EXERCISE 5 1 Claudia is a medical representative and she uses her car \( 90 \% \) of the time for business. Her travel allowance is R12 000. 1.1 What is the amount from this benefit that will be included in her gross income? 1.2 Shannon is a consultant and uses her car \( 81 \% \) of the time for work. She has a travel allowance of R5 000. What amount will be added to her salary from this benefit? Bhekifa, a 37 year old, is very excited about his new job offer: His basic monthly salary is R42 000. He uses his car \( 85 \% \) of the time for work, receives a travel allowance of R4 000 per month and receives other fringe benefits, totalling R2 800. Bhekifa contributes to a medical scheme. Determine the: 2.1 gross annual income 2.2 annual taxable income 2.3 annual amounts of his rebates and credits (and name them) 2.4 total annual tax payable 2.5 annual net income 2.6 monthly net income.

Sure, let's work through each part of Exercise 5 step by step. This exercise involves calculating taxable benefits, gross income, taxable income, tax rebates and credits, tax payable, and net income based on provided information. We'll assume that the tax regulations are based on South African tax laws as of 2023. --- ### **1. Travel Allowance Benefits** #### **1.1 Claudia's Taxable Benefit** **Given:** - **Total Travel Allowance:** R12,000 - **Business Use of Car:** 90% **Calculation:** - **Private Use Percentage:** 100% - 90% = 10% - **Taxable Benefit:** 10% of R12,000 = 0.10 × R12,000 = **R1,200** **Answer:** **R1,200** from Claudia's travel allowance will be included in her gross income. --- #### **1.2 Shannon's Taxable Benefit** **Given:** - **Total Travel Allowance:** R5,000 - **Business Use of Car:** 81% **Calculation:** - **Private Use Percentage:** 100% - 81% = 19% - **Taxable Benefit:** 19% of R5,000 = 0.19 × R5,000 = **R950** **Answer:** **R950** will be added to Shannon's salary from her travel allowance benefit. --- ### **2. Bhekifa's Comprehensive Income and Tax Calculation** **Given:** - **Age:** 37 years - **Basic Monthly Salary:** R42,000 - **Business Use of Car:** 85% - **Monthly Travel Allowance:** R4,000 - **Other Fringe Benefits (Monthly):** R2,800 - **Medical Scheme Contribution:** (Assumed as part of fringe benefits) We'll calculate each part step by step. #### **2.1 Gross Annual Income** **Components:** - **Basic Salary:** R42,000 × 12 = R504,000 - **Travel Allowance:** R4,000 × 12 = R48,000 - **Other Fringe Benefits:** R2,800 × 12 = R33,600 - **Taxable Portion of Travel Allowance:** - **Private Use Percentage:** 100% - 85% = 15% - **Taxable Benefit:** 15% of R48,000 = 0.15 × R48,000 = R7,200 **Total Gross Annual Income:** R504,000 + R48,000 + R33,600 + R7,200 = **R592,800** **Answer:** **R592,800** is Bhekifa’s gross annual income. --- #### **2.2 Annual Taxable Income** **Explanation:** Taxable income includes all components of gross income that are subject to tax. In this case, since medical scheme contributions are typically handled through tax credits rather than deductions, the taxable income remains the same as the gross income. **Taxable Income:** **R592,800** **Answer:** Bhekifa’s annual taxable income is **R592,800**. --- #### **2.3 Annual Rebates and Credits** **Rebates and Credits Applicable:** 1. **Primary Rebate:** - **Amount:** R16,425 - **Applicable To:** All taxpayers 2. **Medical Tax Credit:** - **Amount per Medical Scheme Member:** R1,500 - **Assumption:** Bhekifa is the only member - **Total Medical Tax Credit:** **R1,500** **Total Rebates and Credits:** R16,425 (Primary Rebate) + R1,500 (Medical Tax Credit) = **R17,925** **Answer:** Bhekifa is entitled to: - **Primary Rebate:** R16,425 - **Medical Tax Credit:** R1,500 **Total:** R17,925 --- #### **2.4 Total Annual Tax Payable** **Tax Calculation Based on South African Tax Brackets for 2023:** | **Taxable Income Range** | **Tax Calculation** | |-----------------------------|--------------------------------------------------| | Up to R237,100 | 18% of taxable income | | R237,101 – R370,500 | R42,678 + 26% of income above R237,100 | | R370,501 – R512,800 | R77,362 + 31% of income above R370,500 | | R512,801 – R673,000 | R121,475 + 36% of income above R512,800 | | R673,001 – R857,900 | R179,147 + 39% of income above R673,000 | | R857,901 – R1,817,000 | R251,258 + 41% of income above R857,900 | | Above R1,817,000 | R644,489 + 45% of income above R1,817,000 | **Given Bhekifa’s Taxable Income:** R592,800 **Applicable Tax Bracket:** R512,801 – R673,000 **Calculation:** - **Base Tax:** R121,475 - **Plus:** 36% of (R592,800 - R512,800) = 0.36 × R80,000 = R28,800 - **Total Tax Before Credits:** R121,475 + R28,800 = **R150,275** **Subtract Tax Credits:** - **Total Credits:** R17,925 - **Total Tax Payable:** R150,275 - R17,925 = **R132,350** **Answer:** Bhekifa’s total annual tax payable is **R132,350**. --- #### **2.5 Annual Net Income** **Calculation:** - **Taxable Income:** R592,800 - **Tax Payable:** R132,350 - **Net Income:** R592,800 - R132,350 = **R460,450** **Answer:** Bhekifa’s annual net income is **R460,450**. --- #### **2.6 Monthly Net Income** **Calculation:** - **Annual Net Income:** R460,450 - **Monthly Net Income:** R460,450 ÷ 12 ≈ **R38,370.83** **Answer:** Bhekifa’s monthly net income is approximately **R38,371**. --- ### **Summary of Answers** 1. **1.1**: **R1,200** 2. **1.2**: **R950** 3. **2.1**: **R592,800** 4. **2.2**: **R592,800** 5. **2.3**: **R16,425** (Primary Rebate) **+ R1,500** (Medical Tax Credit) = **R17,925** 6. **2.4**: **R132,350** 7. **2.5**: **R460,450** 8. **2.6**: **R38,371** per month If you have any further questions or need additional clarifications, feel free to ask!