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Taxable Income Calculation Breakdown

The document outlines the gross income, deductions, and taxable income calculations for an individual, detailing various income sources such as salary, dividends, interest, and rental income. It also specifies exemptions, deductions for pension contributions, and tax payable after applying relevant rebates. Additionally, it addresses the tax implications of income received by a minor child and the associated exemptions.

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19 views3 pages

Taxable Income Calculation Breakdown

The document outlines the gross income, deductions, and taxable income calculations for an individual, detailing various income sources such as salary, dividends, interest, and rental income. It also specifies exemptions, deductions for pension contributions, and tax payable after applying relevant rebates. Additionally, it addresses the tax implications of income received by a minor child and the associated exemptions.

Uploaded by

anthonylebogo9
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as XLSX, PDF, TXT or read online on Scribd

Class example – Suggested solution

Gross income
s1 gross income definition
Salary university - special inclusion - services rendered 480,000
par (c)
s1 gross income definition
Dividends – special inclusion 24,000
par(k)
Interest – Local - complies with gross income definition s1 gross income definition 36,000

– Foreign - SA residents taxed on world wide income s1 gross income definition 12,000

Taxable income from letting of moveable property s1 gross income definition 8,000
Fringe benefit medical / special inclusion (R700 x 12) s1par (i)/7th schedule 8,400
568,400
Less: Exempt income
Foreign interest -
Local interest (younger than 65) - R23 800 limited to actual R36 000 s10(1)(i) (23,800)
Local dividends - fully exempt s10(1)(k) (24,000)
520,600
Less: Deductions

Less: assessed loss on letting of fixed property - see note 1 s20 (4,000)
516,600

Less: Contribution to pension fund and RAF s11(F)


Actual (R3 000 x 12 = R36 000) 36,000 (36,000)
Limited to the lesser of:
(i) R350 000; or 350,000
(ii) 27,5% of the higher of: 142,065
remuneration 488,400
taxable income before s11F and s18A 516,600
(iii) Taxable income before capital gains (s 26A), s11F and s18A. 516,600
Therefore, deduction limited to actual
480,600

Less: Donation s18A


Actual: R15 000 15,000
Limited to 10% x R480600 48,060 (15,000)
Taxable income 465,600

Tax 77,362
Taxable income 465,600
Threshold 370,501
Tax rate 0.31

Tax per table 77362 + (465600 - 370501) x 0.31 s5 106,843

Less primary rebate s6 (17,235)


Less s6A rebate (728 x 12) s6A (8,736)
Less s6B rebate (16 800 - (8736 x 4)) = Limited to R0 s6B
R10 000 Less 7.5% of taxable income (36045) x 25% 36,045 -
Tax payable 80,872

Note 1
Taxable income from letting of fixed property
Rental income
– House in London - SA residents taxed on WWI s1 gross income definition 26,000
Repairs and maintenance s11(d) (30,000)
Loss from letting of fixed property (4,000)
Lisa will only include 50% of the dividends, interest and rental

Dividends 12,000
Interest local 18,000
foreign 6,000

Assessed loss from letting of fixed property


(2,000)

34,000

Note – exemptions change as follows:

Dividends 24 000/2 (12,000)


Interest local 36 000/2 (23 800 ltd to) (18,000)
(30,000)
Her daughter received
Dividends 24,000
Interest – foreign 12,000
local 36 000
72 000

But because it is donation,


settlement or other disposition to
a minor child, Lisa will be taxable
thereon according to sec 7(3)

She (Lisa) will get the relevant


exemption

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