TAXATION 1 TAX260S & TAX262S – MODULE 5: EXPENSES OF AN INDIVIDUAL

2022 TUTOR QUESTIONS

QUESTION 1
Expenses incurred on entertainment by an employee on behalf of his or her employer and
who receives remuneration will normally be allowed as a deduction according to section 23(m).
A. True
B. False (1)

QUESTION 2
Interest which might have been made on any capital employed in trade are allowed as a
deduction.
A. True
B. False (1)

QUESTION 3
Employees who perform their duties as representatives and earn their remuneration mainly
(more than 50%) in the form of commission based on sales, are included in subsection 23(m).
A. True
B. False (1)

QUESTION 4
Which of the following does not form part of the requirements or components as specified by
s11(a) of the Income Tax Act?
A. Expenditure and assets
B. Actually incurred
C. During the year of assessment
D. In the production of income (1)

QUESTION 5
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². During 2022 year of assessment, he received:

Commission on the sale of properties 600 000

Inheritance 350 000

Calculate Joseph’s gross income for the 2022 tax year. (NB: No spaces, no Rand sign
required and round off to the nearest Rand if applicable) (1)
QUESTION 6
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². The rental expense for his private residence
amounted to R150 000 for the 2022 year of assessment.

Calculate the amount of the rental expense that can be deducted for the 2022 tax year. (NB:
No spaces, no Rand sign required and round off to the nearest Rand if applicable) (1)

QUESTION 7
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². He made repairs to his private residence
amounting to R7 000 for the 2022 year of assessment. The repairs were for the re-painting
done to the entire house.

Calculate the amount of the repairs to the residential property that can be deducted for the
2022 tax year. (NB: No spaces, no Rand sign required and round off to the nearest Rand
if applicable) (1)

QUESTION 8
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². He incurred insurance (against fire and flooding),
water and electricity costs totaling R45 000 for his private residence for the 2022 year of
assessment.

Calculate the amount of the insurance, water and electricity that can be deducted for the 2022
tax year. (NB: No spaces, no Rand sign required and round off to the nearest Rand if
applicable) (1)

QUESTION 9
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². He spent R40 000 on wages for his domestic
cleaner for the 2022 year of assessment. The domestic cleaner cleans the whole property.

Calculate the amount of the wages paid to the domestic cleaner that can be deducted for the
2022 tax year. (NB: No spaces, no Rand sign required and round off to the nearest Rand
if applicable) (1)
QUESTION 10
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². He spent R30 000 on the acquisition of a new
filing cupboard and computer for the estate agency for the 2022 year of assessment.

Will the cost of the new filing cupboard and computer be allowed as a deduction for the 2022
tax year? (1)
A. Yes
B. No

QUESTION 11
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². Wear and tear on furniture, fixtures and fittings
for the estate agency trade amounted to R10 000 for the 2022 year of assessment.

Determine how much, if any, of the wear and tear on furniture, fixtures and fittings for the
estate agency trade that can be deducted for the 2022 tax year. (NB: No spaces, no Rand
sign required and round off to the nearest Rand if applicable) (1)

QUESTION 12
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². He spent R15 000 on telephone and internet
expenses for the 2022 year of assessment. 30% of the telephone and internet expenses is for
private use and 70% is for business use.

Calculate the amount of the telephone and internet expense that can be deducted for the 2022
tax year. (NB: No spaces, no Rand sign required and round off to the nearest Rand if
applicable) (1)

QUESTION 13
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². He spent R15 000 on groceries from Pick and
Pay for the 2022 year of assessment. The full amount of R15 000 spent on groceries from
Pick and Pay will be allowed as a deduction for the 2022 tax year. (1)
A. True
B. False
QUESTION 14
Joseph is an estate agent who trades from his private residence (total floor space is 400m²),
the portion attributable to his trade is 100m². He wrote off bad debts totaling R20 000 during
the 2022 year of assessment.

The bad debts relate to the following:

• Outstanding commission from property sales of R15 000. The amount was considered
bad because the client absconded and relocated to Namibia.
• Cash loan to Joseph’s mother amounting to R5 000 who cannot afford to repay the
amount to Joseph.

