Andrew Porchini is a South African resident who is married to Emma. Emma recently gave birth...

  

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Andrew Porchini is a South African resident who is married to Emma. Emma recently gave birth to their first child Andy in September 2020. Andrew is employed by Benni (Pty) Ltd who grows, processes, and sells all kinds of mushroom products in Johannesburg Gauteng. He has been employed by Benni (Pty) Ltd for the last 10 years and he earned a salary of R 42 500 per month for the 2021 year of assessment. Receipts for the 2021 year of assessment: 1. Andrew received the following dividends during the 2021 year of assessment • local dividend . foreign dividend (s10(B(2) exemption will apply) R27 200 R9 650 2. Andrew received the following interest during the 2021 year of assessment: • interest from a Money Market account at a registered bank in South Africa • interest from a tax-free investment • foreign interest R 15 980 R7 200 R8 300 3. Andrew had a bachelors party for one of his friends in July 2020 and they decided to go to Gold Reef City for some fun in the casino. Andrew won R 350 000 on the second spin on the roulette table. 4. Andrew owns a townhouse in Modderfontein and earned R8 500 per month for the full 2021 year of assessment. • Water & electricity • Waterproofing of roof and outside walls due to leaking • Costs incurred to erect new fencing around the house to improve the market value • Replacement of leaking geyser • Painting maintenance work 5. Andrew incurred the following expenses for the 2021 year of assessment in respect of the Modderfontein property: R 9 600 R7 200 R 8 900 R4 500 R6 000 6. Benni's granted Andrew the right of use of a company vehicle. The vehicle was purchased by the company on 1 February 2020 and had a retail market value of R 395 000 (including VAT). The cost of the vehicle included a maintenance plan and Benni was responsible for all the running costs. Andrew was granted the right of use on the 1st of March 2020 and kept an accurate logbook. Andrew travelled 35 000km's for the year in total, of which 18 000km's was business km's. 7. On the 1st of October 2020 Benni granted Andrew a loan of R 18 000 to do some maintenance on his residence. Benni charged him interest at a rate of 5% per annum on the loan. (Assume that the official interest rate is 7.5%). 8. Benni also granted Andrew the right of use to the company's residential accommodation. The residence is owned by the employer. Neither Andrew nor any of his relatives has a controlling interest in the residence. It consists of 6 rooms; the right of use was granted to him for the entire 2021 year of assessment. The house is furnished, and Andrew is responsible for the water and electricity account and for maintaining the house. His remuneration proxy is R385 000. 9. During the April 2020 holidays Andrew and his wife spent five days at the coast in a furnished flat that is owned by the employer. When it is not booked out to employees of Benni, the house is rented out at a cost of R275 per person per day to the public. 10. Andrew has contributed 7.5% of his cash salary per month to the company's pension fund for the 2021 year of assessment. In addition to Andrew's contributions, the company contributes 3.5% of Andrew's cash salary per month to the company pension fund. 11. Andrew donated R9 600 to the "Abraham Kriel Maria Kloppers Children's Home" organisation, a registered PBO. Andrew received his S18A donation certificate. Andrew had a s18A donation brought forward from the prior year of R2 750 which could not be deducted in the 2020 year of assessment.. 12. Andrew belongs to the company medical aid. He contributes R3 300 per month to the scheme. His employer matches his contribution of R3 300 per month to the scheme. The baby was registered on the medical aid from 1 October 2020. Andrew incurred qualifying medical expenses, which was all paid by 28 February 2021 of R 25 600. 