UESTION 2

Tangeni is earning a salary and other income. His other income includes rental income, interest income and divided income. His salary is structured as follows:

1 March 2020 to 28 February 2021
Earnings	812 000
Basic	500 000
Housing allowance (note 1)	240 000
Vehicle allowance (Note 2)	60 000
Entertainment (note 3)	12 000
Company Contribution	120 972
Pension Fund (note 4)	60 000
Medical aid (note 5)	60 000
Social Security	972
Deduction	- 415 572
Social Security	- 972
Employee contribution toward pension fund (note 4)	- 42 500
Bond repayment (note 1)	- 200 000
PAYE	- 172 100
Net pay	396 428

Note

1. Tangeni received a housing allowance of $240 000 for the year but his actual bond repayments for the year were only $200 000.

2. Tangeni structured his vehicle allowance to be 75% taxable and 25% non- taxable.

3. Tangeni received an entertainment allowance of $12000 for the year.

4. Tangeni contributed $42500 toward the pension fund. His employer also contributed $60 000 toward the pension fund.

5. The company contributes towards the medical aid fund.

Required: a) Calculate Tangeni PAYE ( 10 marks)

b) Tangeni incurred the following expenses for business purposes:

a. $25 000 vehicle -related expenses: his total vehicle expenses were $40 000 of which $ 25 000 relate to his business kilometers.

b. $5000 (entrainment related expenses

c. Tangeni received dividend of $20 000 and interest income of $10 000 from a Namibia Unit trust. d. He also receives rental income of $60 000 for the year and incurred $ 25 000 of related rental expenses

e. He did not pay any provisional taxes on his other income. Required:

Calculate Final taxable income in completing Tangeni annual tax returns (15 marks)