Tutorial Letter 101/3/2020: Taxation of Individuals

TAX3702/101/3/2020
Tutorial Letter 101/3/2020

TAXATION OF INDIVIDUALS
TAX3702
Semesters 1 and 2
Department of Taxation
This tutorial letter contains important information about
this module.
CONTENTS
Page
1 INTRODUCTION TO THE MODULE ............................................................................................ 3

2 PURPOSE AND OUTCOMES ...................................................................................................... 4
2.1 Purpose ............................................................................................................................... 4
2.2 Outcomes and assessment criteria ...................................................................................... 4
3 LECTURER(S) AND CONTACT DETAILS................................................................................... 5
3.1 Administrative queries .......................................................................................................... 5
3.2 Module content-related queries ............................................................................................ 6
3.3 Academic administrative queries .......................................................................................... 6
4 RESOURCES ............................................................................................................................... 7
4.1 Study material ...................................................................................................................... 7
4.2 Prescribed book ................................................................................................................... 7
4.3 E-Reserves/recommended books and reading lists ............................................................. 8
4.4 Library services and resources information 9
4.5 Pocket calculators ................................................................................................................ 8
5 STUDENT SUPPORT SERVICES ................................................................................................ 9
FREE COMPUTER AND INTERNET ACCESS ............................................................................ 9
6 STUDY PLAN ............................................................................................................................... 9
7 ASSESSMENT ........................................................................................................................... 10
7.1 Assignments ...................................................................................................................... 10
7.2 Examination ....................................................................................................................... 13
7.3 Supplementary, aegrotat or special examinations .............................................................. 13
8 OTHER MATTERS ..................................................................................................................... 14
8.1 Plagiarism .......................................................................................................................... 14
8.2 How do I redirect my mylife unisa e-mail address to another account?. ............................. 15
8.3 Health conditions such as HIV/AIDS 15
9 FREQUENTLY ASKED QUESTIONS ........................................................................................ 15
10 IN CLOSING ............................................................................................................................... 16
ANNEXURE A: ASSIGNMENT 1 FOR FIRST SEMESTER STUDENTS .............................................. 17
ANNEXURE B: ASSIGNMENT 2 FOR FIRST SEMESTER STUDENTS .............................................. 31
ANNEXURE C: ASSIGNMENT 1 FOR SECOND SEMESTER STUDENTS ......................................... 35
ANNEXURE D: ASSIGNMENT 2 FOR SECOND SEMESTER STUDENTS ......................................... 50
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TAX3702/101
Dear Student
As part of this tutorial letter, we wish to inform you that Unisa has implemented a transformation charter
based on five pillars and eight dimensions. In response to this charter, we have also placed curriculum
transformation high on the agenda. For your information, curriculum transformation includes the following
pillars: student-centred scholarship, the pedagogical renewal of teaching and assessment practices, the
scholarship of teaching and learning, and the infusion of African epistemologies and philosophies. These
pillars and their principles will be integrated at both the programme and module levels, as a phased-in
approach. You will notice the implementation thereof in your modules, and we encourage you to fully
embrace these changes during your studies at Unisa.
1 INTRODUCTION TO THE MODULE

We have pleasure in welcoming you as a student to the module, TAXATION OF INDIVIDUALS (TAX3702).
We hope that you will find your studies interesting and rewarding and that you will be successful in the
examination.
Please read this tutorial letter carefully to orientate yourself with the requirements for this module.
This module is practical and therefore you will have to learn rules and how to apply them. This means that
you will have to start with your studies immediately as the semester is approximately 13 weeks long, and
you will need to give yourself time to practice what you learn. For your convenience, we include a proposed
study programme indicating the MINIMUM time you will have to put aside for each learning unit as well as
the specific outcomes and assessment standards for the module. The specific outcomes and assessment
standards for the module will be provided again in every learning unit.
There are several lecturers in the Department of Taxation’s undergraduate section who will be assisting
you, but your primary lecturers are Mr Ari Swanepoel and Mr Mark van Dyk.
How to get started on myUnisa
Owing to the nature of this module, you can read about the module and find your study material online.
Go to the website at https://my.unisa.ac.za and log in using your student number and password. You will
see [TAX3702-20-S1/S2] in the row of modules displayed in the orange blocks at the top of the webpage.
Select the More tab if you cannot find the module you require in the blocks displayed. Then click on the
module you want to open.
You will receive this tutorial letter and a printed copy of the online study material for your module. While
the printed material may appear different from the online study material, it is the same.
It is important that you use myUnisa regularly. This technological resource makes it easier to communicate
with the University, your lecturers and fellow students about your studies. By using myUnisa, you will be
able to submit your assignments electronically, access the library resources, get your assignment marks
and take part in activities, tasks and discussions relating to the contents of this module. Register TODAY
and visit it regularly.
In addition to registering on myUnisa, it is crucial that you activate your myLife e-mail address, as all your
official correspondence regarding this module will be sent to your myLife address and not your private e-
mail address. Please consult the Study @ Unisa brochure: www.unisa.ac.za/brochures/studies, for more
information on the activation of your myLife e-mail address as well as obtaining access to the myUnisa
module website.
All study material is available online. You will receive some printed materials as a back-up. HOWEVER,
DO NOT WAIT FOR PRINTED MATERIALS BEFORE YOU START STUDYING.
We wish you much success in your studies!
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2 PURPOSE AND OUTCOMES
2.1 Purpose
The aim of this module is to provide learners with a sound knowledge of the Income Tax Act, applicable
to individuals (natural persons) as well as the application of the principles governing individuals in order to
determine their income tax liability. The module encompasses the calculation of income tax liability inclu-
ding the calculation of fringe benefits, retirement benefits, investment income and capital gains tax.
Students will also learn to calculate pre-paid taxes, both employees’ tax and provisional tax. The taxation
of non-residents also forms part of the content of the module. You will also deal with donations tax, estate
duty and the taxation of farming income.
2.2 Outcomes and assessment criteria
We will assess whether you are competent in the taxation of individuals by means of case studies (real-
life situations). You will be required to apply a thorough theoretical knowledge to the calculation of the tax
liability of natural persons, both resident and non-resident, in terms of the South African Income Tax Act.
You will also be required to apply a thorough theoretical knowledge to the calculation of donations tax and
estate duty.
The assessment will be conducted in terms of the following specific outcomes:
SPECIFIC OUTCOME 1:
Students must be able to demonstrate a well-rounded and systematic knowledge base in determining
the total net tax liability in terms of the Income Tax Act as it applies to an individual resident in South
Africa.
Assessment Criteria
Students are competent if evidence shows that they are able to:
1.1 discuss and calculate the gross income and special inclusions of an individual
1.2 identify and apply exempt or partially exempt income
1.3 identify, calculate and apply the general, specific and prohibited deductions
1.4 calculate and apply the taxable capital gain/loss of an individual
1.5 calculate the net normal tax liability
1.6 calculate the tax liability in respect of lump sums
1.7 identify the tax status of insolvent persons
1.8 calculate the taxable income/loss of farmers
SPECIFIC OUTCOME 2:
Students must be able to demonstrate an understanding and knowledge of the total net tax liability, in
terms of the Income Tax Act, as it applies to an individual who is considered a non-resident in South
Africa for taxation purposes, as well as an ability to evaluate and apply this knowledge.
Assessment Criteria
2.1 apply the source rules for different types of income

2.2 apply exemptions applicable for different types of income
2.3 calculate net normal tax liability and withholding taxes
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SPECIFIC OUTCOME 3:
Students must be able to demonstrate an ability to gather, process and apply information in the context
of employees’ tax and provisional tax in terms of the Income Tax Act.
Assessment Criteria
3.1 calculate employees’ tax

3.2 calculate provisional tax
3.3 apply penalties and interest in respect of provisional tax
SPECIFIC OUTCOME 4:
Students must be able to demonstrate integrated knowledge of donations tax liability in terms of the
Income Tax Act as it applies to an individual.
Assessment Criteria
4.1 discuss, apply and reflect critically on the disposal of property, which constitutes a donation or
deemed donation with reference to relevant legislation
4.2 identify and explain donations, which are exempt from donations tax
4.3 calculate the donations tax payable on a donation
SPECIFIC OUTCOME 5:
Students must be able to demonstrate the ability to communicate how the estate duty liability in a
deceased estate is calculated in accordance with the Administration of Estates Act 66 of 1965, using
appropriate professional discourse.
Range: Students will be required to calculate the estate duty payable in a deceased estate and identify
the person(s) responsible for the payment thereof.
Assessment Criteria
5.1 identify property and deemed property in a deceased estate

5.2 determine and communicate the value to be used for estate duty purposes of all property and
deemed property in a deceased estate, including limited interests
5.3 identify and apply the various deductions and rebates allowed for estate duty purposes according
to current legislation
5.4 calculate and apportion the estate duty liability of a deceased estate
3 LECTURER(S) AND CONTACT DETAILS

3.1 Administrative queries
For any contact with the University concerning administrative matters, please consult the Study @ Unisa
brochure: www.unisa.ac.za/brochures/studies. Enquiries in connection with administrative matters must
5
be addressed to the relevant administration department to which the problem applies and NOT to the
lecturers.
Administrative enquiries should be directed to:
E-mail addresses Use to enquire about:

CASenquiries-undergraduate @unisa.ac.za CAS-related enquiries
Administrative enquiries
econ@unisa.ac.za Registration and credit/exemption
study-info@unisa.ac.za Applications and registrations
assign@unisa.ac.za Assignments (not for submission purposes)
exams@unisa.ac.za Examinations
despatch@unisa.ac.za Study material
finan@unisa.ac.za Student accounts
gaudeamus@unisa.ac.za Graduation ceremonies
myUnisaHelp@unisa.ac.za myUnisa
myLifeHelp@unisa.ac.za myLife e-mail
Link to Unisa website relating contact details for student enquiries:
http://www.unisa.ac.za/sites/corporate/default/Contact-us/Student-enquiries
When corresponding with the University in writing, always supply:
 your student number,

 module code and
 a telephone number where we can contact you.
3.2 Module content-related queries
Ensure that you have the right module code on hand when you contact the lecturers.
Available lecturers:
The lecturers who are available to assist

you are:
Mr A Swanepoel 012 429 4313
Mr M van Dyk 012 429 4918
Ms R Moosa 012 429 2883
Ms K de Hart 012 429 4173
079 365 1124 (Please do not send text messages, make

Departmental cellphone number:
missed calls or send “please call me” messages to this
number, it will not be responded to.)
TAX3702-20-S1@unisa.ac.za (Semester 1)
E-mail contact with lecturers: TAX3702-20-S2@unisa.ac.za (Semester 2)
Course contact tab on myUnisa
3.3 Academic administrative queries
Ms S Brecher (Departmental Secretary) 012 429 4494
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4 RESOURCES
4.1 Study material
All the following tutorial letters for this module will become available on myUnisa, at https://my.unisa.
ac.za:during during the semester:
PLEASE NOTE: Tutorial Letters 201, 202 and 203 will not be provided to you in printed format. You must
download them yourself from myUnisa under ‘official study material’.
Tutorial Content Learning units to

Letter be covered
101 This is this tutorial letter and it contains very important information
regarding the module. Keep it at hand, as you will have to refer to it
regularly.
NB:
Includes the compulsory Assignment 1 that counts as part of the year
mark, for both semesters. 1 to 5
Includes Assignment 2 that counts as part of the year mark, for both
semesters. 1 to 7
102 Contains the first of two study guides you will use for this module. 1 to 6
103 Contains the second study guide you will use for this module. 7 to 13
201 Contains:
Assignment 3 – Mock exam paper. 1 to 13
Solution to Assignment 3.
202 Contains the solution to Assignment 1.
203 Contains the solution to Assignment 2.
Further tutorial letters
Further tutorial letters may be published on myUnisa during the year as the need arises. Tutorial letters
are all sequentially numbered.
Additional study material
The above study material is the only study material, which the University provides to you. The lecturers
believe that this is sufficient for you to complete your studies successfully in conjunction with the prescribed
textbook.
Each year the Income Tax Act is amended. Remember that if you become at tax practitioner, you will
need to update your knowledge continually.
4.2 Prescribed book
It is essential that you obtain the following prescribed textbook:
A Student’s Approach to Income Tax: Natural Persons 2020, Coetzee, K. et al. LexisNexis.
ISBN 978-0-6390-0094-7.
You must obtain the prescribed textbook as soon as possible in the semester. Note that the library does
not provide for this book specifically and that copies of the book may not always be readily available in the
library.
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Please refer to the list of official booksellers and their addresses in the Study @ Unisa brochure:
www.unisa. ac.za/brochures/studies.
4.3 E-reserves/recommended books and reading lists
There are no e-reserves, recommended books or reading lists for this module.
4.4 Library services and resources information
The Unisa Library offers a range of information services and resources:
 for brief information go to: https://www.unisa.ac.za/library/libatglance

 for more detailed Library information, go to http://www.unisa.ac.za/sites/corporate/default/Library
 for research support and services (e.g. Personal Librarians and literature search services), go to
http://www.unisa.ac.za/sites/corporate/default/Library/Library-services/Research-support
The Library has created numerous Library guides: http://libguides.unisa.ac.za
Recommended guides:
 request and find library material/download recommended material:

http://libguides.unisa.ac.za/request/request
 postgraduate information services: http://libguides.unisa.ac.za/request/postgrad
 finding and using library resources and tools:
http://libguides.unisa.ac.za/Research_skills
 Frequently asked questions about the Library: http://libguides.unisa.ac.za/ask
 Services to students living with disabilities:
http://libguides.unisa.ac.za/disability
Important contact information:
 https://libguides.unisa.ac.za/ask - Ask a Librarian

