TAXATION

Guidelines:

• This question relates to a resident
• Question a) relates to the resident test, establish if Sandra is a resident.
• Understanding of gross income, special inclusions, exemptions and deductions are important in this question b)
• Taxable income must be calculated at the end of the year assessment.
• The following format can be used for this question:

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QUESTION 1

Sandra Cruise is ordinary resident in a northern-hemisphere country. She has been retired for a number of years. She is 69 years old. She does not enjoy the cold northern-hemisphere winter and has therefore, each year, traveled to Cape town where she stays in a holiday cottage from 1 October each year until 31 March the following year. She purchased this holiday cottage primarily for this purpose since she enjoys the warm weather that Cape Town experiences during that time of year. She made her first trip to Cape Town in the 2013 year of assessment when she stayed in South Africa from 1 October 2012 till 31 March 2013. She has made the same trip every year since then. Sandra's receipts and accruals for the 2019 year of assessment were as follows:

- A social security pension the equivalent of $ 100 000 from the country that she is a resident of

- An annuity the equivalent of $ 80 000 from her former employer as a result of the 30 years employment that she had with it. None of these years were spent in South Africa.

- Rentals of $ 36 000. The rentals are earned from her holiday cottage in Cape Town. She lets it to tenants at a market-related for the six months of the year that she is not in Cape Town. For this six month period she incurred in the determination of her taxable income deductible expenditure of $ 15 000 in earning these rentals.

- Interest of $ 45 000 from a bank in South Africa. It is not from a 'tax free investment'. The interest accrues to her annually in arrears on the last day of February.

- Local dividends from listed South African companies of $ 17 000.

Required:

a) Determine if Sandra Cruise is a resident of the Republic for the 2019 year of assessment.

b) Calculate her South African taxable income for the 2019 year of assessment

XXX Gross income inclusions LIST ALL eg: Rent income Less Exemptions LIST ALL EXEMPTION IF APPLICABLE Eg interest exemption Less deductions LIST ALL Taxable income XX