13. The PAYE already paid over to SARS for the 2021 year of assessment amounted to R 175 166. You may assume that Andrew's remuneration for the 2021 year of assessment was not higher than taxable income. REQUIRED Show all calculations and round off to the nearest Rand 1. Calculate Andrew's normal tax liability for the 2021 year of assessment. Show all calculations. Please use the taxable income framework when answering the question. Marks 39 Andrew Porchini is a South African resident who is married to Emma. Emma recently gave birth to their first child Andy in September 2020. Andrew is employed by Benni (Pty) Ltd who grows, processes, and sells all kinds of mushroom products in Johannesburg Gauteng. He has been employed by Benni (Pty) Ltd for the last 10 years and he earned a salary of R 42 500 per month for the 2021 year of assessment. Receipts for the 2021 year of assessment: 1. Andrew received the following dividends during the 2021 year of assessment • local dividend . foreign dividend (s10(B(2) exemption will apply) R27 200 R9 650 2. Andrew received the following interest during the 2021 year of assessment: • interest from a Money Market account at a registered bank in South Africa • interest from a tax-free investment • foreign interest R 15 980 R7 200 R8 300 3. Andrew had a bachelors party for one of his friends in July 2020 and they decided to go to Gold Reef City for some fun in the casino. Andrew won R 350 000 on the second spin on the roulette table. 4. Andrew owns a townhouse in Modderfontein and earned R8 500 per month for the full 2021 year of assessment. • Water & electricity • Waterproofing of roof and outside walls due to leaking • Costs incurred to erect new fencing around the house to improve the market value • Replacement of leaking geyser • Painting maintenance work 5. Andrew incurred the following expenses for the 2021 year of assessment in respect of the Modderfontein property: R 9 600 R7 200 R 8 900 R4 500 R6 000 6. Benni's granted Andrew the right of use of a company vehicle. The vehicle was purchased by the company on 1 February 2020 and had a retail market value of R 395 000 (including VAT). The cost of the vehicle included a maintenance plan and Benni was responsible for all the running costs. Andrew was granted the right of use on the 1st of March 2020 and kept an accurate logbook. Andrew travelled 35 000km's for the year in total, of which 18 000km's was business km's. 7. On the 1st of October 2020 Benni granted Andrew a loan of R 18 000 to do some maintenance on his residence. Benni charged him interest at a rate of 5% per annum on the loan. (Assume that the official interest rate is 7.5%). 8. Benni also granted Andrew the right of use to the company's residential accommodation. The residence is owned by the employer. Neither Andrew nor any of his relatives has a controlling interest in the residence. It consists of 6 rooms; the right of use was granted to him for the entire 2021 year of assessment. The house is furnished, and Andrew is responsible for the water and electricity account and for maintaining the house. His remuneration proxy is R385 000. 9. During the April 2020 holidays Andrew and his wife spent five days at the coast in a furnished flat that is owned by the employer. When it is not booked out to employees of Benni, the house is rented out at a cost of R275 per person per day to the public. 10. Andrew has contributed 7.5% of his cash salary per month to the company's pension fund for the 2021 year of assessment. In addition to Andrew's contributions, the company contributes 3.5% of Andrew's cash salary per month to the company pension fund. 11. Andrew donated R9 600 to the "Abraham Kriel Maria Kloppers Children's Home" organisation, a registered PBO. Andrew received his S18A donation certificate. Andrew had a s18A donation brought forward from the prior year of R2 750 which could not be deducted in the 2020 year of assessment.. 12. Andrew belongs to the company medical aid. He contributes R3 300 per month to the scheme. His employer matches his contribution of R3 300 per month to the scheme. The baby was registered on the medical aid from 1 October 2020. Andrew incurred qualifying medical expenses, which was all paid by 28 February 2021 of R 25 600. 13. The PAYE already paid over to SARS for the 2021 year of assessment amounted to R 175 166. You may assume that Andrew's remuneration for the 2021 year of assessment was not higher than taxable income. REQUIRED Show all calculations and round off to the nearest Rand 1. Calculate Andrew's normal tax liability for the 2021 year of assessment. Show all calculations. Please use the taxable income framework when answering the question. Marks 39

Answer rating: 100% (QA)

Here are the stepbystep calculations to determine Andrews normal tax liability for the 2021 year of assessment 1 Gross Income Salary R42 500 x 12 R510 000 Local dividends R27 200 Rental income R8 500 ... View the full answer