 Lib-help@unisa.ac.za - technical problems accessing library online services
 Library-enquiries@unisa.ac.za - general library related queries
 Library-fines@unisa.ac.za - for queries related to library fines and payments
4.5 Pocket calculators
Candidates may only use silent, electronic, battery-driven pocket calculators subject to the following condi-
tions:
 calculators must be cordless, and may not have print-out facilities or alpha keys;
 any financial calculator will be allowed, as the following tables will not be provided:
 tables of present value factors for various discount rates for varying periods; and
 tables of future value factors for various interest rates for varying periods;
 the calculator function on mobile telephones or any electronic device (i.e. laptops and/or any Smart
Phone) may not be used; and
 candidates may not share a calculator with another candidate in the examination room.
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5 STUDENT SUPPORT SERVICES

The Study @ Unisa brochure is available on myUnisa: www.unisa.ac.za/brochures/studies
This brochure has all the tips and information you need to succeed at distance learning and, specifically,
at Unisa.
PLEASE ACTIVATE YOUR MYLIFE E-MAIL ACCOUNT SO THAT WE CAN COMMUNICATE WITH
YOU!
For this module, we will make use of the following using myUnisa:
 “Official study material” – all tutorial letters that you will need for this module
 “Course contact” – module e-mail for technical questions
 “Additional resources” – additional resources will be uploaded here, where applicable
 “Schedule” – you will be provided with a weekly study schedule
 “Announcements” – announcements will be made when required
 “Discussion forum” – please take part in meaningful content-related discussions
 “FAQ” – please read this
 “Self-assessment” – short questions at the end of learning units
Please arrange to visit myUnisa regularly to make use of these valuable resources.
FREE COMPUTER AND INTERNET ACCESS
Unisa has entered into partnerships with establishments (referred to as telecentres) in various locations
across South Africa to enable you (as a Unisa student) free access to computers and the internet. This
access enables you to conduct the following academic related activities: registration; online submission of
assignments; engaging in e-tutoring activities and signature courses etc. Please note that any other acti-
vity outside of these is for your own costing e.g. printing, photocopying etc. For more information on the
tele-centre nearest to you, please visit www.unisa.ac.za/telecentres.
6 STUDY PLAN
Below is a proposed weekly plan for TAX3702 – based on a minimum time spent on the module of 12
hours per week. Please keep in mind that you have 13 weeks of study from registration to start of exams.
Semester 1 commences 22 January 2020 and Semester 2 commences 10 July 2020. If you start later,
you need to realise that you will have to catch up the time that you have missed.
Minimum
Study S1 S2 Topic time
Week needed
1 20/1 6/7 Learning unit 1: Introduction to Taxation 6 hours

Learning unit 2: Gross income and special inclusions 6 hours
2 27/1 13/7 Learning unit 2: Gross income and special inclusions 6 hours
Learning unit 3: Fringe benefits and allowances 6 hours
3 3/2 19/7 Learning unit 3: Fringe benefits and allowances 12 hours
4 10/2 27/7 Learning unit 4: Exempt income 6 hours
Learning unit 5: Deductions 6 hours
5 17/2 3/8 Learning unit 5: Deductions 12 hours
Do Assignment 1 2,5 hours
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Minimum
Study S1 S2 Topic time
Week needed
6 24/2 10/8 Learning unit 6: Capital gains tax 12 hours

7 2/3 17/8 Learning unit 6: Capital gains tax 6 hours
Learning unit 7: Lump sum benefits 6 hours
Do Assignment 2. 2 hours
8 9/3 24/8 Assignment 1 is due next week ensure you have done it. (2,5 hours)
Learning unit 8: Non-residents 6 hours
Learning unit 9: Prepaid taxes 6 hours
SUBMIT Assignment 1 (Tutorial letter 101)
S1: Due date 16 March 2020.
S2: Due date 31 August 2020.
9 16/3 31/8 ASSIGNMENT 1 DUE
Learning unit 9: Prepaid taxes 12 hours
10 23/3 7/9 Assignment 2 is due next week ensure you have done it. (2 hours)
Learning unit 10: Donations tax
Learning unit 11: Estate duty 6 hours
SUBMIT Assignment 1 (Tutorial letter 101) 6 hours
S1: Due date 30 March 2020.
S2: Due date 14 September 2020
11 30/3 14/9 ASSIGNMENT 2 DUE
Learning unit 11: Estate duty 6 hours
Learning unit 12: Farming income 6 hours
12 6/4 21/9 Learning unit 12: Farming income 6 hours
Do Assignment 3 (Tutorial Letter 201) under exam conditions and 4 hours
mark 3 hours
Revision for exam
13 13/4 28/9 Revision for exam 12 hours
7 ASSESSMENT
Assignment 1 Assignment 3
Assignment 2 Exam
Compulsory for
Self- Sub-minimum
exam admission
75% of year mark of 40%
25% of year assessment
mark does not count
20% of final mark 80% of final mark
7.1 Assignments
There are three assignments per semester. Assignments 1 and 2 are in tutorial letter 101/3/2020 and
Assignment 3 is in Tutorial Letter 201/1/2020 (1st semester) and Tutorial Letter 201/2/2020 (2nd semester).
As a Unisa student, you do not write tests and therefore you need to use the assignments as a substitute.
It is part of your learning process to receive feedback in the form of an assignment solution. The comple-
tion of your assignment will also help you, as you will only obtain a total understanding of this module
through practice by working out questions.
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You MUST keep a copy of your completed compulsory assignment, so that in the event that the assign-
ment is lost, before it can be assessed, you will have a copy that we can mark.
Submission of assignments
Assignments, both written and mark-reading sheets, can be submitted by post or electronically via
myUnisa. See the Study @ Unisa brochure: www.unisa.ac.za/brochures/studies, for the different ways
in which assignments can be submitted. Assignments may not be faxed or e-mailed.
A mark-reading sheet is required for answering Assignment 1. Before completing the mark-reading sheet
please see the instructions contained in the Study @ Unisa brochure: www.unisa.ac.za/brochures/
studies. Read these instructions carefully and follow them exactly to avoid mistakes and delays.
PLEASE NOTE: Written assignments that are submitted electronically/online for this module must be in
PDF format.
For detailed information on assignments, please refer to the Study @ Unisa brochure: www.unisa.ac.za/
brochures/studies.
PLEASE NOTE: Information about assignments, (e.g. whether the university has received your
assignment or the date on which an assignment was returned to you) can be obtained on myUnisa.
Marking of assignments
 Assignment 1 will be marked by a computer.
 Assignment 2 will be marked electronically by team of markers.
 Assignment 3 is a self-assessment assignment, which means that you do not submit it to Unisa and
you mark it yourself.
You will receive the correct answers automatically for multiple-choice questions. The solutions to all the
assignments will only be available on myUnisa for students registered for this module. Feedback
regarding assignments will be “announced” on myUnisa. The assignments and the feedback on these
assignments constitute an important part of your learning and should help you to be better prepared for
the next assignment and the examination.
The feedback on the self-assessment assignment is included in Tutorial Letter 201. This will enable you
to mark your assignment as soon as you have completed it.
Due dates
The due dates for the assignments are as follows:
FIRST SEMESTER
ASSIGNMENT DUE DATE UNIQUE NUMBER
1 (compulsory) 16 March 2020 835735

2 (contributes toward year mark) 30 March 2020 811177
3 (self-assessment)
SECOND SEMESTER
ASSIGNMENT DUE DATE UNIQUE NUMBER
1 (compulsory) 31 August 2020 604693
2 (contributes toward year mark) 14 September 2020 796321
3 (self-assessment)
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Finality of due dates
Please remember that Assignment 1 is marked by the computer and these marks are finalised on a given
date, therefore NO extensions can be granted, WHATSOEVER.
PLEASE NOTE: Assignment 1 counts 25% and Assignment 2 counts 75% of your year mark. Only
Assignment 1 is compulsory, this means that you have to do Assignment 1 and submit it if you would like
admission to the exam. It would be in your own interest to submit Assignment 2 as well, as it contributes
75% to your year mark.
The assignments do not cover all the essential work of the module – they are just a tool to assist you to
study the material in good time. Furthermore, doing assignments is not sufficient preparation for the exa-
mination. For your own good, and in preparation for the examination, we recommend that over and above
the assignments, you should do all the activities properly.
Instructions regarding electronic submission of assignments
Submit Assignment 1 using myUnisa:
 Go to www.unisa.ac.za
 Go to myUnisa
 Enter your student number and password
 Select your module from the orange strip
 Click on “Assignments”
 Find the course code in the Course column
 Find the corresponding number of the assignment, e.g. 01 or 02 in the Ass. No. column
 Click on the Submit link in the Action column next to the assignment number
 Enter the total number of questions for your assignment in the Number of Questions field
 Click on the Continue button
 The number of questions requested in the previous step will now be displayed with five answer
options next to each one. Please note that each row represents a question in your assignment
 Click on the radio button [the small circle] that corresponds to your answer for that question. If you
want to restart the assignment, click on Clear Form to remove all your selections and start again
 Click on the Continue button after you have completed all the questions and checked if you are
happy with all your answers
 If you want to redo the answers to the assignment, click Back
 Click on the Continue button to submit your assignment. If you do not click Continue, no sub-
mission action will take place
 The assignment submission report is your proof that your assignment was submitted. You must
print this page for your record purposes.
 Click on the Return to Assignment List button to go back to the Assignment overview screen.
Submit Assignment 2 using myUnisa:
 Go to myUnisa.
 Log in with your student number and password.
 Select the module.
 Click on “Assignments”.
 Click on the assignment number you want to submit.
 Follow the instructions on the screen.
Remember that your assignment document (attachment) must be in a PDF-format only.
The RESUBMIT feature for online assignments submission
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If you have made a mistake while completing a multiple-choice questionnaire online or uploaded the wrong
file for an assignment, this feature in the myUnisa Assignments tool allows you to replace your assignment
submission without any intervention from Unisa staff. It’s called the RESUBMIT function.
Click on it ONLY to reload a file or redo the multiple-choice questions if you have to – it is NOT mandatory.
After you resubmitted an assignment successfully, your previous submissions will show as Cancelled.
The CLOSED action link
The assignment action link will display as CLOSED under one of the following conditions:
 Your submitted assignment file or multiple-choice questions is already in the process of marking (if
you submit early, this can happen before the due date and you will therefore not be allowed to
replace the file).
 You have not obtained admission to the examination.
 The assignment is no longer open for submissions.
7.2 Examination
The examination counts 100 marks. The entire syllabus is covered in the examination and you can there-
fore not afford to leave out any part of it.
The mark obtained for this examination will contribute 80% towards the final mark for this module. In order
to obtain admission to the examination you must submit Assignment 1 (the compulsory multiple-choice
assignment) on or before the due date. Assignment 2 is not compulsory but it will count towards your year
mark.
Once again, all-important information regarding the administration of the exam is contained in the Study
@ Unisa brochure: www.unisa.ac.za/brochures/studies.
Final mark
The final mark for this module is calculated as follows, an example:
Final mark
Assignment Weighting Mark achieved (weight x actual mark)
1 25% x 20% = 5% 80% 4%
2 75% x 20% = 15% 70% 11%
3 0% 75% 0%
Examination 80% 64% 51%
Final mark 66%
A student must obtain a final mark of 50% or more to pass this module.
You have to achieve 40% or more in the exam before your year mark will be included to calculate a final
mark.
7.3 Supplementary, aegrotat or special examinations
Supplementary, aegrotat and special examinations are allowed in this module.
You will not be required to submit assignments if you are a supplementary, aegrotat or special examination
student.
Supplementary, aegrotat or special examination student – your year mark from the previous semester will
be carried forward.
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As a supplementary student, you will still have access to myUnisa and we encourage you to make use of
all the resources.
8 OTHER MATTERS
8.1 Plagiarism
Plagiarism is the act of taking words, ideas and thoughts of others and passing them off as your own. It
is a form of theft, which involves a number of dishonest academic activities.
The Disciplinary Code for Students (2004) is given to students at registration. Students are advised to
study the Code, especially Sections 2.1.13 and 2.1.14 (2004: 3-4). Kindly read the University’s Policy on
Copyright Infringement and Plagiarism as well.
Plagiarism declaration:
By submitting “YOUR MODULE NAME”, assignment number THE RELEVANT ASSIGNMENT

NUMBER, I declare that:
 I have read the Unisa Students’ Disciplinary Code;

