Taxation Grant Reynolds, a 42-year-old South African for income tax purposes, was employed by DNG Textiles (Pty) Ltd for the 2024 year of assessment. DNG Textiles (Pty) Ltd is a company involved in the production and distribution of textile products in South Africa. Grant Reynolds is married out of community of property to Chantal Reynolds, and the couple have two children, Charlotte, aged 12 and Jake, 17.The following information pertains to the 2024 year of assessment:1. Grant earns a basic salary of R42 000 per month. Employees’ tax of R92 560 was withheld by his employer and paid to the South African Revenue Service (SARS) on behalf of Grant in respect of the 2024 year of assessment.2. Grant received a performance bonus amounting to R37 500 on 31 March 2024. This bonus was in relation to the 2023 financial year and had been approved by the Board of Directors in a meeting on 22 February 2024.3. On 22 January 2024, DNG Textiles (Pty) Ltd awarded a bona fide bursary of R50 000 to cover the school fees of Grant’s son, Jake. Jake is in Grade 11 and has a physical disability. Grant’s remuneration proxy amounts to R550 000 for the 2024 year of assessment. 4. Grant received the right of use of a company-owned vehicle from the beginning of the year of assessment. The vehicle was purchased on 31 January 2023, at a cost of R460 000 (excluding VAT). Grant’s logbook indicated that he travelled a total of 28 750 km for the period, of which 8 625 km were travelled for private purposes. The vehicle was subject to a maintenance plan, but Grant was required to pay for fuel costs and for the vehicle’s insurance expenses for the period. Fuel costs amounted to R32 000, and insurance amounted to R15 360.5. A Gateway Mall shopping voucher to the value of R10 000 was awarded to Grant by his employer for uninterrupted service of 15 years. This voucher may be used at any shop in the mall, and it may not be exchanged for cash.6. Grant contributed R6 500 per month to a pension fund for the entire 2024 year of assessment. DNG Textiles (Pty) Ltd contributed R4 000 per month to Grant’s pension fund. Assume a remuneration of R690 000 for the 2024 year of assessment for Grant.7. It is compulsory for the employees of DNG Textiles (Pty) Ltd to be part of a medical aid scheme. The company contributed one-third of Grant’s total contributions of R72 000 to the Meschem Medical Aid Fund. The registered dependents on the medical aid are Grant, his wife, and their two kids.8. Grant contributed R3 000 per month to a ‘tax-free investment’ fund (as defined) for the entire 2024 year of assessment. He earned dividends of R6 800 and interest of R4 200 from the tax-free investment. The returns on investment were capitalised (reinvested).9. Grant earned South African source interest of R25 000 in respect of a South African government bond, and foreign interest of R6 000 in respect of a foreign debenture.10. Local dividends of R27 000 were earned by Grant in the current year, however, he had incurred non-capital expenditure of R6 000 in earning these dividends.11. Grant incurred premiums on a life insurance policy amounting to R42 800 during the current year of assessment. 12.Grant owns a beach facing apartment in Ballito, Kwa Zulu Natal, which he rents out during the peak periods in the year. He renovated the main bedroom to include a modern ensuite bathroom at a cost of R30 000. The apartment generated net rentals of R111 000 after deducting the cost of the renovations. Q.2) Calculate the net normal tax payable by Grant Reynolds for the year of assessment ended 29 February 2024. Show all calculations.Include nil value items in your answer, give a reason for it.
