Solution- Question 1
Abbey Smith
If Abbey remains a resident
GROSS INCOME
Income from consulting work 400,000 1
Foreign dividend received Taxed on worldwide income 7,500 1
Foreign interest received Taxed on worldwide income 2,400 1
SA interest received 23,000 1
Annuity income received (R1 000 × 12) 12,000 1
Royalties received 50,000 1
INCOME 494,900
Exempt Income
less Exemption - s10B(3) 25 -4,167 1
R7 500 × /45
less Exemption - s10(1)(i) R23 800 limited to -23,000 1
less Exemption - s10 A A
Y = /B × C
R80 000 -10,000 2
Y= /(R1 000 × 8y × 12m) × R12 000
INCOME 457,733
Less deductions
less Other expenditure - s11(a) -120,000 1
Taxable income 337,733
11
If Abbey is a non-resident R
Foreign dividend received Not SA source 0 1
Foreign interest received Not SA source 0 1
Income from consulting work 400,000 1
SA interest received 23,000 1
THE QUESTION STATES THAT DETARMINE THE GROSS INCOME ( CALCULATE JUST THE GROSS INCOME)
AMOUNTS BELOW ARE ONLY FOR DEMONSTATRATION
In terms of s10(1)(h) she should not be physically present in the Republic for > 183 days in 1
aggregate during the 12-month period preceding the payment of the interest or in any time
during the 12-month period preceding the accrual of the interest or carrying on a business
through a permanent establishment in SA.
This has the following effect (assuming interest accrues evenly over the year):
At the end of the year of assessment, interest received will only be exempt to the extent that it -11,532 2
relates to the part-period once she has been out of the country for 182 days. This is the point at
which the number of days during which she was present in SA prior to 1 March 2021 that will
fall within the preceding 12 months will equal exactly 183.
Exempt in terms of s10(1)(h) 183
R23 000 × /365
s10(1)(i) interest exemption in respect of portion not exempt i.t.o. s10(1)(h), limited to -11,468 1
Annuity income received common law source 12,000 1
less s10 A A
Y = /B × C
R80 000 -10,000 1
Y= /(R1 000 × 8y × 12m) × R12 000
Royalties received s9(2)(d) 50,000 1
s10(1)(l ) -50,000 1
The royalty only accrued on 15 January 2022 and she has been out of the country for more than
183 days in the preceding 12 months.
Taxable income 282,000
A withholding tax of 15% × R50 000 would have been paid to CSARS on her behalf i.t.o. 1
s49B(1).
less Other expenditure - s11(a) -120,000 1
14
Solution-Question 2
PART A
Mr Boyes R R
Capital portion = 90 000
/150 000 = 60% 1
Annuity - Taxable
Received in current year 3
/12 x 15 000 3,750 1
Exempt portion: S10A 90
( /150) x 3 750 = 60% -2,250 1
Commuted Amount 80,000
Total capital portion X=A-D 90,000 A
Already claimed: 2022 year exempt portion -2,250 D
2021 year (6 250 x 60%) -3,750 D
(R15 000 x 5/12 = 6 250)
Capital portion remaining R(90 000 - 6 000) 84,000 1
Therefore the full R80 000 is exempt -80,000 1
Total taxable income relating to 1,500
annuity
PART B
Mrs Tandi
Salary - gross income para (c) 10 000 x 10 months 100,000 1
Workman's Compensation 400,000 1
Exemption - s10(1)(gB)(i) -400,000 1
Employer lump sum "Gross income" par (d) 350,000 1
Exemption S10(1)(gB)(iii) should not exceed an amount of R300 000 -300,000 1
Taxable income 150,000
5
Note: The R50 000 taxable portion of the employer lump sum is regarded as a 'severance
benefit' as defined and will be taxed separately in terms of the retirement lump sum table as set
out in the Second Schedule.