 I know what plagiarism is, that plagiarism is wrong and that disciplinary steps can be taken
against me if I am found guilty of plagiarism;
 This assignment, submitted by myself, is my own work and that I have referenced all the sources
that I have used;
 I have not allowed any other student to copy my work;
 I know that if I am found to be in violation of this declaration, I will receive 0% for the assignment
involved.
Please note: You do not have to submit the declaration. By submitting any assignment for “YOUR
MODULE NAME”, you automatically declare that you adhere to all the above with regard to the specific
assignment.
8.2 How do I redirect MY MYLIFE UNISA E-MAIL ADDRESS TO another account?
Redirected messages appear as though they came from the original sender. Use a redirect message rule
when you want replies to redirected messages to go to the original sender.
Sign into the outlook web app by doing the following:
1. Sign in on myUnisa.
2. Select the More Sites tab.
3. Under Projects, select myLife e-mail access
4. You are now in Outlook.
5. At the top of the page, select Settings > Options, and then select one of the following:
6. Organize e-mail > Inbox rules > New
7. OR
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8. Mail > Automatic processing > Inbox rules > New > Create a new rule for arriving messa-
ges
9. Type a name for your rule.
10. Under When the message arrives, select Apply to all messages.
11. Under Do the following, select Forward, redirect, or send > Redirect the message to.
12. Enter the e-mail address you want in the To box, or choose it from your list of contacts.
13. Choose OK to save your selections, and OK or Save to create the rule.
A copy of messages that you redirect or forward remains in your mailbox. If you add an action to delete
the message, the message goes to your Deleted Items folder and is counted against your mailbox limit. If
you exceed your mailbox limit, you may be blocked from sending or receiving new messages. Forwarding
rules also may not work until you delete enough messages to bring the total below your mailbox limit.
When you create a forward or redirect rule, you can add more than one address to send to. The number
of addresses you can send to may be limited depending on your account settings. If you create a rule with
more than one address, test it to make sure it works.
If you don’t want a forward or redirect inbox rule to apply to all messages, choose any option other than
Apply to all messages.
Your administrator may have blocked the ability to use forward or redirect rules to send mail to some or all
domains outside of your own. After you’ve created a redirect or forward rule, test the rule by sending a
message from a third account to your account. Then check the account your rule is set to redirect or to
forward messages to.
8.3 Health conditions such as HIV/AIDS
If you are a student with a health-related condition such as HIV/AIDS, or have a close family member with
this or another health condition, then you need to take cognisance thereof in planning your studies. It will
be unwise to cram tasks as this creates enormous stress, which negatively impacts on your performance
as a student, as well as your health. Planning your studies is essential so that you work consistently and
make progress.
It is wise to know your health status (HIV/AIDS, blood pressure, diabetes, cholesterol etc.). If you are
informed by medical tests, with the necessary medical and supportive interventions, you can prolong and
improve the quality of your life and success in your studies.
9 FREQUENTLY ASKED QUESTIONS

1. Must I buy the prescribed textbook or can I use a previous version?
The Income Tax Act is amended (changed) each year with the budget speech. This means that
old textbooks will be out of date. Please only use the current version of the textbook.
2. I think that I found a mistake in the study material, what should I do?
In spite of the care taken to ensure that the tutorial letters, assignments and solutions are compre-
hensible and free from errors, omissions and discrepancies may occur, as our study material must
be updated annually. Should you come across such matters, or matters that are not clearly expres-
sed, kindly let us know to enable us to make the necessary correction. As soon as we discover a
mistake we will make an announcement on the myUnisa system, please ensure that you register
yourself to receive e-mails from the system.
15
3. Please could I have the answers to the old exam papers that are available on myUnisa?
These are uploaded automatically on myUnisa. We advise you, however, not to focus on old exa-
mination papers only as the content of modules and therefore examination papers changes from
year to year. You may, however, accept that the type of questions that will be asked in the exami-
nation will be similar to those asked in the activities in your study guide and in the assignments.
Remember that the solutions to the previous exam papers are not made available to students, as
they are out of date. Assignment 3 is a previous exam paper that has been updated with the
legislative amendments and a new solution is provided for you in Tutorial Letter 201. Other exam
questions have in most instances been incorporated into your study guide as additional questions
to work through.
4. I received my study material too late to submit my first assignment on time. What do I do now?
You will have to prove that you indeed received your study material late and submit it with a
motivated request to examadmission@unisa.ac.za.
You can also refer to the Study @ Unisa brochure: www.unisa.ac.za/brochures/studies, which contains
an A-Z guide of the most relevant study information.
10 IN CLOSING
We would like to take this opportunity to extend our best wishes for success in your studies and assure
you that we realise that you are not studying under ideal conditions. We invite you to communicate with
us on any matter concerning this module.
16
TAX3702/101
ANNEXURE A: ASSIGNMENT 1 FOR FIRST SEMESTER STUDENTS
SUBMISSION OF ASSIGNMENT 1 IS COMPULSORY TO OBTAIN ADMISSION TO

THE EXAMINATION. ADMISSION WILL BE OBTAINED BY SUBMITTING THE
ASSIGN-MENT AND NOT BY THE MARKS YOU OBTAIN FOR IT. THIS ASSIGN-
MENT WILL COUNT A MAXIMUM OF 5% OF YOUR FINAL MARK. PLEASE ENSURE
THAT THIS ASSIGNMENT REACHES THE UNIVERSITY ON OR BEFORE THE DUE
DATE SINCE LATE SUBMISSION WILL RESULT IN YOUR NOT BEING ADMITTED
TO THE EXAMINATION. NO CORRESPONDENCE OR TELEPHONIC CONVERSA-
TION WILL THEREFORE BE ENTERED INTO IN THIS REGARD.
IF YOU INTEND POSTING YOUR ASSIGNMENT, MAKE A COPY OF IT BEFORE

YOU POST IT TO UNISA, IN CASE YOUR ASSIGNMENT IS LOST IN THE POST. WE
ADVISE YOU, IF POSSIBLE, TO SUBMIT YOUR ASSIGNMENT ELECTRONICALLY.
Note:
(1) Questions can be answered on a mark-reading sheet or submitted electronically via the myUnisa
online system.
(2) Before completing the mark-reading sheet, study the instructions in the Study @ Unisa brochure:
www.unisa.ac.za/brochures/studies. Read these instructions carefully and follow them exactly to
avoid mistakes.
(3) Do your calculations on a separate piece of paper before you complete the mark-reading sheet.
IMPORTANT INFORMATION ON MULTIPLE-CHOICE ASSIGNMENTS
REMEMBER
 There is only one correct answer to each question.

 All questions are equal in value.
 Only the mark-reading sheets provided may be used.
 Colour in the correct block with an HB pencil.
 Fill in your student number correctly.
 Fill in the assignment number correctly.
 Fill in the unique assignment number for the specific semester and the module you are registered
for correctly. Every assignment marked by the computer has a unique number. The number
contains information on the course code and assignment number. When the computer reads the
mark-reading sheet with, say, the unique number 612166, it recognises it as Assignment 1 for that
specific module.
 Send only your mark-reading sheet to the Assignment Section in the appropriate envelope.
 Make sure that you have enough mark-reading sheets.
DO NOT
 Make more than one mark per question.

 Tear or fold the mark-reading sheet.
 Staple the mark-reading sheet to another piece of paper.
 Colour outside the block.
 Colour in the block with a pen.
 Make corrections with correction fluid.
 Try to repair a torn mark-reading sheet with sticky tape – use another mark-reading sheet.
17
FIRST SEMESTER
ASSIGNMENT 1 (70 marks, 126 minutes)
COURSE DUE DATE UNIQUE NUMBER
TAX3702 16 March 2020 835735
ASSESSMENT CRITERIA FOR THIS ASSIGNMENT
For this assignment, you will need to have achieved the learning outcomes set out in learning units 1 to
5, as contained in Tutorial Letter 102/3/2020. This assignment will assess you on being able to select the
appropriate alternative that best reflects the quantitative/qualitative answer to a problem.
REQUIRED:
Select the number ((1) – (5)) that represents the correct answer to the question.
QUESTION 1
In which one of the following cases would a natural person, not ordinarily resident in the Republic of South
Africa, be a resident due to the physical presence test?
(1) Days in South Africa during the current (2020) year of assessment – 199 days; days in South Africa
during the five previous years of assessment: 103 days (2019); 204 days (2018); 97 days (2017);
207 days (2016); 305 days (2015)
91 days (2016); 299 days (2015)
(3) Days in South Africa during the current (2020 year of assessment – 91 days; days in South Africa
243 days (2016); 232 days (2015)
127 days (2016); 135 days (2015)
244 days (2016); 174 days (2015)
18
TAX3702/101
ASSIGNMENT 1: 1st SEMESTER 2020 (continued)
QUESTION 2
The Gross Income definition excludes amounts of a capital nature. Capital nature is often based on the
intention of the taxpayer, in this regard, which of the following statements are correct?
(i) The mere fact that a taxpayer sells an asset does not necessarily result in a change in intention.
(ii) A change in intention is not conclusive where a taxpayer decides to wait before selling the asset.
(iii) Where the taxpayer is seen to carry on a scheme of profit making, the proceeds are capital in nature.
(iv) Where an amount received has resulted in a “sterilisation” of rights or an asset, the amount is capital
in nature.
(v) If a taxpayer states his intention is capital in nature, it is not necessary to consider objective factors.
The correct statements are:
(1) (iii) and (v)

(2) (i), (iii) and (v)
(3) (iii), (iv) and (v)
(4) (i), (ii) and (iv)
(5) all the statements are correct.
QUESTION 3
Godfrey is 65 years old and married in community of property. His taxable income for the 2020 year of
assessment is R560 000. Calculate his ‘normal tax’:
(1) R127 593 [((R560 000 - R555 600) x 39%) + R147 891] - R22 014
(2) R 74 804 [((R560 000 - R555 600) x 39%) + R147 891] x 50%
(3) R149 607 [((R560 000 - R555 600) x 39%) + R147 891]
(4) R 35 118 [(((R560 000 x 50%) - R195 850) x 26%) + R35 253] - R22 014
(5) R135 387 [((R560 000 - R555 600) x 39%) + R147 891] - R14 220
QUESTION 4
Moosa is 50 years old and married out of community of property. Assume that his normal tax for the 2020
year of assessment is R147 500. His employer deducted R62 000 employees’ tax during the year.
Calculate Moosa’s ‘net normal tax’:
(1) R122 885 [R147 500 – (R14 220 + R7 794 + 2 601)]

(2) R63 486 [R147 500 – (R14 220 + R7 794) – R62 000]
(3) R71 280 [R147 500 – R14 220 – R62 000]
(4) R133 280 [R147 500 – R14 220]
(5) R125 486 [R147 500 – (R14 220 + R7 794)]
19
Use the following information below to answer questions 5 to 7.
Nkosi (50 years old and married in of community of property) received the following amounts during the
2020 year of assessment:
 A salary of R52 000 per month

 50% share of profits in a partnership amounting to R187 000
 Local interest amounting to R28 000 (not from a tax-free investment)
 Local dividends amounting to R14 000
 Taxable capital gain on sale of assets amounting to R320 000
 Allowable deductions amounting to R12 500
QUESTION 5
Calculate Nkosi’s ‘gross income’ for the 2020 year of assessment.
(1) R601 000 [R52 000 + R187 000 + R28 000 + R14 000 + R320 000]
(2) R426 500 [R52 000 x 12) + R187 000 + R28 000 + R14 000] x 50%
(3) R986 000 [(R52 000 x 12) + R28 000 + R14 000 + R320 000]
(4) R825 000 [(R52 000 x 12) + R187 000 + (R28 000/2)]
(5) R832 000 [(R52 000 x 12) + R187 000 + (R28 000 + R14 000)/2]
QUESTION 6
What is Nkosi’s ‘income’ for the 2020 year of assessment?
(1) R815 200 [(R52 000 x 12) + R187 000 + (R28 000 – R23 800) + (R14 000 – R14 000)]
(2) R811 000 [(R52 000 x 12) + R187 000 + (R28 000/2 – R23 800 limited to R14 000) +
(R14 000/2 – R7 000)]
(3) R813 100 [(R52 000 x 12) + (R28 000 – R23 800)/2 + (R14 000 – R14 000)/2 +
R187 000]
(4) R707 700 [(R52 000 x 12) + (R28 000/2 – R23 800) + (R14 000/2 – R7 000) + R187 000/2]
(5) R1 131 000 [(R52 000 x 12) + R187 000 + (R28 000/2 – R14 000) + (R14 000/2 – R7 000)
+ R320 000]
QUESTION 7
What is Nkosi’s ‘taxable income’ for the 2020 year of assessment?
(1) R1 118 500 [(R52 000 x 12) + R187 000 + (R28 000/2 – R23 800 limited to R14 000) +
(R14 000/2 – R7 000) – R12 500 + R320 000]
(2) R914 700 [(R52 000 x 12) + R187 000 + (R28 000 – R23 800) + (R14 000 – R14 000) –
R12 500 + ((R320 000 – R40 000) x 40%)]
(3) R559 250 [(R52 000 x 12) + R187 000 + (R28 000 – R28 000) + (R14 000 – R14 000) –
R12 500 + R320 000] x 50%
(4) R451 500 [(R52 000 x 12) + (R28 000/2 – R23 800 limited to R14 000) + (R14 000/2 – R7 000)
– R12 500 – R320 000/2]
(5) R931 500 [(R52 000 x 12) + (R28 000 – R28 000) + (R14 000 – R14 000) – R12 500 +
R320 000]
20
TAX3702/101
QUESTION 8
Goodwell died on 18 July 2019 at the age of 76. His normal tax was correctly calculated at R97 852.
Employees’ tax of R69 250 was deducted for the 2020 year of assessment. Calculate his ‘net normal tax’
for the 2020 year of assessment?
(1) R39 840 [R97 850 – R14 220 – R7 794 – R2 601]

(2) R82 653 [R97 852 – ((R14 220 – R7 794 – R2 601) x 226/366)]
(3) R42 465 [R97 852 – ((R14 220 + R7 794 + R2 601) x 140/366)]
(4) R1 633 [(R97 852 – R14 220 – R7 794 – R2 601 – R69 250) x 140/366]
(5) R4 465 [R97 852 – ((R14 220 + R7 794 + R2 601) x 140/366) – R69 250]
QUESTION 9
Adisa (39 years old) is married in community of property and contributes to a medical aid fund. His wife,
two sons, 13 years old and 18 years old, are all dependants on his medical aid. His mother (81 years old)
was also a dependant until her date of death on 30 June 2019. Calculate Adisa’s medical scheme fees
tax credit for the 2020 year of assessment?
(1) R12 456 [(R310 + R310 + R209 + R209) x 12 months]