How much of the bad debts can be deducted for the 2022 tax year? (NB: No spaces, no
Rand sign required and round off to the nearest Rand if applicable) (1)

QUESTION 15
Mrs Gordon works at Game Enterprise and earns a salary of R380 000 and a commission of
R192 000. She uses part of her accommodation exclusively for work. The part of her house
that she uses for work is about 36 square meters and the total area of her house is about 244
square meters. She incurred the following expenses for the current year of assessment:

Purchased computer R13 000

Telephone (68% is used for business and 32% for private use) R10 400
Internet subscription (used for work only) R 9 050
Wear and tear on computer R 2 450

Calculate Mrs Gordon’s taxable income for the current year of assessment. (NB: No spaces,
no Rand sign required and round off to the nearest Rand if applicable) (2)

QUESTION 16
Ms Kies is 38 years old and is not married. She furnished the following information for the
2022 year of assessment:

Taxable income after retirement fund contribution R315 800

Donations to approved institution that complies with the requirements of S18A R 10 000
Calculate Mrs Kies’s Taxable income after donations. (NB: No spaces, no Rand sign
required and round off to the nearest rand if applicable) (2)
QUESTION 17
Mrs Martin is 39 years of age and works for Murrays Grove Group Pty (Ltd). She provided the
following information for the 2022 year of assessment:
• She received an annual salary of R500 000 and contributed an amount of R41 000 to
Alexander Forbs towards her pension, R18 000 for her Provident fund, R27 000
towards her Retirement fund and
• Retirement contributions that were not allowed the previous year of assessment
amounted to R4 500.

How much will she be allowed to deduct in the current year of assessment for her
contributions towards the retirement funds? (NB: No spaces, no Rand sign required and
round off to the nearest rand if applicable) (2)

QUESTION 18
Mr Carl is 42 years of age and is fully employed by Grove South Africa Pty (Ltd) and is married
out of community of property. From 1 May 2021, Mr Carl started using his single room as an
office which constitutes 6% of space of the entire home (120 square meters). Other information
of Mr Carl for the 2022 year of assessment is as follows:

Item R
Basic Salary 350 000
Bonus 130 000
South African interest income 33 000
Current pension fund contributions (Employer contribution) 18 750
Current pension fund contributions (Mr Carl’s own contributions in the current year 2 900
of assessment)
Past pension fund contributions not allowed in the previous year 11 200
Insurance premiums (life insurance policy) 15 000
Current Retirement Fund Contributions (Employer contributions) 18 000
Past Retirement Fund Contributions (Not allowed in the previous year) 22 000
Electricity expense (Office only) 12 400
Purchase of office computer 13 200
Wear & tear on office computer 1 100
Rental expense (for the entire house for the whole year) 160 000
Medical aid contributions (2 children) partly funded by employer as follows: 3 400
Employer: R1 800
Employee: R1 600

Calculate Mr Carl’s taxable income before the section 11F deduction. (NB: No spaces, no
Rand sign required and round off to the nearest rand if applicable) (2)
QUESTION 19

Mr Ronald is 56 years of age. He furnishes you with the following information for the 2022 year
of assessment:

Salary R300 000

Commission R130 000
Current retirement Fund Contributions (Employee Contributions) R 46 000

Current retirement Fund Contributions (Employer Contributions) R 41 800

Calculate Mr Ronald‘s retirement funding income. (NB: No spaces, no Rand sign required
and round off to the nearest rand if applicable) (2)

QUESTION 20

Mr Guru is a 68 year old man and not married. He provided you with the following information
for the 2022 tax year:

• Taxable income after retirement fund contribution: R430 000

• Donations to an approved institution that complies with section 18A: R21 000

What will be Mr Guru‘s allowable donations deduction for the 2022 year of assessment? (NB:
No spaces, no Rand sign required and round off to the nearest rand if applicable) (2)

QUESTION 21

Mr Guru is a 68 year old man and not married. He provided you with the following information
for the 2022 tax year:

• Taxable income after retirement fund contribution: R430 000

• Donations to an approved institution that complies with section 18A: R21 000

Calculate Mr Guru’s taxable income after donations for the 2020 tax year. (NB: No spaces,
no Rand sign required and round off to the nearest rand if applicable) (2)
QUESTION 22
Mr Zungu is 56 years old and is not married. He furnished you with the following information
for the 2022 tax year:
Commission (retirement funding income) R18 000
Current pension fund contribution (Employer contribution) 6%
Interest from Nedbank R122 000
Current retirement annuity fund contribution (Employee contribution) R130 000
Current Pension Fund contribution (Employee contribution) 6%
Allowable expenses against commission income R7 000

