Tax 3702 Tutorial Class Bloemfontein Campus Revision Presented

Tax 3702 Tutorial Class Bloemfontein Campus Revision Presented by: Mr TK Raseleka

Rebates Natural Persons Primary 2020 14 220 Secondary (65 years >) 7 794 Tertiary ( 75 years >) 2 601

Partial exemptions South African interest received by residents • If a taxpayer is 65 years or older they have a maximum amount of R 34 500 to use to exempt South African interest income. • If a taxpayer is younger than 65 years then they have a maximum amount of R 23 800 to use to exempt South African interest income.

Partial exemptions Foreign dividends • not fully exempt, qualify for a partial exemption from tax, in the form of a ratio exemption. • The ratio is 25/45. • In other words, 55, 6% (25/45 x 100%) of these foreign dividends are exempt in the hands of an individual.

Revision: Travel Allowance

Medical Tax Credits • Medical contributions: to fund • Medical Expenses: not covered by medical fund • Medical scheme fees tax credit (per month): • R 310 p. m. for taxpayer and R 310 p. m. for 1 st dependent • R 209 p. m. for each additional dependent

Medical Tax Credits Under 65 years: • Medical expense tax credit: Calculation • Step 1: Add up all medical contributions • Step 2: Deduct 4 X annual medical scheme tax credits • Step 3: Add all qualifying medical expenses • Step 4: Calculate 7. 5% of taxable income • Step 5: If 3 exceeds 4…. Excess multiplied by 25% = additional tax credit

Medical Tax Credits Over 65 years and Persons with Disabilities: • Medical expense tax credit: Calculation • • Step 1: Add up all medical contributions Step 2: Deduct 3 X annual medical scheme tax credits Step 3: Add all qualifying medical expenses Step 4: Multiply total by 33. 3%

Other Expenses Contributions to retirement funds • pension funds, provident funds and/or retirement annuity funds are added together, and the total contributions to all these funds are taken into account for the sec 11 F (previously sec 11(k)) deduction. • Subject to limitations imposed by the Act

Other Expenses Contributions to Retirement funds • Where an employer contributes to a retirement fund on behalf of an employee, as part of the employee’s salary package, the portion contributed by the employer will be taxed as a fringe benefit in the employee’s hands. • This fringe benefit is also deemed part of the employee’s contributions.

Other Expenses Donations • Some donations are tax deductible, subject to certain requirements and a limitation. • Only donations to public benefit organisations (PBOs) that have the right to issue receipts in terms of section 18 A, qualify for a deduction. The most common PBOs that have section 18 A status include education institutions, conservation organisations and social welfare bodies.

Exercise 13. 3 Integrated questions Examination Past Papers