(2) R14 964 [(R310 + R310 + R209 + R209 + R209) x 12 months]
(3) R13 292 [((R310 + R310 + R209) x 12 months) + (R209 x 4 months)]
(4) R14 128 [((R310 + R310 + R209 + R209) x 12 months) + (R209 x 8 months)]
(5) R12 484 [((R310 + R209 + R209 + R209) x 12) + (R310 x 4)]
QUESTION 10
Vihaan has been leasing a property in the Drakensberg for about 10 years. He incurred significant costs
to set up beautiful cottages to rent out to holidaymakers. These cottages have been very successful over
the past three years. The owner of the property would like to sell and has offered it to Vihaan for a very
reasonable price. Vihaan has done extensive research in the last two months and has found an interna-
tional buyer willing to pay double the purchase price for a rent-producing establishment. Vihaan will
arrange bridging finance for 12 months so that he can purchase the farm and then resell it at a major profit
to the international buyer.
Will the sale of the property be included in Vihaan’s gross income and what will the principal reason for
including or excluding the profit, be?
(1) Yes, it will be included in his gross income, based on objective factors, his intention is revenue in
nature.
(2) Yes, it will be included in his gross income, he is acquiring the property with a dual purpose therefore
the dominant purpose being to make a profit will prevail
(3) No, it will not be included in his gross income as he made use of the property for 10 years.
(4) No, it will not be included in his gross income, as he can realise an asset to its best advantage.
(5) No, it will not be included in his gross income as, a property is capital in nature and therefore the
sale will not be included in Vihaan’s gross income.
21
QUESTION 11
Which of the following receipts would be included in gross income, in terms of the general definition in
section 1 of the Act, or as a special inclusion in terms of paragraphs (a) to (n) of that definition?
a) A police reward of R10 000 received by a taxpayer for providing information that led to the arrest of
a criminal.
b) A pension fund lump sum of R800 000, received by a taxpayer on his retirement at the age of 65.
c) Annuity receipts of R70 000, received by a taxpayer, throughout the year of assessment, following
the sale of goodwill in his business.
d) A ‘know-how’ payment of R120 000 received by a taxpayer for technical knowledge given to an
engineering company.
(1) a&c
(2) a, b & c
(3) a, c & d
(4) a&b
(5) a, b, c & d
QUESTION 12
After the completion of the stock count at the local cell phone shop, stock losses due to theft were identified.
It also became apparent that the temporary cashier stole money during the December holiday period.
What is the principal reason for these losses to be allowed or disallowed as a deduction for the local cell
phone shop, in terms of the general deduction formula?
(1) Both the theft of stock and cash will be allowed as a deduction because they are closely connected
to the cell phone shop’s operations.
(2) Neither theft of stock nor theft of cash can be seen to be in the production of income therefore a
deduction for these amounts will not be allowed.
(3) Theft of stock only will be allowed as a deduction because trading stock can be seen as floating
capital.
(4) No deduction will be allowed because the expense was not actually incurred.
(5) Theft of cash only will be allowed because the income had already been generated in the current
year of assessment where the theft of stock will be disallowed as no income had been generated
yet.
Use the following information to answer questions 13 and 14.
With effect from 1 August 2019 to 29 February 2020, Reyansh received a travel allowance from his
employer.
Reyansh’s logbook indicated that she travelled a total distance of 29 220 km during the period that she
received the allowance. Out of that total, 9 156 km were travelled for private purposes.
Reyansh’s vehicle was purchased for cash 31 July 2017 at a cost of R340 000 (VAT exclusive).
Reyansh’s actual fuel and maintenance costs amounted to R28 659 for the period he received the
allowance.
22
TAX3702/101
QUESTION 13
Travel allowance - Reyansh’s deemed fixed cost per kilometre is:
(1) 461.9 cents [R92 683/20 064kms x 100c]

(2) 224.0 cents [R112 443/29 220 kms x 100c x 213/366 days]
(3) 184.6 cents [R92 683/29 220kms x 100c x 213/366 days]
QUESTION 14
Travel allowance – what is the total amount for Reyansh’s actual vehicle expenses for the year of
assessment?
(1) R28 659

(2) R61 166 [R28 659 + ((R340 000 x 1.15)/7 years x 213/366 days)]
(3) R73 773 [R28 659 + ((R340 000 x 1.14)/5 years x 213/366 days)]
(4) R60 883 [R28 659 + ((R340 000 x 1.14)/7 years x 213/366 days)]
(5) R49 186 [(R28 659 x 213/366 days) + ((R340 000 x 1.15)/7 years x 213/366 days)]
Use the following information to answer questions 15 to 18.
Thandi received the right of the use of an employer-owned vehicle from 31 January 2019. The vehicle
was originally purchased by her employer on 1 May 2017 at a cost of R280 000 (including VAT).
Thandi kept an accurate logbook of the distances she travelled in the vehicle. The logbook indicated that
she travelled 12 000 km for private purposes, out of a total of 36 000 km travelled for the period. The
vehicle was subject to a maintenance plan but Thandi was obliged to pay for all fuel costs for the vehicle.
Fuel amounted to R39 600 for the period.
QUESTION 15
Right of use of employer vehicle – what determined value will be used for the vehicle for the 2020 year of
assessment:
(1) R230 622 [R280 000 x 1.14 x 85% x 85%]

(2) R238 000 [R280 000 x 85%]
(3) R273 700 [R280 000 x 1.15 x 85%]
(4) R232 645 [R280 000 x 1.15 x 85% x 85%]
(5) R271 320 [R280 000 x 1.14 x 85% ]
QUESTION 16
Right of use of employer vehicle – assume that the determined value of the vehicle is R240 000. What is
the cash equivalent of the benefit before taking into account the fact that a proportion of the distance
travelled was for business purposes?
(1) R240 000 x 3.25% x 12 months
(2) R240 000 x 3.25% x 1 month
(3) R240 000 x 3.25% x 12 months
(4) R240 000 x 3.5% x 1 month
(5) R240 000 x 3.5% x 12 months
23
QUESTION 17
Right of use of employer vehicle – assume that the cash equivalent of the benefit was R20 000 (before
taking into account the fact that a proportion of the distance travelled was for business purposes). Cal-
culate the reduced cash equivalent of the benefit, due to Thandi using the vehicle partially for business
purposes:
(1) R13 333 [R20 000 – (R20 000 x 12 000km/36 000km)]

(2) R6 667 [R20 000 – (R20 000 x 24 000km/36 000km)]
(3) R10 000 [R20 000 – (R20 000 x 12 000km/24 000km)]
(4) R160 000 [R20 000 – (R20 000 x (12 000km/36 000km))] x 12 months
(5) R1 111 [R20 000 – (R20 000 x 12 000km/36 000km)] x 1/12
QUESTION 18
Right of use of employer vehicle – assume that the determined value of the vehicle is R240 000. Calculate
the amount by which the cash equivalent of the benefit may be reduced, due to Thandi’s payment of
R39 600 for the vehicle’s fuel:
(1) The benefit may be reduced by R4 332 [12 000km x 361cents]

(2) The benefit may be reduced by R8 664 [24 000km x 361cents]
(3) The benefit may be reduced by R1 392 [12 000km x 116,0 cents]
(4) The benefit may be reduced by R4 176 [36 000km x 116,0 cents]
(5) The benefit may be not be reduced because she paid for the vehicle’s fuel.
QUESTION 19
Sacagawea had the free use of a four-roomed, employer-owned, unfurnished house with effect from
1 April 2019 until the end of the year of assessment. The property’s electricity costs were paid by
Sacagawea.
Sacagawea’s remuneration proxy for the 2019 year of assessment was R320 000. His salary for the 2020
year of assessment is R350 000.
Free residential accommodation – the value of the benefit will be:
(1) (R350 000 – R79 000) x 17% x 11/12

(2) (R320 000 – R79 000) x 17% x 11/12
(3) (R320 000 – R79 000) x 18% x 11 months
(4) (R320 000 – R79 000) x 17% x 11 months
(5) (R350 000 – R79 000) x 19% x 11/12
24
TAX3702/101
QUESTION 20
Krishna works for an employer who buys and sells electronic equipment. On 1 February 2020 Krishna
was given a slightly damaged television set by her employer. The specific television model usually sells
for R7 500. Her employer purchased this television model for R4 000. The market value of the damaged
television Krishna received was R3 500.
The amount to be included as a taxable fringe benefit in Krishna’s taxable income is:
(1) R7 500
(2) R94 [15% x R7 500 x 1/12]
(3) R3 500
(4) R44 [15% x R3 500 x 1/12]
(5) R4 000
QUESTION 21
On 1 January 2019, Pravesh was granted a R160 000 loan from his employer to enable him to purchase
his first car. The loan was repayable over a four-year period. Pravesh was required to pay 5% interest
per annum on the loan.
Assume the official SARS rate of interest is 8% per annum and the current market rate for vehicle finance
is 10%.
If Pravesh receives a travel allowance, how much interest will he be allowed to include as part of his actual
travel expenses?
(1) R 8 000 [R160 000 x 5%]

(2) R 1 312 [R160 000 x 5% x 60/366]
(3) R 787 [R160 000 x (8% - 5%) x 60/366]
(4) R 2 098 [R160 000 x (8% x 60/366)]
(5) R12 800 [R160 000 x 8%]
QUESTION 22
On 1 September 2019, Adriana received a R500 000 bank loan to enable her to purchase her own house.
Adriana was only required to pay 3% per annum interest on the loan. The interest rate was low because
Adriana’s employer compensated the bank for loss of interest on the difference between 3% and the rate
of 13% that it normally charges its clients.
Assume the REPO rate of interest is 8% per annum.
The amount to be included as a fringe benefit in Adriana’s taxable income is:
(1) R24 795 [R500 000 x (13% - 3%) x 181/365]

(2) R24 864 [R500 000 x (13% - 3%) x 182/366]
(3) R9 945 [R500 000 x (13% - (8% + 1%)) x 182/366]
(4) R14 918 [R500 000 x ((8% + 1%) - 3%) x 182/366]
(5) R12 397 [R500 000 x (8% - 3%) x 181/365]
25
QUESTION 23
Which one of the following receipts is not exempt from South African normal income tax?
(1) A bursary of R38 000, for a university degree, is granted by an employer to the child of an employee.
The employee’s total remuneration amounts to R290 000.
(2) A South African resident earns pension income from the Netherlands, which relates to his
employment in the Netherlands before he became a resident of South Africa.
(3) A South African resident receives a foreign dividend from a company in which she holds 9% of the
equity shares and voting rights.
(4) Compensation of R1 500 000 paid to an employee, in terms of an employer-owned investment policy.
All premiums were included as a taxable fringe benefit in the taxable income of the employee.
(5) All of the above are exempt.
QUESTION 24
Ishaan is 63 years old and married in community of property. He received foreign interest of R4 000 and
South African interest of R36 000 for the 2020 year of assessment. His South African interest was re-
invested by his broker and he did not receive the amount. Ishaan’s wife received foreign dividends of
R8 000 and South African dividends of R15 000. Neither Ishaan nor his wife have a tax-free investment.
If Ishaan does not earn any other income, calculate his “income” as defined for Income Tax purposes?
(1) R16 200 [R4 000 + (R36 000 – R23 800)]

(2) R13 978 [(R4 000 – (R4 000 x 25/45)) + (R36 000 – R23 800)]
(3) R9 878 [R4 000 + (R36 000 – R23 800) + (R8 000 – (R8 000 x 25/45)) + (R15 000 –
R15 000)] x 50%
(4) R3 778 [(R4 000 /2) + (R36 000/2 – R23 800) + (R8 000/2 – (R8 000/2 x 25/45)) + (R15 000
- R15 000)]
(5) R40 000 [R4 000 + R36 000]
QUESTION 25
Which one of the following statements, regarding the general deduction formula, is incorrect?
(1) A taxpayer exchanges (barters) various assets in payment for purchasing trading stock. The cost of
the assets given in exchange is not deductible for tax purposes.
(2) A payment, subject to a resolutive condition, is not deductible.
(3) Expenditure that is more closely linked to the income-earning structure of the taxpayer is capital in
nature.
(4) For an expense to be “actually incurred” it does not have be “necessarily incurred”.
(5) Interest incurred on loans that are used to produce income is deductible
26
TAX3702/101
QUESTION 26
Which one of the following statements is incorrect?
(1) The deduction relating to a single item of expenditure may be apportioned between trade and non-
trade purposes.
(2) Interest earned by a moneylender does not constitute “carrying on a trade”.
(3) Expenditure on floating capital items are deductible in terms of the general deduction formula.
(4) The actual payment of an expense is not essential for the deduction of that expense.
(5) Expenditure does not have to produce income during the year in which it is incurred, to be deductible.
QUESTION 27
Rory contributed R10 000 per month and his employer contributed R4 000 per month to a provident fund,
for the full year of assessment.
Rory’s provident fund contribution fringe benefit for the full year of assessment, will amount to:
(1) R14 000 [R10 000 + R4 000]