Calculate Mr Zungu’s Gross Income. (NB: No spaces, no Rand sign required and round
off to the nearest rand if applicable) (2)

QUESTION 23
Mr Zungu is 56 years old and is not married. He furnished you with the following information
for the 2022 tax year:
Commission (retirement funding income) R18 000
Current pension fund contribution (Employer contribution) 6%
Interest from Nedbank R122 000
Current retirement annuity fund contribution (Employee contribution) R130 000
Current Pension Fund contribution (Employee contribution) 6%
Allowable expenses against commission income R7 000

Calculate Mr Zungu’s taxable income before s11F and s18A. (NB: No spaces, no Rand sign
required and round off to the nearest rand if applicable) (2)

QUESTION 24
Mr Zungu is 56 years old and is not married. He furnished you with the following information
for the current tax year (2022):
Commission (retirement funding income) R18 000
Current pension fund contribution (Employer contribution) 6%
Interest from Nedbank R122 000
Current retirement annuity fund contribution (Employee contribution) R130 000
Current Pension Fund contribution (Employee contribution) 6%
Allowable expenses against commission income R7 000

Calculate Mr Zungu’s Retirement Funding Income. (NB: No spaces, no Rand sign required
and round off to the nearest rand if applicable) (2)
QUESTION 25
Mr Zungu is 56 years old and is not married. He furnished you with the following information
for the current tax year:

Commission (retirement funding income) R18 000

Current pension fund contribution (Employer contribution) 6%
Interest from Nedbank R122 000
Current retirement annuity fund contribution (Employee contribution) R130 000
Current Pension Fund contribution (Employee contribution) 6%

Calculate Mr Zungu’s allowable retirement fund contribution deduction for the 2022 year of
assessment. (NB: No spaces, no Rand sign required and round off to the nearest rand if
applicable) (2)

QUESTION 26
Edwin (55 years old and SA resident) is an employee of Smart Technology (Pty) Ltd. He
started working there at the beginning of the 2020 year of assessment and he is married out
of community of property. The following are his income and expenses for the 2022 year of
assessment:

Item R
Salary (retirement funding income) 600 000
Business income 100 000
Medical Scheme contribution by Employer – Smart Technology 10 000
Current Pension fund contribution – Smart Technology 5%
Current Pension fund contribution -Edwin 20 000
Interest from Standard Bank 20 000
Foreign Interest 12 000
Past retirement fund contribution 5 000
Retirement Annuity contribution 40 000
Cash Donation to Approved Institution 25 000
Business Expenses 30 000

Calculate Edwin’s Retirement funding income for the 2022 year of assessment. (NB: No
spaces, no Rand sign required and round off to the nearest Rand if applicable)
QUESTION 27
Edwin (55 years old and SA resident) is an employee of Smart Technology (Pty) Ltd. He
started working there at the beginning of the 2020 year of assessment and he is married out
of community of property. The following is his income and expenses for 2022 year of
assessment:
Item R
Salary (retirement funding income) 600 000
Business income 100 000
Medical Scheme contribution by Employer – Smart Technology 10 000
Current Pension fund contribution – Smart Technology 5%
Current Pension fund contribution -Edwin 20 000
Interest from Standard Bank 20 000
Foreign Interest 12 000
Past retirement fund contribution not allowed in previous year 5 000
Retirement Annuity contribution 40 000
Cash Donation to Approved Institution 25 000
Business Expenses 30 000

Calculate Edwin’s Total Retirement Fund Contributions for the 2022 year of assessment. (NB:
No spaces, no Rand sign required and round off to the nearest Rand if applicable)

QUESTION 28
Edwin (55 years old and SA resident) is an employee of Smart Technology (Pty) Ltd. He
started working at the beginning of the 2020 year of assessment and he is married out of
community of property. The following are his income and expenses for 2022 year of
assessment:
Item R
Salary (retirement funding income) 600 000
Business income 100 000
Medical Scheme contribution by Employer – Smart Technology 10 000
Current Pension fund contribution – Smart Technology 5%
Current Pension fund contribution -Edwin 20 000
Interest from Standard Bank 20 000
Foreign Interest 12 000
Past retirement fund contribution 5 000
Retirement Annuity contribution 40 000
Cash Donation to Approved Institution 25 000
Business Expenses 30 000

Calculate the allowable retirement fund contribution deduction that Edwin will be limited to for
the 2022 year of assessment. (NB: No spaces, no Rand sign required and round off to
the nearest Rand if applicable)