Seven steps to be followed in order to solve Taxation problem. Step 1: Multiplying by 12 to calculate Annual Salary. Step 2: Calculating pension fund and subtracting it from Annual salary Step 3: Selecting the Tax bracket. Step 4: Substituting the amount into the tax bracket to calculate Taxable Income. Step 5: Subtracting the rebates from Taxable Income Step 6: Calculating the medical aid credits and subtracting it from Taxable Income. Step 7: Dividing by 12 to calculate the Monthly Tax. SCENARIO: Lesego is a 45 year old who earns a gross monthly salary of R36 200. On his birthday, his employer pays him \( 85 \% \) of his gross monthly salary as a bonus. Lesego has a wife and two children. He has medical aid cover for himself, his wife and their two children. \( 7.5 \% \) of his gross monthly salary is deducted for his pension subscriptions. The following questions are based on the above SCENARIO. Refer to the NOTES above and use ANNEXTURE A to answer the questions: 2.1 What does the acronym "PAYE" stand for? (2) 2.2 Is it necessary for governments to collect TAX from citizens? Give a reason for your answer. (3) 2.3 Calculate the amount that Lesego gets as a bonus on his birthday. (3) 2.4 Calculate Lesego's gross annual income. (2) 2.5 How much does he contribute towards pension fund per annum? 2.6 Determine the annual Lesego`s medical credits. (3) 2.6 Detemine the an Lese s medital credis. 2.7 Give the amount that Lesego qualifies to get as a tax rebate. (3) 2.8 Calculate the amount of money that should be indicated as a PAYE (2) deduction on Lesego's monthly payslip. (7)
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Taxation has an interesting history! Governments have been collecting taxes for thousands of years, with evidence dating all the way back to the ancient Egyptians, who imposed taxes on agriculture and trade. It’s fascinating how tax systems have evolved over time, influenced by societal needs, wars, and economic shifts. Today, taxes fund public services like healthcare, education, and infrastructure, making them essential for a functioning society. Now, let’s talk about how taxes impact everyday life! Understanding taxation is crucial because everyone pays it, whether it's income tax, sales tax, or even property tax. For individuals like Lesego, knowing how taxes are calculated can lead to smarter financial decisions, such as contributing to a retirement fund or choosing medical aid coverage. The correct approach can reduce their taxable income, maximizing take-home pay and ensuring they’re compliant with the law while making the most of available rebates and credits.