(2) R4 000
(3) R168 000 [(R10 000 + R4 000) x 12 months]
(4) R48 000 [R4 000 x 12 months]
(5) R nil, there is no fringe benefit in respect of provident fund contributions.
QUESTION 28
Stanley (35 years old) earned a total remuneration package of R450 000 during the 2020 year of assess-
ment. The package includes a basic salary of R180 000.
Stanley’s employer made contributions, in his name, to a pension fund. The contributions amounted to
R35 000. Stanley also made contributions to a retirement annuity fund amounting to R20 000.
You may assume that Stanley’s taxable income, before taking the retirement fund contribution into
account, amounted to R390 000.
Stanley’s retirement fund contribution deduction for the 2020 year of assessment will amount to:
(1) R123 750 R35 000 limited to the lesser of R350 000 or (the greater of 27,5% x
R450 000 = R123 750 or 27,5% x R390 000 = R107 250)
(2) R55 000 [(R35 000 + R20 000) = R55 000] limited to the lesser of R350 000 or (the greater
of 27,5% x R450 000 = R123 750 or 27,5% x R390 000 = R107 250)
(3) R107 250 [(R35 000 + R20 000) = R55 000] limited to lesser of R350 000 or (the lesser of
27,5% x R450 000 = R123 750 or 27,5% x R390 000 = R107 250)
(4) R35 000 R35 000 limited to the lesser of R350 000 or (the greater of 27,5% x R450 000 =
R123 750 or 27,5% x R390 000 = R107 250)
(5) R350 000 [(R35 000 + R20 000) = R55 000] limited to the greater of R350 000 or (the lesser
of 27,5% x R450 000 = R123 750 or 27,5% x R390 000 = R107 250)
27
QUESTION 29
Sidney (57 years old) earned a total remuneration package of R980 000 during the 2020 year of assess-
Sidney’s employer made contributions, in his name, to a provident fund. The contributions amounted to
R30 000. Sidney also made contributions to the provident fund amounting to R15 000.
Sidney also contributed to a retirement annuity fund during the 2020 year of assessment. Those contri-
butions amounted to R325 000.
You may assume that Sidney’s taxable income, before taking the provident fund and retirement annuity
fund contributions into account, amounted to R1 400 000.
What deduction, in respect of the provident fund and retirement fund contributions, will Sidney be allowed
to claim as a deduction for the 2020 year of assessment?
(1) R340 000 [R15 000 + R325 000 = R340 000] limited to the lesser of R350 000 or (the greater
of 27,5% x R1 400 000 = R385 000 or 27,5% x R980 000 = R269 500)
(2) R45 000 [R30 000 + R15 000 = R45 000] limited to the lesser of R350 000 or (the greater of
27,5% x R1 400 000 = R385 000 or 27,5% x R980 000 = R269 500)
(3) R385 000 [R30 000 + R15 000 + R325 000 = R370 000] limited to the lesser of R350 000 or
(the greater of 27,5% x R1 400 000 = R385 000 or 27,5% x R980 000 = R269 500)
(the greater of 27,5% xR1 400 000 = R385 000 or 27,5% x R980 000 = R269 500)
(the greater of 27,5% x R1 400 000 = R385 000 or 27,5% x R980 000 = R269 500)
QUESTION 30
Cindy (32 years old) earned a total remuneration package of R150 000 during the 2020 year of assess-
ment. The package consists of a basic salary of R150 000. Cindy also earned net rental income of
R250 000 during the current year of assessment.
Cindy contributed to a retirement annuity fund during the 2020 year of assessment. Those contributions
amounted to R120 000.
You may assume that Cindy’s taxable income, before taking the retirement annuity fund contributions into
account, amounted to R400 000.
Cindy’s retirement fund contribution deduction for the 2017 year of assessment will amount to:
(1) R350 000 [R120 000] limited to the lesser of R350 000 or (the greater of 27,5% x R400 000 =
R110 000 or 27,5% x R150 000 = R41 250)
R110 000 or 27,5% x R150 000 = R41 250)
R110 000 or 27,5% x R150 000 = R41 250)
R110 000 or 27,5% x R150 000 = R41 250)
(5) Rnil Retirement annuity fund contributions are not deductible for income tax purposes
28
TAX3702/101
QUESTION 31
Assume that Veronica’s taxable income is R490 000, before taking into account her taxable capital gain
and her donation to a public benefit organisation.
You may assume that her taxable capital was correctly calculated at R70 000. Her donation (for which
she received a section 18A receipt) amounted to R20 000.
Veronica’s deduction in respect of the donation will amount to:
(1) R49 000 [R20 000, limited to 10% x R490 000 = R49 000]
(2) R56 000 [R20 000, limited to 10% x (R490 000 + R70 000) = R56 000]
(3) R2 000 [10% x R20 000]
(5) R100 000 [A natural person can donate up to R100 000 per year of assessment]
Vusi (65 years old and not retired) is a member of a medical aid fund and his wife is listed as a dependant
on the fund. Vusi contributed R5 800 per month and his employer contributed R2 200 per month to the
medical aid fund, for the full year of assessment. Neither he nor his wife have a disability as defined.
QUESTION 32
Vusi’s medical fringe benefit for the 2020 year of assessment will amount to:
(1) R2 200
(2) R8 000 [R5 800 + R2 200]
(3) R26 400 [R2 200 x 12 months]
(4) R7 400 [(R310+R310) x 12 months
(5) Vusi is 65 years old, therefore there is no medical fringe benefit.
QUESTION 33
How much will Vusi’s medical scheme fees tax credit amount to for the 2020 year of assessment?
(1) R7 440 [R310 + R310] x 12 months

(2) R6 228 [R310 + R209] x 12 months
(3) Rnil [R5 800 – (((R310 + R310) x 12) x 4)]
(4) R2 664 [(R5 800 + R2 200) x 33.3%]
(5) R2 000 [R5 800 + R2 200] x 25%
29
Pamela (68 years old) is married in community of property. She is a member of a medical aid fund and
her husband is listed as her only dependant. Pamela’s husband has a disability as defined. Pamela
contributed to the medical aid fund, throughout the year of assessment.
Pamela’s taxable income amounts to R190 000. You may assume that her total medical aid contribution
amounts to R28 000 and her annual medical scheme fees tax credit amounts to R8 000. Her employer
made no contributions to the medical aid fund on her behalf. Pamela also had qualifying medical expenses
of R21 000 which were not covered by the medical aid fund.
QUESTION 34
Pamela’s additional medical expenses tax credit amounts to:
(1) R49 000 [R28 000 + R21 000]

(2) R3 830 [(R28 000 – (R8 000 x 3)) + R21 000 – (7.5% x R180 000)] x 33,3%
(3) R875 [(R28 000 – (R8 000 x 4)) + R21 000 – (7.5% x R180 000)] x 25%
(4) R4 250 [(R28 000 – (R8 000 x 4)) + R21 000] x 25%
(5) R8 325 [(R28 000 – (R8 000 x 3)) + R21 000] x 33,3%
QUESTION 35
Assume that Pamela’s medical scheme fees tax credit amounts to R8 000 and her additional medical
expenses tax credit amounts to R5 000.
Pamela’s net normal tax for the year of assessment ended 29 February 2020 is:
(1) R11 980 [R190 000 x 18%] – R14 220 – R8 000

(2) R21 200 [R190 000 x 18%] – R8 000 – R5 000
(3) R12 186 [R190 000 x 18%] – R14 220 – R7 794
(4) Rnil [R190 000 x 18%] – R14 220 – R7 794 – R8 000 – R5 000
(5) R814 refund [R190 000 x 18%] – R14 220 – R7 794 – R8 000 – R5 000
END OF ASSIGNMENT 1
30
TAX3702/101
ANNEXURE B: ASSIGNMENT 2 FOR FIRST SEMESTER STUDENTS
FIRST SEMESTER
TAX3702 30 March 2020 811177
NOTE THAT THE MARK OBTAINED FOR THIS ASSIGNMENT WILL FORM 75% OF
YOUR YEAR MARK FOR THIS MODULE. YOUR YEAR MARK WILL CONTRIBUTE
20% TOWARDS YOUR FINAL MARK (CONSISTING OF 5% FOR ASSIGNMENT 1
AND 15% FOR ASSIGNMENT 2).
PLEASE ENSURE THAT THIS ASSIGNMENT REACHES THE UNIVERSITY ON OR

BEFORE THE DUE DATE BECAUSE LATE SUBMISSION WILL RESULT IN THE
MARK OBTAINED FOR THIS ASSIGNMENT NOT FORMING PART OF YOUR YEAR
MARK! NO CORRESPONDENCE OR TELEPHONIC CONVERSATION WILL
THEREFORE BE ENTERED INTO IN THIS REGARD.
YOU MAY SUBMIT THIS ASSIGNMENT ELECTRONICALLY, BUT IT MUST BE IN A

PDF-FORMAT.
7, as contained in Tutorial Letters 102/3/2020 and 103/3/2020. The references to the chapters in the
prescribed book are provided in the respective learning units. This assignment will assess you on being
able to answer the case study questions.
NOTE: SHOW ALL CALCULATIONS. MARKS ARE ALLOCATED TO EACH STEP IN A CAL-
CULATION AND WE CANNOT THEREFORE ALLOCATE MARKS IF YOU ONLY
PROVIDE US WITH AN INCORRECT TOTAL FIGURE. WHERE ANY ITEM IS
EXEMPT FROM TAX, OR NOT ALLOWED AS A DEDUCTION, DO NOT SIMPLY
LEAVE IT OUT. SHOW THE ITEM AS A "NIL" IN THE MONEY COLUMN, GIVING A
BRIEF REASON FOR THIS.
31
CASE STUDY 1 (48 marks, 87 minutes)
Goshain was employed by ABC Accounting until 31 July 2019 when he retired at the age of 75. After his
retirement Goshain earned pension and retirement annuity income for the remainder of the 2020 year of
assessment. Goshain is married out of community of property and has two adult children.
Details relating to Goshain’s income and receipts, as well as his expenses and contributions, for the 2020
year of assessment are as follows:
Notes R
Employment
Salary (for the period ended 31 July 2019) 550 000
Right of use of employer vehicle 1 310 000
Travel allowance 2 30 000
Free residential accommodation 3
Current contributions to pension fund 6 44 000
Current contributions to retirement annuity fund 6 140 000
Medical aid contributions 7
Retirement
Retirement annuity and pension income (post-retirement) 90 000
Pension fund lump sum benefit 5 900 000
Retirement annuity fund lump sum benefit 5 400 000
Other
Local interest 4 42 000
Foreign dividends 3 000
Notes:
1. Right of use of employer vehicle
Goshain had to travel to see clients in and around the town where he worked. From the beginning of
the year of assessment until the date of his retirement Goshain received the right of use of a company-
owned vehicle. The vehicle was purchased on 1 November 2017 at a cost of R310 000 (excluding VAT).
Goshain’s logbook indicated that he travelled a total of 9 000 km for the period, of which 3 500 km were
travelled for private purposes. The vehicle was subject to a maintenance plan but Goshain was required
to pay for the vehicle’s fuel costs for the period. Fuel costs amounted to R5 800 for the period.
2. Travel allowance
From 1 March 2019 up to the date of his retirement, Goshain also received a travel allowance in respect
of his own motor vehicle. The total travel allowance received amounted to R30 000. Goshain purchased
his vehicle, in terms of an instalment sale agreement, on 1 May 2018 at a cost of R230 000 (VAT exclu-
sive). His logbook indicated he travelled a total of 3 000 km for the period, of which 1 000 km were travelled
for private purposes.
Actual running costs amounted to R8 000 for the period he received the allowance. Finance charges over
the full four-year term of the agreement amounted to R96 000. Goshain’s capital repayments of his loan
amounted to R22 000 during the period that he received the travel allowance.
32
TAX3702/101
CASE STUDY 1 (continued)
3. Free residential accommodation
Goshain had the free use of an employer-owned, four-roomed, unfurnished house up to the date he retired.
He had to pay electricity costs.
Goshain’s remuneration proxy for the 2020 year of assessment was R540 000 and his remuneration for
the 2020 year of assessment amounted to R740 125.
4. Local interest
Goshain earned interest totalling R42 000, during the year of assessment. Of that total, R3 100 related to
interest earned on Goshain’s tax-free investment. The balance related to interest earned on a fixed deposit
bank account.
5. Retirement fund lump sum benefits
Goshain received lump sums amounting to R900 000 from his pension fund and R400 000 from his
retirement annuity fund on the date of his retirement.
In 2012 Goshain had received a severance benefit from a previous employer amounting to R520 000.
6. Pension fund and retirement annuity fund contributions
Goshain’s contributions to a pension fund, from 1 March 2019 up to the date of his retirement, amounted
to R44 000. His employer also paid an amount of R44 000 to pension fund on his behalf.
Goshain also contributed an amount of R140 000 to a retirement annuity fund during the year of
assessment.
His gross remuneration for the 2020 year of assessment amounted to R740 125.
7. Medical
Goshain contributed to a medical aid scheme throughout the year of assessment. His wife is the only
dependent listed on the scheme. No member of the family has a disability as defined.
Contributions to the medical aid fund amounted to R3 600 per month for the full year of assessment.
Goshain’s employer paid 30% of the contributions during the period that he was employed. Goshain was
responsible for paying the full contribution after his retirement.
Goshain also paid R17 000 in qualifying medical expenditure that was not covered by his medical aid fund.
REQUIRED: MARKS
a) Calculate Goshain’s net normal tax payable (excluding the lump sum) for the year
of assessment ended 29th February 2020. 44
b) Calculate the tax payable on the pension and retirement annuity lump sums. 4
33
Shona and Shaun are married in of community of property. They purchased vacant land in January 2008
for R850 000. The property is registered in both of their names. The land is less than two hectares.
During 2010 they had the property subdivided into two sections, one section (70% of the total property
area) on which their residence was erected for them to live in, the other section (30% of the total property
area) on which a small cottage was erected for purposes of renting it out. The total cost of the subdivision
was R100 000.
Their primary residence’s total building cost amounted to R1 830 000. The residence for letting purposes
total building cost amounted to R920 000. Shona and Shaun moved into their residence on 1 October
2010 and they rented the other residence out from the same date.
On 27 March 2019, Shona and Shaun sold both their residence and the rental cottage R2 650 000 and
R1 300 000 respectively.
REQUIRED: MARKS
Calculate Shaun’s taxable capital gain/(assessed capital loss) for the year of assessment
ended 29 February 2020. 12
Note: do not combine the calculations for the two properties.
34
TAX3702/101
ANNEXURE C: ASSIGNMENT 1 FOR SECOND SEMESTER STUDENTS
SUBMISSION OF ASSIGNMENT 1 IS COMPULSORY TO OBTAIN ADMISSION TO

THE EXAMINATION. ADMISSION WILL BE OBTAINED BY SUBMITTING THE
ASSIGN-MENT AND NOT BY THE MARKS YOU OBTAIN FOR IT. THIS ASSIGN-
MENT WILL COUNT A MAXIMUM OF 5% OF YOUR FINAL MARK. PLEASE ENSURE
THAT THIS ASSIGNMENT REACHES THE UNIVERSITY ON OR BEFORE THE DUE
DATE BECAUSE LATE SUBMISSION WILL RESULT IN YOUR NOT BEING
ADMITTED TO THE EXAMINATION. NO CORRESPONDENCE OR TELEPHONIC
CONVERSATION WILL THEREFORE BE ENTERED INTO IN THIS REGARD.
IF YOU INTEND POSTING YOUR ASSIGNMENT, MAKE A COPY OF IT BEFORE

YOU POST IT TO UNISA, IN CASE YOUR ASSIGNMENT IS LOST IN THE POST. WE
ADVISE YOU, IF POSSIBLE, TO SUBMIT YOUR ASSIGNMENT ELECTRONICALLY.
Note:
(1) Questions can be answered on a mark-reading sheet or submitted electronically via the myUnisa
online system.
(2) Before completing the mark-reading sheet, study the instructions in the Study @ Unisa brochure:
www.unisa.ac.za/brochures/studies.
Read these instructions carefully and follow them exactly to avoid mistakes.
(3) Do your calculations on a separate piece of paper before you complete the mark-reading sheet.
IMPORTANT INFORMATION ON MULTIPLE-CHOICE ASSIGNMENTS
REMEMBER
 There is only one correct answer to each question.