Taxation Grant Reynolds, a 42-year-old South African for income tax purposes, was employed by DNG Textiles (Pty) Ltd for the 2024 year of assessment. DNG Textiles (Pty) Ltd is a company involved in the production and distribution of textile products in South Africa. Grant Reynolds is married out of community of property to Chantal Reynolds, and the couple have two children, Charlotte, aged 12 and Jake, 17.The following information pertains to the 2024 year of assessment:1. Grant earns a basic salary of R42 000 per month. Employees’ tax of R92 560 was withheld by his employer and paid to the South African Revenue Service (SARS) on behalf of Grant in respect of the 2024 year of assessment.2. Grant received a performance bonus amounting to R37 500 on 31 March 2024. This bonus was in relation to the 2023 financial year and had been approved by the Board of Directors in a meeting on 22 February 2024.3. On 22 January 2024, DNG Textiles (Pty) Ltd awarded a bona fide bursary of R50 000 to cover the school fees of Grant’s son, Jake. Jake is in Grade 11 and has a physical disability. Grant’s remuneration proxy amounts to R550 000 for the 2024 year of assessment. 4. Grant received the right of use of a company-owned vehicle from the beginning of the year of assessment. The vehicle was purchased on 31 January 2023, at a cost of R460 000 (excluding VAT). Grant’s logbook indicated that he travelled a total of 28 750 km for the period, of which 8 625 km were travelled for private purposes. The vehicle was subject to a maintenance plan, but Grant was required to pay for fuel costs and for the vehicle’s insurance expenses for the period. Fuel costs amounted to R32 000, and insurance amounted to R15 360.5. A Gateway Mall shopping voucher to the value of R10 000 was awarded to Grant by his employer for uninterrupted service of 15 years. This voucher may be used at any shop in the mall, and it may not be exchanged for cash.6. Grant contributed R6 500 per month to a pension fund for the entire 2024 year of assessment. DNG Textiles (Pty) Ltd contributed R4 000 per month to Grant’s pension fund. Assume a remuneration of R690 000 for the 2024 year of assessment for Grant.7. It is compulsory for the employees of DNG Textiles (Pty) Ltd to be part of a medical aid scheme. The company contributed one-third of Grant’s total contributions of R72 000 to the Meschem Medical Aid Fund. The registered dependents on the medical aid are Grant, his wife, and their two kids.8. Grant contributed R3 000 per month to a ‘tax-free investment’ fund (as defined) for the entire 2024 year of assessment. He earned dividends of R6 800 and interest of R4 200 from the tax-free investment. The returns on investment were capitalised (reinvested).9. Grant earned South African source interest of R25 000 in respect of a South African government bond, and foreign interest of R6 000 in respect of a foreign debenture.10. Local dividends of R27 000 were earned by Grant in the current year, however, he had incurred non-capital expenditure of R6 000 in earning these dividends.11. Grant incurred premiums on a life insurance policy amounting to R42 800 during the current year of assessment. 12.Grant owns a beach facing apartment in Ballito, Kwa Zulu Natal, which he rents out during the peak periods in the year. He renovated the main bedroom to include a modern ensuite bathroom at a cost of R30 000. The apartment generated net rentals of R111 000 after deducting the cost of the renovations. Q.2) Calculate the net normal tax payable by Grant Reynolds for the year of assessment ended 29 February 2024. Show all calculations.Include nil value items in your answer, give a reason for it.
Chapter3: Computing The Tax
Section: Chapter Questions
Problem 38P
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Question
Grant Reynolds, a 42-year-old South African for income tax purposes, was employed by DNG Textiles (Pty) Ltd for the 2024 year of assessment. DNG Textiles (Pty) Ltd is a company involved in the production and distribution of textile products in South Africa. Grant Reynolds is married out of community of property to Chantal Reynolds, and the couple have two children, Charlotte, aged 12 and Jake, 17.
The following information pertains to the 2024 year of assessment:
1. Grant earns a basic salary of R42 000 per month. Employees’ tax of R92 560 was withheld by his employer and paid to the South African Revenue Service (SARS) on behalf of Grant in respect of the 2024 year of assessment.
2. Grant received a performance bonus amounting to R37 500 on 31 March 2024. This bonus was in relation to the 2023 financial year and had been approved by the Board of Directors in a meeting on 22 February 2024.
