PART A 40 MARKS Wiseman Madala has been employed by Amapiano (Pty) Ltd (referred to as Amapiano) since 1 October 2021. Up until 30 June 2021 he had been employed by Kwaito Records (Pty) Ltd (referred to as Kwaito Records). Ho Selen He was unemployed for the period of 3 months from 1 July 2021 until 30 September 2021. At Kwaito Records, he received a monthly net cash salary of R21 369 (after the deduction of employees' tax of R3 853, UIF of R177 and his contribution to the pension fund of R2 600 per month). The company's contributions to the pension fund amounted to R2 600 per month in terms of the rules of the fund. On 30 June 2021, he also received a lump sum of R66 000 (gross amount) from Kwaito Records for accumulated leave days due to him. On his resignation from Kwaito Records (Pty) Ltd, the value of his pension fund amounted to R1 080 000. The full amount was transferred for his benefit directly by the pension fund to a pension preservation fund, which will only be accessible when he turns 65 years old according to the rules of the fund. He turned 59 years old, on 2 August 2021 and retired from a retirement annuity fund from which he will receive a lifelong monthly annuity of R10 200 from 31 August 2021. At this date, contributions to this retirement annuity fund amounting to R18 250, in total, have not yet been allowed as a deduction against his taxable income. Wiseman earns a gross cash salary of R33 000 per month from Amapiano. In addition to this, he received the following benefits or allowances: . He joined a medical aid fund effective from 1 October 2021. He and his mother are the only dependants of the fund. His mother qualifies as a dependant in terms of the rules of the fund. His total monthly contributions amounted to R6 800 per month from 1 October 2021 to 31 January 2022, of which his employer contributed R4 000 per month. His mother sadly passed away during January 2022 and therefore the total contributions for February 2022 amounted to only R3 400, of which his employer contributed R2 000. For the period 1 October 2021 to 28 February 2022 he did not incur any additional medical expenses as the medical aid fund settled all claims. His employer effected the payment of her contributions to the medical aid fund. During the period 1 March 2021 to 30 September 2021, Wiseman did not belong to a medical aid fund. His medical expenses for this period amounted to R34 000, which he paid for in cash. . Wiseman's total contributions to a provident fund from 1 October 2017 were R3 800 per month. His employer did not make any contributions to the fund. . Wiseman enjoyed the right of use of a company-owned vehicle, which she uses for business as well as for private purposes. Amapiano purchased the vehicle when it had a retail market value of R368 000 (VAT included) on 1 October 2021, the same date that Wiseman obtained its use. The vehicle had a qualifying maintenance plan. Wiseman had to pay for the full fuel cost of the vehicle, which amounted to R29 000 in total until February 2022. Wiseman kept a logbook at the insistence of his employer. He travelled a total of 18 900 km for the 152-day period, 8 300 km of which was for 2 | Page private purposes. He also paid R200 per month to his employer for the use of the vehicle. W Amapiano, a manufacturer of world-class LED televisions, granted Wiseman the free use of a 120 cm HD LED television for use at his home for a period of 2 months. On 1 October 2021, the date on which the benefit was granted to Wiseman, the manufacturing cost to Amapiano of the television was R65 000 (excluding VAT) and the open market value was R110 000. On 1 December 2021, this television was sold to Wiseman for R65 000, funded by an interest-free loan (repo rate 7%). At this date the television had an open market value of R95 000. He had to pay an instalment of R2 500, at the end of each month commencing from 31 March 2022 for a period of 26 months, on the loan. Wiseman performed so well in his position at Amapiano that the company, instead wrote off the outstanding amount (R65 000) on this loan on 28 February 2022 in lieu of paying Wiseman an annual bonus. YOU ARE REQUIRED TO: a) Calculate the total amount which will be included for the right of use of the motor car for employees' tax purposes in Wiseman's remuneration for the year of assessment ended 28 February 2022. (3) b) Calculate Wiseman Madala's