 All questions are equal in value.
 Only the mark-reading sheets provided may be used.
 Colour in the correct block with an HB pencil.
 Fill in your student number correctly.
 Fill in the assignment number correctly.
 Fill in the unique assignment number for the specific semester and the module you are registered
for correctly. Every assignment marked by the computer has a unique number. The number
contains information on the course code and assignment number. When the computer reads the
mark-reading sheet with, say, the unique number 612166, recognises it as Assignment 1 for that
specific module.
 Send only your mark-reading sheet in the appropriate envelope to the Assignment Section.
 Make sure that you have enough mark-reading sheets.
DO NOT
 Make more than one mark per question.

 Tear or fold the mark-reading sheet.
 Staple the mark-reading sheet to another piece of paper.
 Colour outside the block.
 Colour in the block with a pen.
 Make corrections with correction fluid.
 Try to repair a torn mark-reading sheet with sticky tape – use another mark-reading sheet.
35
SECOND SEMESTER
TAX3702 31 August 2020 604693
5, as contained in Tutorial Letter 102/3/2020. This assignment will assess you on being able to select the
appropriate alternative that best reflects the quantitative/qualitative answer to a problem.
REQUIRED:
Select the number ((1) – (5)) that represents the correct answer to the question.
QUESTION 1
Gobi (48 years old and single) receives a monthly salary of R85 000 for the 2020 year of assessment.
Gobi received a dividend of R10 000 during the current year on her local investments.
Allowable deductions amounted to R8 000 and employees’ tax of R300 000 was deducted from Gobi’s
salary for the year. Calculate Gobi’s income for the current year of assessment.
(1) R1 022 000 [(R85 000 x 12) + R10 000 – R8 000]

(2) R722 000 [(R85 000 x 12) + R10 000 – R8 000 – R300 000]
(3) R1 012 000 [(R85 000 x 12) + R10 000 – R10 000 – R8 000]
(4) R1 020 000 [(R85 000 x 12) + R10 000 – R10 000]
(5) R712 000 [(R85 000 x 12) + R10 000 – R10 000 – R8 000 – R300 000]
QUESTION 2
Dudu is 32 years old and married. Assume that her taxable income for the 2020 year of assessment is
R488 000. She made provisional tax payments of R57 000 for the 2020 year of assessment. What is her
normal tax?
(1) R123 555 [R100 263 + (36% x (R488 000 – R423 300))]
(2) R109 488 [R100 263 + (36% x (R488 000 – R423 300)) – R14 067]
(3) R109 335 [R100 263 + (36% x (R488 000 – R423 300)) – R14 220]
(4) R52 335 [R100 263 + (36% x (R488 000 – R423 300)) – R14 220 – R57 000]
(5) R66 555 [R100 263 + (36% x (R488 000 – R423 300)) – R57 000]
36
TAX3702/101
ASSIGNMENT 1: 2nd SEMESTER 2020 (continued)
QUESTION 3
Mandisa’s normal tax (per the tax tables) based on her taxable income for the 2020 year of assessment
is R34 800. Employees’ tax of R8 000 was deducted from Mandisa’s salary for the period. Mandisa (64
years old) passed away on 1 December 2019. What is her net normal tax?
(1) R12 786 [R34 800 – R14 220 – R7 794]

(2) R24 077 [(R34 800 – R14 220 x 276/366)]
(3) R18 199 [R34 800 – ((R14 220 + R7 794) x 276/366)]
(4) R31 303 [R34 800 – (R14 220 x 90/366)]
(5) R16 076 [R34 800 – (R14 220 x 276/366) – R8 000]
QUESTION 4
Sheila is 79 years old. Her net normal tax for the current year of assessment is R88 000. Sheila is
registered as a provisional taxpayer. Her provisional tax payments for the 2020 year of assessment
amounted to R38 000. Her employer deducted R42 000 employees’ tax during the year.
Her net normal tax liability or refund for the current year is:
(1) R15 373 refund [R88 000 – R13 500 – R7 407 – R2 466 – R38 000 – R42 000]
(2) R50 000 liability [R88 000 – R38 000]
(3) R46 000 liability [R88 000 – R42 000]
(4) R8 000 liability [R88 000 – R38 000 – R42 000]
(5) R63 385 liability [R88 000 – R13 500 – R7 407 – R2 466]
QUESTION 5
Which of the following statements are correct?
(i) Gross income less exempt income less allowable deductions less rebates less tax credits equals
taxable income.
(ii) Gross income less exempt income less allowable deductions add taxable capital gain equals taxable
income.
(iii) Net normal tax less rebates less tax credits less employees’ tax less provisional tax equals net
normal tax liability.
(iv) Net normal tax less employees’ tax less provisional tax equals tax liability.
(v) Normal tax add taxable capital gain less rebates less tax credits equals net normal tax.
(1) (i), (ii), (iii), (iv) and (v)

(2) (ii) and (iv)
(3) (ii) and (iii)
(4) (i), (iii) and (v)
(5) (ii), (iv) and (v)
37
QUESTION 6
Debbie (48 years old) is married and has a daughter. Her daughter, who is 20 years old and earns no
income, has a daughter who will be five months old on 29 February 2020. Debbie contributes to a medical
fund and her husband, daughter and granddaughter are dependants. None of them has a disability as
defined. How much will Debbie’s medical scheme fees tax credit be for the 2020 year of assessment?
(1) R9 948 [(R310 + R310 + R209) x 12]

(2) R12 456 [(R310 + R310 + R209 + R209) x 12]
(3) R10 993 [((R310 + R310 + R209) x 12) + (R209 x 5)]
(4) R4 030 [((R310 + R310) x 12)]
(5) R11 411 [((R310 + R310 + R209) x 12) + (R209 x 7)]
QUESTION 7
Bernie has been leasing a farm in Stellenbosch for the past 20 years. He incurred significant costs to set
up his winery and also expanded the vineyards. His wine sales have been very successful over the past
three years. The owner wants to sell the farm and has offered it to Bernie for a very reasonable price.
Bernie has done extensive research in the last two months and has found an international buyer willing to
pay double the purchase price. Bernie will arrange bridging finance for 12 months so that he can purchase
the farm and then resell it at a major profit to the international buyer.
The components of the “gross income” definition for a resident are as follows:
 the total amount
 in cash or otherwise
 received by or accrued to or in favour of
 during the year or period of assessment
 excluding receipts or accruals of a capital nature
What is the principal reason for including the profit on sale of the farm in Bernie’s gross income?
(1) Bernie is acquiring the property with a dual purpose therefore the dominant purpose being to make
a profit will prevail.
(2) Bernie owned the farm for one year only.
(3) Realising the asset to its best advantage indicates a change of intention.
(4) Based on objective factors, Bernie’s intention is revenue in nature.
(5) Applying the ‘tree and fruit’ principle makes the profit revenue in nature.
QUESTION 8
Alex (28 years old and married) purchased a family home in September 2015. The house was well
situated, close to schools and highways. His intention was to renovate the house and then live there until
his children graduate from school.
In June 2019, a security village was established and Alex’s house was included in the security village
thereby increasing the value his property. By July 2019, Alex had not commenced any renovations or
improvements due to time constraints. He decided to sell the house while there was a high demand for
houses in security areas. In August 2019 the house was sold for a profit of R1 million.
What is the principal reason for excluding from, or including in, Alex’s gross income the profit on sale of
the house for the 2020 year of assessment?
38
TAX3702/101
QUESTION 8 (continued)
(1) Excluded from gross income due to capital nature because Alex was merely realising his capital
asset to his best advantage.
(2) Included in gross income because Alex is seen to have commenced a scheme of profit making.
(3) Included in gross income because Alex held the asset for less than 5 years therefore indicative of a
speculative motive.
(4) Excluded from gross income because Alex’s intention was never to sell the house and make a profit.
(5) Excluded from gross income because the receipt is intended to ‘fill a hole in a capital asset’.
QUESTION 9
a) Taxpayer A: receives R45 000 on behalf of services provided by his father on 14 January 2020.
b) Taxpayer B: receives an amount of R32 000 on 15 March 2020 for services provided on 15 February
2020.
c) Taxpayer C: entered into a 12-month lease agreement for the rental of his property on 1 June 2019.
He receives a monthly rental income of R6 000 per month. On 29 February 2020 the rent was 2
month’s in arrears.
d) Taxpayer D: entered into a 12-month lease agreement for the rental of his property on 1 June 2019.
He received 12 month’s rental income upfront on 1 June 2019 amounting to R60 000.
Which of the above receipts and accruals will be included in the various persons’ gross income, for the
year of assessment ended 29 February 2020?
(1) Taxpayer A includes R45 000; taxpayer B includes R32 000; taxpayer C includes R54 000; taxpayer
D includes R45 000.
(2) Taxpayer A includes R45 000; taxpayer B includes R32 000; taxpayer C includes R54 000; taxpayer
D includes R60 000.
(3) Taxpayer A excludes R45 000; taxpayer B excludes R32 000; taxpayer C includes R42 000; taxpayer
D includes R45 000.
(4) Taxpayer A excludes R45 000; taxpayer B excludes R32 000; taxpayer C includes R42 000; taxpayer
D includes R60 000.
(5) Taxpayer A excludes R45 000; taxpayer B includes R32 000; taxpayer C includes R54 000; taxpayer
D includes R60 000.
39
QUESTION 10
Which of the following statements is correct?
a) A deduction for bribes is prohibited in terms of section 23(o). Income generated as a result of the
bribe paid will therefore not be included in gross income.
b) Where a taxpayer’s receipt of an amount is conditional upon the fulfilment of a condition, the amount
will be included in gross income when the condition has been met.
c) A breakage deposit received by a taxpayer was kept in a separate trust account. These deposits
are refundable to tenants when their lease ends. The deposits will therefore not be included in gross
income upon receipt but only once the deposits have been used in lieu of rent.
d) A taxpayer acquired an asset as a long-term investment. The decision to sell that asset for the best
possible price is proof that the taxpayer’s intention has changed and that he is now engaged in a
profit-making scheme.
(1) b only
(2) b, c and d
(3) a and c
(4) b and c
(5) All of the above
QUESTION 11
An IT company paid R250 000 for an advertising billboard to be erected on the N1 highway. What would
the correct reason be for this expense not being deductible in terms of the general deduction formula?
(1) Capital in nature: to fill a hole in the taxpayer’s assets.
(2) Capital in nature: the expense will create an enduring benefit.
(3) Revenue in nature: more closely related to income earning operations.
(4) Capital in nature: the billboard is the tree and the revenue generated from new clients will be the
fruit.
(5) Revenue in nature: the expense is not incurred in the production of income.
QUESTION 12
Which of the following receipts would be “special inclusions” in gross income in terms of paragraphs (a) to
(n) of the gross income definition?
a) A premium amount received from another person for the use of a building by that person.
b) A retirement fund lump sum withdrawal benefit.
40
TAX3702/101
c) Bonani renders services to ABC Ltd. His sister receives R10 000 from ABC Ltd for the services he
rendered.
d) An amount received from an insurance policy on the life of a director who passed away. The amount
has not previously been taxed.
(1) a, b, c & d
(2) a, b & c
(3) a, b & d
(4) b, c & d
(5) a, c & d
QUESTION 13
In which one of the following cases would a natural person, not ordinarily resident in the Republic of South
Africa, be a resident due to the physical presence test?
127 days (2016); 135 days (2015)
207 days (2016); 305 days (2015)
91 days (2016); 299 days (2015)
(4) Days in South Africa during the current (2020 year of assessment – 91 days; days in South Africa
243 days (2016); 232 days (2015)
244 days (2016); 174 days (2015)
QUESTION 14
Jasmin, a South African resident, is 64 years old and a widow. She received South African dividends of
R52 000 and South African interest of R74 500 for the 2020 year of assessment. She also received foreign
interest of R2 000 and foreign dividends from a collective investment scheme (unit trust) of R8 200. None
of Jasmin’s investment income was due to a tax-free investment. How much of Jasmin’s investment
income will be included in her taxable income?
(1) R42 000 [(R52 000 – R52 000) + (R74 500 – R34 500) + R2 000 + (R8 200 – R8 200)]
(2) R52 700 [(R52 000 – R52 000) + (R74 500 – R23 800) + R2 000 + (R8 200 – R8 200)]
41
(3) R56 344 [(R52 000 – R52 000) + (R74 500 – R23 800) + R2 000 + (R8 200 – (R8 200 x
25/45))]
(4) R55 233 [(R52 000 – R52 000) + (R74 500 – R23 800) + (R2 000 + R8 200) – ((R2 000 +
R8 200) x 25/45)]
(5) R45 644 [(R52 000 – R52 000) + (R74 500 – R34 500) + R2 000 + (R8 200 – (R8 200 x
25/45))]
QUESTION 15
Tladi, aged 68 years, is married in community of property to Tumi, aged 64 years. Tladi received a salary
of R640 000, foreign dividends from a collective investment scheme (unit trust) of R13 940 and foreign
interest of R4 900 for the 2020 year of assessment. Tumi only received South African interest of R88 000.
None of the investment income was due to a tax-free investment. How much of these amounts will be
included in Tumi’s taxable income?
(1) R15 048 [Rnil + ((R13 940 x 50%) – (R13 940 x 50% x 25/45)) + (R4 900 x 50%) +((R88 000
x 50%) – R34 500)]
(2) R25 748 [Rnil + ((R13 940 x 50%) – (R13 940 x 50% x 25/45)) + (R4 900 x 50%) + ((R88 000
x 50%) – R23 800)]
(3) R26 646 [Rnil + ((R13 940 x 50%) – (R13 940 x 50% x 26/41)) + ((R4 900 x 50%) – (R4 900
x 50% x 26/41)) + ((R88 000 x 50%) – R23 800)]
(4) R37 648 [Rnil + ((R13 940 x 50%) – (R13 940 x 50% x 25/45)) + (R4 900 x 50%) + ((R88 000
– R23 800) x 50%)]
(5) R345 748 [(R640 000 x 50%) + ((R13 940 x 50%) – (R13 940 x 50% x 25/45)) + (R4 900 x
50%) + ((R88 000 x 50%) – R23 800)]
QUESTION 16
Siya, 78 years old, had the following receipts during the 2020 year of assessment:
R
a) Lotto prize money 50 000

