member Main member with one dependant Main member with two dependants 2019 R310 R620 R829 2020 R310 R620 R829 Taxable turnover (R) (R 0-335 000 335001 - 500 000 500 001 - 750 000 - 750 001 and above Rate of tax (R) 0% of taxable turnover 0 1% of taxable turnover above 335 000 1 650 + 2% of taxable tumover above 500 000 6 650 + 3% of taxable tumover above 750 000 Each additional de pendant qualifies for a further rebate or credit of R209 (2019: R209) per month. Travel allowance-cost scale - 2019 and 2020 years of assessment VALUE-ADDED TAX (VAT) From 1 April 2018 Prior to 1 April 2018 15% Value of the vehicle including VAT (R) Fixed cost (Rp.a) Fuel cost (c/km) Maintenance cost (c/km) 0-85 000 28 352 95.7 34.4 85 001 - 170 000 50 631 106.8 43.1 170001 - 255 000 72 983 1 16.0 47.5 255001 - 340 000 92 683 124.8 51.9 340001 - 425 000 112 443 133.5 60.9 425001 - 510 000 133 147 153.2 71.6 7 8 153 850 88.9 88.9 510001 - 595 000 153 850 158.4 more than 595 000 158.4 CAPITAL GAINS TAX (CGT) - 2019 & 2020 years of assessment Inclusion rates Individuals, special trusts and individual policyholder funds 40% Other taxpayers 80% R300 000 Exclusions . Individuals (annual non-cumulative): R40 000 Individuals in year of death: Primary residence exclusion on the disposal of a primary residence: R2milion (gain loss) Small business assets (when a person is at least 55 years of age): R1.8 million when a small business with a market value not exceeding R10 million is disposed of QUESTION FOUR [10] During the 2020 year of assessment Karl Naidoo (unmarried, aged 52), a resident of the Republic, made the following donations: 1. On 25 April 2019, he gave his best friend, Shaun, the lifetime usufruct in his holiday apartment, situated in Cape Town. The value of the usufruct on this date was R1 545 000, 2. On 1 May 2019 he gave his sister a necklace valued at R20 000 as a birthday gift, 3. On 1 July 2019 he gave R45 000 to North West University (an approved Public Benefit Organisation as referred to in Section 10(1)(c) of the Income Tax Act). 4. On 24 December 2019, Karl gave his driver, Abe, a bonus of R25 000. This was to acknowledge his many years of hard work and loyalty to Karl. 5. On 1 January 2020, Karl gave an amount of R60 000 to his widowed mother. The Commissioner of SARS considers this to be a bona fide contribution to maintenance and regards the amount as reasonable. 6. On 10 January 2020 he gave his niece an annuity of R7 000 per annum for 10 years. The Commissioner does not regard this as a bona fide contribution to maintenance. The value of the annuity on this date was R39 550. Required Calculate the donations tax payable on each of the above donations made by Karl during the 2020 year of assessment. Show all workings and where there is an exemption applicable, clearly state as such TAXATION TABLES AND RATES COMPANIES AND CLOSE CORPORATIONS 2019/2020 year of assessment 28% RATES OF TAX FOR INDIVIDUALS 2019 tax year (1 March 2018 - 28 February 2019) & 2020 tax year (1 March 2019-29 February 2020) Taxable income (R) Rates of tax (R) 1 - 195 850 18% of taxable income 195851 - 305 850 35 253 +26% of taxable income above 195 850 305851 - 423 300 63 853 +31% of taxable income above 305 850 423 301-555 600 100 263 + 36% of taxable income above 423 300 555601 - 708 310 147 891 + 39% of taxable income above 555 600 708 311 - 1 500 000 207 448 + 41% of taxable income above 708 310 1 500 001 and above 532 041 +45% of taxable income above 1 500 000 SMALL BUSINESS CORPORATIONS (SBC) ) Financial years ending on any date between 1 April 2019 and 31 March 2020: Taxable income (R) 0-79 000 79 001 - 365 000 365001 - 550 000 550 001 and above Rate of Tax (R) 0% of taxable income 7% of taxable income above 79 000 % 20020 +21% of taxable income above 365 000 58 870+ 28% of the amount above 550 000 Tax Rebates Tax Rebate Financial years ending on any date between 1 April 2018 and 31 March 2019: : Younger than 65 65 and older 75 and older 2019 R14067 R21780 R24 354 2020 R14 220 R22014 R24 615 Taxable income (R) 0-78 150 78 151 - 365 000 365001 - 550 000 550 001 and above Rate of Tax (R) 0% of taxable income 7% of taxable income above 78 150 20080 + 21% of taxable income above 365 000 58930 + 28% of the amount above 550 000 Exempt Income (2019 & 2020 year of assessment) Total interest exemption including foreign interest Below 65 R23 800 65 and over R34 500 TURNOVER TAX FOR MICRO BUSINESSES Medical Scheme Credit (monthly) 2019 & 2020 years of assessment Main member Main member with one dependant Main member with two dependants 2019 R310 R620 R829 2020 R310 R620 R829 Taxable turnover (R) (R 0-335 000 335001 - 500 000 500 001 - 750 000 - 750 001 and above Rate of tax (R) 0% of taxable turnover 0 1% of taxable turnover above 335 000 1 650 + 2% of taxable tumover above 500 000 6 650 + 3% of taxable tumover above 750 000 Each additional de pendant qualifies for a further rebate or credit of R209 (2019: R209) per month. Travel allowance-cost scale - 2019 and 2020 years of assessment VALUE-ADDED TAX (VAT) From 1 April 2018 Prior to 1 April 2018 15% Value of the vehicle including VAT (R) Fixed cost (Rp.a) Fuel cost (c/km) Maintenance cost (c/km) 0-85 000 28 352 95.7 34.4 85 001 - 170 000 50 631 106.8 43.1 170001 - 255 000 72 983 1 16.0 47.5 255001 - 340 000 92 683 124.8 51.9 340001 - 425 000 112 443 133.5 60.9 425001 - 510 000 133 147 153.2 71.6 7 8 153 850 88.9 88.9 510001 - 595 000 153 850 158.4 more than 595 000 158.4 CAPITAL GAINS TAX (CGT) - 2019 & 2020 years of assessment Inclusion rates Individuals, special trusts and individual policyholder funds 40% Other taxpayers 80% R300 000 Exclusions . Individuals (annual non-cumulative): R40 000 Individuals in year of death: Primary residence exclusion on the disposal of a primary residence: R2milion (gain loss) Small business assets (when a person is at least 55 years of age): R1.8 million when a small business with a market value not exceeding R10 million is disposed of