Example 1 Paula
Salary 60,000.00
Profit from trade S7(2A)
Interest S7(2A)(b) 22,000.00
Rental income: Fixed property S7(2A) 3,000.00
Rental income: Movable property 5,000.00
EXEMPT INCOME
Interst s10(1)(i) - 22,000.00
Capital gains tax s26A Paula Qwabe 34,000.00
Proceeds 300,000.00
Base cost - 50,000.00
250,000.00 125,000.00 125,000.00
Annual excclusion -40000 -40000
85,000.00 85,000.00
Inclusion 34,000.00 34,000.00
Taxable income 102,000.00
Example 2
1. Because Karabo is a resident, he will be taxed on worldwide income.
As he is not an employee, he will be taxed on the profit of the contract.
The s10(1)(o)(ii) exemption is not available to him.
2) Because the eight employees comply with the requirements of s10(1)(o)(ii),
they qualify for the exemption and will not be taxed in SA on the salary that
they received for the services provided in Nigeria.
3)The seven employees who return to SA once a month do not comply with the
requirements of s10(1)(o)(ii). They will thus not get the exemption, because
they were not outside of SA for more than 183 full days and not for a continuous
period of 60 full days.
Qwabe
14,000.00
22,000.00
3,000.00
- 22,000.00
34,000.00
51,000.00
Example 3
s20A will apply if the following requirements are met:
The person is a natural person
Joseph Brown is a natural person
The natural person is taxed at the maximum marginal tax rate
Joseph Brown's taxable income before s20 is R1 800 000,
which is more than R1 731 601 and he is therefore taxed at the maximum marginal tax rate
The person carries on a suspect trade or incurred loss 3 out of 5 years
Trading in stamps is a suspect trade (given)
Escape hatch available if reasonable prospect of profits
Joseph does not have a reasonable prospect of making profits any time soon.
The loss of R100 000 will therefore be ring-fenced in terms of s20A and Joseph
will not be allowed to set it off against his salary
Gross income
Salary 48,400.00
Bonus 5,000.00
Dividends 2,200.00
Inerest 24,100.00
Subtotal 79,700.00
Exempt income
Dividends s10(1)(k) - 2,200.00
Inerest s10(1)i - 23,800.00
Income 53,700.00
Taxable capital gain s26A 15,000.00
Taxable income 68,700.00
Deductions
Actual contributions S11F 3782 - 3,782.00
Limited to the lesser of
1 350,000.00
2 27.5% of the greater of 18,892.50
Remuneration 53,400.00
Taxable income- before s11F and S18A 68,700.00
3 Taxable income before s26A 53,700.00
Therefore deducted in full
Taxable income 64,918.00
Salary
Medical contributions by employer
Taxable income
Tax payable
Primary rebate
Medical scheme rebate s6A 694*12
Medical expense rebate s6B
Contributions - employee 17,760.00
Contributions -employer 9,240.00
27,000.00
Less:4*8328 - 33,312.00
-
Qualiying medical expense 11,000.00
Less 7.5*taxable income 11,943.00
-
Deductible @25% * Total is negative,therefore no s6B deduction
Tax payable
150,000.00
9,240.00
159,240.00
28,663.20
- 16,425.00
- 8,328.00
3,910.20
66 years old:
Tax payable 28,663.20
Primary rebate - 16,425.00
Secondary rebate - 9,000.00
Medical scheme rebate s6A 694*12 - 8,328.00
Medical expense rebate s6B
Contributions - employee 17,760.00
Contributions -employer 9,240.00
27,000.00
Less:3*8328 - 24,984.00
2,016.00
Qualiying medical expense 11,000.00
13,016.00
Deductible @33% - 4,334.33
Tax payable -
Salary 150,000.00
Commission 50,000.00
Interest received 4,000.00
Foreign interest 4,800.00
Income from trade 29,400.00
Gross income 238,200.00
Less: Exempt income
Interest s10(1)(i) - 4,000.00
INCOME 234,200.00
Less: Deductions
Trade Expenses - 24,550.00
SUBTOTAL 2 209,650.00
Less: Assessed Loss - 10,000.00
SUBTOTAL 3 199,650.00
Add: Taxable capital gain 4,400.00
SUBTOTAL 4 204,050.00
Less: Contributions to funds : 27 000
Limited to the lesser of:
* 350 000 or
* 27,5% of the higher of: 55,000.00
remuneration 200,000.00
taxable income before s11F and S18A 204,050.00
Thus, 27,5% x 200000= 55 000
* taxable income before s26A 199,650.00
Limited to actual - 27,000.00
SUBTOTAL 5 177,050.00
Less: Donation to PBO - 7,000.00
Limited to 10% x 172250 17,225.00
Taxable income 170,050.00
Normal tax per table 18% 30,609.00
Less: Primary rebate - 16,425.00
s6B credit
Contributions -
Less: 4 x s6A -
Add: Qualifying medical expenses 24,000.00
Less: 7.5% of taxable income - 12,753.75
11,246.25
x 25% - 2,811.56
Normal tax payable 11,372.44
Aggregated capital gain 51000
-40000
11000
4400