b) Foreign interest 43 000
c) Retirement annuity fund income 120 000
d) Taxable capital gain 60 000
Greta’s taxable income for the current year of assessment is …

(1) R273 000 [R50 000 + R43 000 + R120 000 + R60 000]
(2) R238 500 [R50 000 + (R43 000 – R34 500) + R120 000 + R60 000]
(3) R233 000 [R50 000 + R43 000 + R120 000 + (R60 000 – R40 000)]
(4) R223 000 [Rnil + R43 000 + R120 000 + R60 000]
(5) R68 500 [Rnil + (R43 000 – R34 500) + (R120 000 – R120 000) + R60 000]
42
TAX3702/101
QUESTION 17
Which one of the following benefits, received by an employee from his employer or a company associated
with the employer, is not a taxable fringe benefit in terms of the Seventh Schedule of the Income Tax Act?
(1) Payment of an employee’s gymnasium subscription fees.
(2) The regular use of a security company’s vehicle by an employee, to perform his duties outside normal
working hours. The private use of the vehicle is infrequent.
(3) A booked flight ticket granted by a transporter of passengers to an employee’s minor daughter, to
enable her to visit her grandmother in Harare.
(4) A bursary of R40 000 granted to an employee to enable his child to enrol at a university for a
degree.
(5) Accommodation provided by an employer to an employee away from his usual place of residence
outside the Republic to perform his duties. The employee was present in the Republic for 90 days
during the year.
QUESTION 18
For which of the following will there be a taxable fringe benefit?
(i) A loan of R3 500 to an employee, interest is charged at the REPO rate.
(ii) An employee purchases a property from a related property development company for its market
value of R425 000. The employee’s remuneration proxy is R240 000 and he is not a connected
person.
(iii) Payment by the employer of a new employee’s outstanding bursary owing to the former employer.
The employee has to work for the new employer for the remainder of the outstanding period of the
obligation he had towards the former employer.
(iv) An employer pays medical expenses in respect of an employee’s dependant 75-year old father.
There is a taxable benefit for:
(1) (i), (ii), (iii) and (iv)

(2) (i), (ii) and (iii)
(3) (ii), (iii) and (iv)
(4) (i) and (iv)
(5) (i), (iii) and (iv)
Jabulani received the use of a company vehicle from 1 November 2019. The vehicle cost R350 000
excluding VAT, on 1 December 2016. The vehicle is subject to a maintenance plan of 100 000 km or
5 years. Jabulani kept accurate record of his travels. He travelled a total of 28 000 km up to 29 February
2020, of which 7 000 km was for private purposes. James has to pay all the fuel costs for private purposes,
which amounted to R8 000.
43
QUESTION 19
The determined value of the vehicle is:
(1) R214 944 (R350 000 x 85% x 85% x 85%)

(2) R252 875 (R350 000 x 85% x 85%)
(3) R350 000
(4) R247 185 (R350 000 x 1.15 x 85% x 85% x 85%)
(5) R288 278 (R350 000 x 1.14 x 85% x 85%)
QUESTION 20
Assume the determined value of the company vehicle is R450 000. What is the cash equivalent of the
use of the company vehicle before any reductions?
(1) R450 000 x 3.25% x 4 months

(2) R450 000 x 3.5% x 4 months
(3) R450 000 x 3.25% x 4/12
(4) R450 000 x 3.5% x 12 months
(5) R450 000 x 3.25% x 12 months
QUESTION 21
Assume the cash equivalent of the use of the company vehicle before any reductions is R90 000. How
much will it be reduced to, due to Jabulani having kept a logbook?
(1) R90 000

(2) R90 000 – (R90 000 x 7 000km/28 000km)
(3) R90 000 – (R90 000 x 21 000km/28 000km)
(4) R90 000 x 85% x 85%
(5) R90 000 x 21 000km/28 000km
QUESTION 22
Assume the determined value of the company vehicle is R450 000. By how much may the cash equivalent
be reduced due to Jabulani having paid for the private fuel cost?
(1) 7 000km/28 000km x R8 000

(2) 28 000 km x R3.61
(3) 21 000 km x R3.61
(4) 7 000 km x R3.61
(5) R8 000
44
TAX3702/101
QUESTION 23
Gary is married to Fathima in community of property and he received a monthly salary of R70 000 for the
full 2020 year of assessment. He also received an annual bonus of R80 000 for the year. His salary is
taken into account for pension fund contributions. Fathima earned net rental income of R120 000 for the
year of assessment. What is Gary’s remuneration for the year of assessment?
(1) R920 000 [(R70 000 x 12) + R80 000]

(2) R840 000 [R70 000 x 12]
(3) R1 040 000 [(R70 000 x 12) + R80 000 + R120 000]
(4) R980 000 [(R70 000 x 12) + R80 000 + R120 000/2]
(5) R140 000 [R80 000 + R120 000/2]
QUESTION 24
Which of the following statements, regarding the general deduction formula, is correct?
a. Where the item of expenditure in question is the subject of a bona fide legal dispute, the courts have
held that it lacks the degree of certainty and finality to render it “actually incurred.”
b. Floating capital expenditure is not deductible in terms of the general deduction formula.
c. Expenditure that is more closely linked to the income-earning structure of the taxpayer is capital in
nature.
d. Expenditure does not have to produce income during the year in which it is incurred, in order to be
deductible.
e. A person who is employed, and who earns a salary, is by definition “carrying on a trade”.
(1) All of the above are correct

(2) b
(3) a, b and c
(4) a, c and d
(5) a, c, d and e
QUESTION 25
Which one of the following statements, regarding the general deduction formula, is incorrect?
(1) Estimated expenditure is deductible.
(2) For an expense to be “actually incurred” it does not have be “necessarily incurred”.
(3) A payment, subject to a resolutive condition, is deductible.
(4) The actual payment of an expense is not essential for the deduction of that expense.
(5) An expense which is not incurred for the purpose of producing income is not deductible.
45
QUESTION 26
Thabang contributed R8 000 per month, and his employer contributed R2 000 per month, to a pension
fund, throughout the year of assessment.
Thabang’s pension contribution fringe benefit for the full year of assessment, will amount to:
(1) R72 000 [(R8 000 – R2 000) x 12 months]

(2) R24 000 [R2 000 x 12 months]
(3) R96 000 [R8 000 x 12 months]
(4) R120 000 [(R8 000 + R2 000) x 12 months]
(5) R10 000 [R8 000 + R2 000]
QUESTION 27
Johannes’ taxable income, before the retirement fund contributions deduction for the 2020 year of assess-
ment, amounted to R510 000. Johannes earned a total remuneration package of R390 000 during the
2020 year of assessment. The package includes a basic salary of R200 000.
Johannes’ employer made contributions, in his name, to a provident fund. The contributions amounted to
R42 000. Johannes also contributed to the provident fund amounting to R28 000.
The amount that Johannes’ employer will deduct in terms of provident fund contributions for the 2020 year
of assessment amounts to:
(1) R70 000 [(R42 000 + R28 000) = R70 000] limited to the lesser of 27,5% x R390 000 =
R107 250 or, R350 000
(2) R28 000 [R28 000] limited to the lesser of 27,5% x R510 000 = R140 250 or R350 000 or
R510 000
(3) R55 500 [(R42 000 + R28 000) = R70 000] limited to the lesser of 27,5% x R200 000 =
R55 000 or, R350 000
(4) R350 000 [(R42 000 + R28 000) = R70 000] limited to the lesser of (the greater of 27,5% x
R510 000 = R140 250 or 27,5% x 390 000 = R107 250) or R350 000 or R510 000
(5) R107 250 [R28 000 +R42 000 = R70 000] limited to the lesser of 27,5% x R390 000 =
R107 250 or R350 000
QUESTION 28
Elisabeth (28 years old) earned a total remuneration package of R220 000 during the 2020 year of assess-
Elisabeth’s employer made contributions, in her name, to a pension fund. The contributions amounted to
R25 000. Elisabeth also contributed to the pension fund amounting to R20 000.
Elisabeth also contributed to a retirement annuity fund during the 2020 year of assessment. Those
contributions amounted to R16 000 (Elisabeth’s employer was not aware of these contributions).
You may assume that Elisabeth’s taxable income, before retirement fund contributions into account,
46
TAX3702/101
What deduction, in respect of the retirement fund contributions, will Elisabeth be permitted for the 2020
year of assessment?
(1) R60 500 [R25 000 + R20 000 + R16 000 = R61 000] limited to the lesser of (the greater of
27,5% x R220 000 = R60 500 or 27,5% x R190 000 = R52 250) or R350 000 or
R190 000
(2) R46 750 [R20 000 + R16 000 = R36 000] limited to the lesser of 27,5% x R170 000 = R46 750
or, R350 000 or, R190 000
27,5% x R220 000 = R60 500 or 27,5% x R190 000 = R52 250) or R350 000 or
R190 000
(4) R36 000 [R20 000 + R16 000 = R36 000] limited to the lesser of 27,5% x R220 000 = R60 500
or, R350 000 or, R190 000
27,5% x R220 000 = R60 500 or 27,5% x R190 000 = R52 250) or R350 000 or
R190 000
QUESTION 29
William earned a total remuneration package of R 1 300 000 during the 2020 year of assessment. The
package consists of a basic salary of R900 000. William also earned net rental income of R170 000 during
the current year of assessment.
William contributed to a retirement annuity fund during the 2020 year of assessment. Those contributions
You may assume that William’s taxable income, before taking the retirement annuity fund contributions
into account, amounted to R1 100 000.
What deduction, in respect of the retirement annuity fund contributions, will William be allowed to claim as
a deduction for the 2020 year of assessment?
(1) R357 500 [R380 000] limited to the lesser of (the greater of 27,5% x R1 300 000 = R357 500
or 27,5% x R1 100 000 = R302 500) or, R350 000 or, R1 100 000.
(2) R247 500 [R380 000] limited to the lesser of (the greater of 27,5% x R900 000 = R247 500 or
R1 100 000 = R302 500) or, R350 000 or, R1 100 0000
(3) R104 500 [R380 000] limited to the lesser of (the greater of 27,5% x (R1 300 000 + R170 000)
= R404 250 or R380 000 x 27,5% = R104 500) or, R350 000 or, R1 100 0000
(4) R294 250 [R380 000] limited to the lesser of (the greater of 27,5% x (R900 000 + R170 000) =
R294 250 or R1 100 000 x 27,5% = R 302 500) or, R350 000 or R1 100 000
(5) R350 000 [R380 000] limited to the lesser of (the greater of 27,5% x R1 300 000 = R357 500
or 27,5% x R1 100 000 = R302 500) or, R350 000, or R1 100 000
47
QUESTION 30
Assume that Douglas’s taxable income is R220 000, before taking into account his taxable capital gain
and his donation to a school (a public benefit organisation). His donation (for which he received a section
18A receipt) amounted to R24 000. You may assume that his taxable capital was correctly calculated at
R40 000.
What will Douglas’s income tax deduction be for the donation to the public benefit organisation?
(1) Rnil [Donations to schools are non-deductible]

(2) R18 000 [(10% x (R220 000 – R40 000))] = R18 000
(4) R2 400 [R24 000, limited to 10% x R24 000 = R2 400]
(5) R22 000 [R20 000, limited to 10% x R220 000 = R22 000]
Glynnis (55 years old) is a member of a medical aid fund. Her husband, her 2 children (both under the age
of 18) and her mother are listed as dependants on the fund. Glynnis contributed R7 300 per month and
her employer contributed R8 000 per month to the medical aid fund, throughout the year of assessment.
Glynnis’ mother has a disability as defined.
QUESTION 31
Glynnis’ medical fringe benefit for the 2020 year of assessment will amount to:
(1) R96 000 [R8 000 x 12 months]