3. On 22 January 2024, DNG Textiles (Pty) Ltd awarded a bona fide bursary of R50 000 to cover the school fees of Grant’s son, Jake. Jake is in Grade 11 and has a physical disability. Grant’s remuneration proxy amounts to R550 000 for the 2024 year of assessment.
4. Grant received the right of use of a company-owned vehicle from the beginning of the year of assessment. The vehicle was purchased on 31 January 2023, at a cost of R460 000 (excluding VAT). Grant’s logbook indicated that he travelled a total of 28 750 km for the period, of which 8 625 km were travelled for private purposes. The vehicle was subject to a maintenance plan, but Grant was required to pay for fuel costs and for the vehicle’s insurance expenses for the period. Fuel costs amounted to R32 000, and insurance amounted to R15 360.
5. A Gateway Mall shopping voucher to the value of R10 000 was awarded to Grant by his employer for uninterrupted service of 15 years. This voucher may be used at any shop in the mall, and it may not be exchanged for cash.
6. Grant contributed R6 500 per month to a pension fund for the entire 2024 year of assessment. DNG Textiles (Pty) Ltd contributed R4 000 per month to Grant’s pension fund. Assume a remuneration of R690 000 for the 2024 year of assessment for Grant.
7. It is compulsory for the employees of DNG Textiles (Pty) Ltd to be part of a medical aid scheme. The company contributed one-third of Grant’s total contributions of R72 000 to the Meschem Medical Aid Fund. The registered dependents on the medical aid are Grant, his wife, and their two kids.
8. Grant contributed R3 000 per month to a ‘tax-free investment’ fund (as defined) for the entire 2024 year of assessment. He earned dividends of R6 800 and interest of R4 200 from the tax-free investment. Thereturns on investment were capitalised (reinvested).
9. Grant earned South African source interest of R25 000 in respect of a South African government bond, and foreign interest of R6 000 in respect of a foreign debenture.
10. Local dividends of R27 000 were earned by Grant in the current year, however, he had incurred non-capital expenditure of R6 000 in earning these dividends.
11. Grant incurred premiums on a life insurance policy amounting to R42 800 during the current year of assessment.
5. A Gateway Mall shopping voucher to the value of R10 000 was awarded to Grant by his employer for uninterrupted service of 15 years. This voucher may be used at any shop in the mall, and it may not be exchanged for cash.
6. Grant contributed R6 500 per month to a pension fund for the entire 2024 year of assessment. DNG Textiles (Pty) Ltd contributed R4 000 per month to Grant’s pension fund. Assume a remuneration of R690 000 for the 2024 year of assessment for Grant.
7. It is compulsory for the employees of DNG Textiles (Pty) Ltd to be part of a medical aid scheme. The company contributed one-third of Grant’s total contributions of R72 000 to the Meschem Medical Aid Fund. The registered dependents on the medical aid are Grant, his wife, and their two kids.
8. Grant contributed R3 000 per month to a ‘tax-free investment’ fund (as defined) for the entire 2024 year of assessment. He earned dividends of R6 800 and interest of R4 200 from the tax-free investment. The
9. Grant earned South African source interest of R25 000 in respect of a South African government bond, and foreign interest of R6 000 in respect of a foreign debenture.
10. Local dividends of R27 000 were earned by Grant in the current year, however, he had incurred non-capital expenditure of R6 000 in earning these dividends.
11. Grant incurred premiums on a life insurance policy amounting to R42 800 during the current year of assessment.
12.Grant owns a beach facing apartment in Ballito, Kwa Zulu Natal, which he rents out during the peak periods in the year. He renovated the main bedroom to include a modern ensuite bathroom at a cost of R30 000. The apartment generated net rentals of R111 000 after deducting the cost of the renovations.
Q.2) Calculate the net normal tax payable by Grant Reynolds for the year of assessment ended 29 February 2024. Show all calculations.Include nil value items in your answer, give a reason for it.
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