Question: Let's break down each transaction's impact on Preeya Naidoo's normal tax calculation: 1 . * Loan from First National Bank ( R 5 0 ,

Let's break down each transaction's impact on Preeya Naidoo's normal tax calculation:
1.*Loan from First National Bank (R50,000) for business equipment*
- The loan itself isn't taxable income.
- Interest paid on the loan (R4,500) is deductible as a business expense.
2.*Loan from Capitec (R6,500) for rental deposit on a townhouse*
- The loan itself isn't taxable income.
- Interest paid on the loan (R750) is not deductible as it's for a personal expense (rental deposit).
3.*Dividends earned from a South African source (R4,000)*
- Dividends from South African companies are exempt from tax in the hands of the shareholder (Preeya Naidoo), as they're subject to Dividends Tax.
4.*Total revenue generated from the catering business (R550,000)*
- This revenue is taxable and will be included in Preeya's taxable income.
5.*SARS fine for late submission of provisional tax returns (R500)*
- The fine is not deductible for tax purposes, as it's a penalty.
In summary:
- Business loan interest (R4,500) is deductible.
- Personal loan interest (R750) is not deductible.
- Dividends (R4,000) are exempt from tax.
- Business revenue (R550,000) is taxable.
- SARS fine (R500) is not deductible.
These transactions will impact Preeya's taxable income and normal tax calculation accordingly.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!