(2) R87 600 [R7 300 x 12 months]
(3) R8 400 [(R8 000 - R7 300) x 12months]
(4) R15 300 [R7 300 + R8 000]
(5) R8 000
QUESTION 32
How much will Glynnis’ medical scheme fees tax credit amount to for the 2020 year of assessment?
(1) R1 038 [R310 + R310 + R209 + R209]

(2) R4 983 [R310 + R310 + R209+ R209 + R209] x 12 months x 33,3%
(3) R1 247 [R310 + R310 + R209 + R209 + R209]
(4) R14 964 [R310 + R310 + R209 + R209 + R209] x 12 months
(5) R12 456 [R310 + R310 + R209 + R209] x 12 months
QUESTION 33
Make the following assumptions for the 2020 year of assessment:
Glynnis’ taxable income amounts to R215 000. Her total medical aid contribution amounts to R37 200,
her medical fringe benefit amounts to R20 000 and her annual medical scheme fees tax credit amounts to
R14 000. Glynnis also had qualifying medical expenses of R27 000 which were not covered by the medical
aid fund.
48
TAX3702/101
Glynnis’ additional medical expenses tax credit amounts to:
(1) R12 075 [(R37 200 + R20 000 – (R14 000 x 4)) + R27 000 – (7.5% x R215 000)]
(2) R8 683 [(R37 200 + R20 000 – (R14 000 x 3)) + R27 000 – (7.5% x R215 000)] x 33,3%
(3) R7 393 [(R37 200 – (R14 000 x 3)) + R27 000] x 33,3%
(4) R3 019 [(R37 200 + R20 000 – (R14 000 x 4)) + R27 000 – (7.5% x R215 000)] x 25%
(5) R14 053 [(R37 200 + R20 000 – (R14 000 x 3)) + R27 000] x 33,3%
Gladys (55 years old) is married in community of property. She is a member of a medical aid fund and her
husband is listed as her only dependant. No member of the family has a disability as defined. Gladys
contributed to the medical aid fund, throughout the year of assessment.
Gladys’s taxable income amounts to R170 000. You may assume that her total medical aid contribution
amounts to R33 000 and her annual medical scheme fees tax credit amounts to R8 000. Her employer
made no contributions to the medical aid fund on her behalf. Gladys also had qualifying medical expenses
of R18 000 which were not covered by the medical aid fund.
QUESTION 34
Gladys’s additional medical expenses tax credit amounts to:
(1) R25 500 [(R33 000 + R18 000) x 50%]

(2) R4 745 [(R33 000 – (R8 000 x 3)) + R18 000 – (7.5% x R170 000)] x 33,3%
(3) R1 563 [(R33 000 – (R8 000 x 4)) + R18 000 – (7.5% x R170 000)] x 25%
(4) R4 750 [(R33 000 – (R8 000 x 4)) + R18 000] x 25%
(5) R8 991 [(R33 000 – (R8 000 x 3)) + R18 000] x 33,3%
QUESTION 35
Assume that Gladys’s medical scheme fees tax credit amounts to R8 000 and her additional medical
expenses tax credit amounts to R4 000.
Gladys’s net normal tax for the year of assessment ended 29 February 2020 is:
(1) R18 600 [R170 000 x 18%] – R8 000 – R4 000

(2) R4 380 [R170 000 x 18%] – R14 220 – R8 000 – R4 000
(3) R8 380 [R170 000 x 18%] – R14 220 – R8 000
(4) R16 380 [R170 000 x 18%] – R14 220
(5) R30 600 [R170 000 x 18%]
END OF ASSIGNMENT 1
49
ANNEXURE D: ASSIGNMENT 2 FOR SECOND SEMESTER STUDENTS
SECOND SEMESTER
TAX3702 14 September 2020 796321
NOTE THAT THE MARK OBTAINED FOR THIS ASSIGNMENT WILL FORM 75% OF
YOUR YEAR MARK FOR THIS MODULE. YOUR YEAR MARK WILL CONTRIBUTE
20% TOWARDS YOUR FINAL MARK (CONSISTING OF 5% FOR ASSIGNMENT 1
AND 15% FOR ASSIGNMENT 2). PLEASE ENSURE THAT THIS ASSIGNMENT
REACHES THE UNIVERSITY ON OR BEFORE THE DUE DATE BECAUSE LATE
SUBMISSION WILL RESULT IN THE MARK OBTAINED FOR THIS ASSIGNMENT
NOT FORMING PART OF YOUR YEAR MARK! NO CORRESPONDENCE OR
TELEPHONIC CONVERSATION WILL THEREFORE BE ENTERED INTO IN THIS
REGARD.
7, as contained in Tutorial Letters 102/3/2020 and 103/3/2020. The references to the chapters in the
prescribed book are provided in the respective learning units. This assignment will assess you on being
able to answer the case study questions.
NOTE: SHOW ALL CALCULATIONS. MARKS ARE ALLOCATED TO EACH STEP IN A CAL-
CULATION AND WE CANNOT THEREFORE ALLOCATE MARKS IF YOU ONLY
PROVIDE US WITH TO AN INCORRECT TOTAL FIGURE. WHERE ANY ITEM IS
EXEMPT FROM TAX, OR NOT ALLOWED AS A DEDUCTION, DO NOT SIMPLY
LEAVE IT OUT. SHOW THE ITEM AS A "NIL" IN THE MONEY COLUMN, GIVING A
BRIEF REASON FOR THIS.
Sophia (60 years old) is employed by a South African company. She is married out of community of
property to Fivaz (57 years old). The couple have two children, aged 22 and 24 years, who still live at
home although both are employed and support themselves.
Sophia has the following income, allowance, expenses and deductions, which relate to the 2020 year of
assessment.
50
TAX3702/101

Notes R
Income
Salary 1 400 000
Bonus 200 000
Award from employer 1 6 000
Entertainment allowance 2 18 000
Loan 3 30 000
Foreign dividends 11 360
SA interest (not from a tax-free investment) 25 563
Expenses
Entertainment expenses 2 16 000
Medical expenses 4 169 000
Current contributions to provident fund (all by Sophia) 5 112 000
Current contributions to retirement annuity fund (all by Sophia) 5 88 000
Other information:
Use of an employer motor vehicle
Sophia was granted the use of an employer motor vehicle from 1 April 2019 up to 29 February 2020. The
vehicle was purchased on 1 June 2016 at a cash cost of R450 000 (VAT exclusive). The vehicle is subject
to a maintenance plan. Sophia paid R1 500 per month towards the use of the vehicle. Sophia kept a
logbook, which indicated that she travelled 7 000 km for private purposes, out of a total distance of 21 000
km, during the period. Sophia paid for all the private fuel, which amounted to R9 500. She further paid
R5 000 to a panel beater, who repaired the vehicle after an accident.
Holiday accommodation
Sophia and Fivas went on a holiday for a week that was paid by the employer to an associated leisure
company. The week cost Sophia’s employer R10 000. The associated company usually charges a daily
rate of R1 000 per day per person to the public. Sophia had to pay R1 000 in total for the week.
Subsistence allowance
During the 2020 year of assessment, Sophia went on several business trips in the Republic. He was away
from home for a total of 10 nights. Sophia received a subsistence allowance of R400 per day, to cover
meals and other incidental expenses. He incurred the following total expenses, of which he kept record,
during the 10 days: meals and refreshments R3 500.
Notes:
1. Award from employer
Sophia received the award, a gift voucher for any household appliance, from her employer when she was
chosen as the employee of the year.
2. Entertainment allowance and entertainment expenses
Sophia received an entertainment allowance of R1 500 per month to entertain customers. She spent a
total of R16 000 on the entertainment of customers during the year.
51
3. Loan
On 1 March 2019 Sophia received a loan of R30 000 from her employer for an overseas holiday. The loan
bears interest at 5% per annum. Sophia repaid R15 000 (excluding interest) on the 31st of August 2019
and the balance was repaid on 29 February 2020.
You may assume that the REPO rate was 7% per annum and the prime bank lending rate was 10% per
annum for the year of assessment.
4. Medical expenses
Sophia is a member of a registered medical scheme. Her husband is registered as a dependent.
The following is an extract from Sophia’s medical aid statement for the year of assessment:
R
 Medical scheme contributions for the year 144 000
 Qualifying medical expenses not reimbursed by the medical scheme, paid
by Sophia up to 29 February 2020 20 000
 Qualifying medical expenses not reimbursed by the medical scheme, only
paid by Sophia during March 2020 5 000
5. Assume Sophia’s remuneration from the SA company was R1 750 000 for the year.
Sophia’s employer paid 60% of the above medical scheme contributions. Neither her nor her husband
have a disability as defined.
REQUIRED: MARKS
a) Calculate Sophia’s net normal tax payable for the year of assessment ended
29 February 2020. 43
b) Calculate Fivas’ net normal tax payable in respect of the lump sums for the year of
assessment ended 29 February 2020, given the following: 7
Fivas retired during the year and received a lump sum of R1 500 000 from his
employer’s pension fund. Current pension fund contributions that were not allowed
as a deduction in the current and previous years of assessment amounted to R6 000
and R40 000 respectively. Past period pension fund contributions that were not
allowed as a deduction in the current and previous years of assessment amounted
to R1 000 and R3 000 respectively.
Fivas received a taxable lump sum from a retirement annuity fund of R700 000 during
the 2019 year of assessment.
52
TAX3702/101
Scotty purchased his first small house in May 1998 for R655 000.
During 2000, he added a garage to the house at a cost of R34 300. During November 2001 he spent
R18 000 and converted the garage into an automotive service centre as his hobby was to restore old cars.
Along with the conversion he spent a further R33 000 on mechanical equipment. He also replaced the
stained carpets inside the house with tiles in July 2002 which cost R22 000.
On 1 October 2003, Scotty decided to turn his motorcar hobby into a business. Scotty rented an apart-
ment. From that date, he lived in the apartment and used the house exclusively for his automotive service
business.
Over the years, his business grew and on 1 October 2019, he sold the house with the business to a listed
company. The proceeds for the house was R3 925 000. Expenses relating to the sale amounted to
R252 400, which included advertising fees amounting to R5 400.
Assume that the 20%-rule value, time-apportionment base cost and market value at 1 October 2001
amounted to R769 000, R1 250 000 and R1 380 000 respectively.
REQUIRED: MARKS
Calculate Scotty’s taxable capital gain/(assessed capital loss) for the year of assessment
ended 29th February 2020. 10
UNISA
AS/(kdh)
Ref: TAX3702_2020_TL_101_3_E.docx
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Tutorial Letter 101/3/2020: Taxation of Individuals

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TAX3702/101/3/2020

Tutorial Letter 101/3/2020

1 INTRODUCTION TO THE MODULE ............................................................................................ 3

1 INTRODUCTION TO THE MODULE

How to get started on myUnisa

We wish you much success in your studies!

2.2 Outcomes and assessment criteria

The assessment will be conducted in terms of the following specific outcomes:

2.1 apply the source rules for different types of income

3.1 calculate employees’ tax

5.1 identify property and deemed property in a deceased estate

3 LECTURER(S) AND CONTACT DETAILS

Administrative enquiries should be directed to:

E-mail addresses Use to enquire about:

Link to Unisa website relating contact details for student enquiries:

When corresponding with the University in writing, always supply:

 your student number,

3.2 Module content-related queries

The lecturers who are available to assist

079 365 1124 (Please do not send text messages, make

3.3 Academic administrative queries

Ms S Brecher (Departmental Secretary) 012 429 4494

Tutorial Content Learning units to

Further tutorial letters

Additional study material

4.2 Prescribed book

It is essential that you obtain the following prescribed textbook:

4.3 E-reserves/recommended books and reading lists

4.4 Library services and resources information

The Unisa Library offers a range of information services and resources:

 for brief information go to: https://www.unisa.ac.za/library/libatglance

The Library has created numerous Library guides: http://libguides.unisa.ac.za

 request and find library material/download recommended material:

Important contact information:

 https://libguides.unisa.ac.za/ask - Ask a Librarian

4.5 Pocket calculators

5 STUDENT SUPPORT SERVICES

FREE COMPUTER AND INTERNET ACCESS

1 20/1 6/7 Learning unit 1: Introduction to Taxation 6 hours

6 24/2 10/8 Learning unit 6: Capital gains tax 12 hours

20% of final mark 80% of final mark

 Assignment 1 will be marked by a computer.

 Assignment 2 will be marked electronically by team of markers.

The due dates for the assignments are as follows:

1 (compulsory) 16 March 2020 835735

Instructions regarding electronic submission of assignments

Submit Assignment 1 using myUnisa:

Submit Assignment 2 using myUnisa:

Remember that your assignment document (attachment) must be in a PDF-format only.

The RESUBMIT feature for online assignments submission

The final mark for this module is calculated as follows, an example:

7.3 Supplementary, aegrotat or special examinations

Supplementary, aegrotat and special examinations are allowed in this module.

By submitting “YOUR MODULE NAME”, assignment number THE RELEVANT ASSIGNMENT

 I have read the Unisa Students’ Disciplinary Code;

8.2 How do I redirect MY MYLIFE UNISA E-MAIL ADDRESS TO another account?

Sign into the outlook web app by doing the following:

8.3 Health conditions such as HIV/AIDS

9 FREQUENTLY ASKED QUESTIONS

ANNEXURE A: ASSIGNMENT 1 FOR FIRST SEMESTER STUDENTS

SUBMISSION OF ASSIGNMENT 1 IS COMPULSORY TO OBTAIN ADMISSION TO

IF YOU INTEND POSTING YOUR ASSIGNMENT, MAKE A COPY OF IT BEFORE

IMPORTANT INFORMATION ON MULTIPLE-CHOICE ASSIGNMENTS