QUESTION 1

Vuyo Limakhwe is a 55-year-old resident of the Republic and employed as the engineering
manager at Amadwala. Amadwala is a construction company based in East London. Vuyo is a
parent of a girl child (her only child and only dependent). Vuyo joined Amadwala Construction in
1990 and resigned on 28 February 2023. Vuyo’s receipts and accruals for the 2023 year of
assessment were as follows:

1. Salary and performance bonus

A salary of R65 000 per month and a performance bonus of R65 000.
2. ECSA annual subscription fees
Amadwala paid the Engineering Council of South Africa (ECSA) an annual subscription fee
of R4 675 for Vuyo. Vuyo is responsible for paying the annual professional fees to ECSA.
3. Use of a computer (HP 200 G4 computer)
Vuyo’s daughter is a university student. Due to hybrid learning (online and physical
learning), Vuyo took the HP 200 G4 computer from Amadwala to be used by her daughter
solely for studies. Her daughter will use this computer for one year and the computer has a
total useful life of 18 months. The computer was purchased by Amadwala for R 17 250
including VAT on 1 March 2022.
4. Holiday accommodation
Amadwala provided holiday accommodation to Vuyo at a value of R19 000 for her to enjoy
her December holidays.
5. Residential accommodation
Amadwala gave a five-bedroom house rent free to Vuyo, the house was fully furnished and
Amadwala pays for power and fuel relating to it. Vuyo’ remuneration proxy as defined in
section 1 of the income tax act is R 1 165 400. If the house was not provided to Vuyo it
would earn R15 000 from it. Assume B is R91 250.
6. Medical aid
Amadwala pays R5 500 a month to a medical scheme for the benefit of its employees and
R2 000 monthly for the benefit of the employee’s dependents. The qualifying medical
expenses for the 2023 year of assessment were R21 000.
7. Dividends and interest
Vuyo received local dividends of R23 800 and local interest of R34 800.
8. Foreign dividends
She received foreign dividends of R15000, and she holds 9% of the shareholding in the
foreign company.
9. Payment not to undertake other contracts.
On 28 February 2023 Amadwala paid Vuyo an amount of R1 800 000 on the agreement that
Vuyo would not undertake any engineering related work for the next 5 years.
10. Annuity
Vuyo received an annuity of R2 000 per month as of 1 June 2022. She will receive these
monthly amounts for the next 5 years.
11. Allowances
Vuyo received a travel allowance of R6 000 per month. The market value of her car is R700
000 including VAT and a finance cost of R16 000. She travelled 30 000kms in total in 2023
year of assessment and 10 000 kms were for business purposes. Actual expenses were as
follows:

No Description Rands
1 Fuel cost 24 000
2 Maintenance costs 4 000
3 Insurance 5 000
4 Finance charges 16 000
5 License 700

12. Relocation benefits

Vuyo was required to relocate to Amadwala head offices (head offices are in SA), her
relocation benefits were R200 000 in total, included in these benefits is temporal
accommodation for 196 days at R700 per night.
13. Interest free loan
Amadwala gave Vuyo a loan of R40 000 to finance her studies, the loan was interest free
and the official interest rate for the 2023 year of assessment was 11%.
14. Donated computer
Vuyo’s mother donated a personal computer to Vuyo. The market value of the computer
was R10 000, Vuyo started using the computer on 1 April 2022.
15. Personal assistant
Due to high demanding job at Amadwala, Vuyo decided to hire an assistant that is taking
care of her home and cook for her if she is working overtime. He spent R100 000 during the
year of assessment paying her personal assistant.

REQUIRED: Marks
Calculate, with brief reasons where applicable, the tax liability of Vuyo for the
2023 year of assessment