taxable income for the year of assessment ended 28 February 2022. Provide reasons for amounts, which in your opinion are either not taxable or not deductible. Show all calculations. (24) c) Calculate Wiseman's normal tax liability for the year of assessment ended 28 February 2022. Assume that Wiseman's taxable income for the year of assessment is R450 000. (9) d) Discuss, with reference to the Income Tax Act, the effect of Wiseman's medical aid fund contributions and medical expenses on the calculation of her employees' tax for the year of assessment ended 28 February 2022. (4) 45 MADKe PART A 40 MARKS Wiseman Madala has been employed by Amapiano (Pty) Ltd (referred to as Amapiano) since 1 October 2021. Up until 30 June 2021 he had been employed by Kwaito Records (Pty) Ltd (referred to as Kwaito Records). Ho Selen He was unemployed for the period of 3 months from 1 July 2021 until 30 September 2021. At Kwaito Records, he received a monthly net cash salary of R21 369 (after the deduction of employees' tax of R3 853, UIF of R177 and his contribution to the pension fund of R2 600 per month). The company's contributions to the pension fund amounted to R2 600 per month in terms of the rules of the fund. On 30 June 2021, he also received a lump sum of R66 000 (gross amount) from Kwaito Records for accumulated leave days due to him. On his resignation from Kwaito Records (Pty) Ltd, the value of his pension fund amounted to R1 080 000. The full amount was transferred for his benefit directly by the pension fund to a pension preservation fund, which will only be accessible when he turns 65 years old according to the rules of the fund. He turned 59 years old, on 2 August 2021 and retired from a retirement annuity fund from which he will receive a lifelong monthly annuity of R10 200 from 31 August 2021. At this date, contributions to this retirement annuity fund amounting to R18 250, in total, have not yet been allowed as a deduction against his taxable income. Wiseman earns a gross cash salary of R33 000 per month from Amapiano. In addition to this, he received the following benefits or allowances: . He joined a medical aid fund effective from 1 October 2021. He and his mother are the only dependants of the fund. His mother qualifies as a dependant in terms of the rules of the fund. His total monthly contributions amounted to R6 800 per month from 1 October 2021 to 31 January 2022, of which his employer contributed R4 000 per month. His mother sadly passed away during January 2022 and therefore the total contributions for February 2022 amounted to only R3 400, of which his employer contributed R2 000. For the period 1 October 2021 to 28 February 2022 he did not incur any additional medical expenses as the medical aid fund settled all claims. His employer effected the payment of her contributions to the medical aid fund. During the period 1 March 2021 to 30 September 2021, Wiseman did not belong to a medical aid fund. His medical expenses for this period amounted to R34 000, which he paid for in cash. . Wiseman's total contributions to a provident fund from 1 October 2017 were R3 800 per month. His employer did not make any contributions to the fund. . Wiseman enjoyed the right of use of a company-owned vehicle, which she uses for business as well as for private purposes. Amapiano purchased the vehicle when it had a retail market value of R368 000 (VAT included) on 1 October 2021, the same date that Wiseman obtained its use. The vehicle had a qualifying maintenance plan. Wiseman had to pay for the full fuel cost of the vehicle, which amounted to R29 000 in total until February 2022. Wiseman kept a logbook at the insistence of his employer. He travelled a total of 18 900 km for the 152-day period, 8 300 km of which was for 2 | Page private purposes. He also paid R200 per month to his employer for the use of the vehicle. W Amapiano, a manufacturer of world-class LED televisions, granted Wiseman the free use of a 120 cm HD LED television for use at his home for a period of 2 months. On 1 October 2021, the date on which the benefit was granted to Wiseman, the manufacturing cost to Amapiano of the television was R65 000 (excluding VAT) and the open market value was R110 000. On 1 December 2021, this television was sold to Wiseman for R65 000, funded by an interest-free loan (repo rate 7%). At this date the television had an open market value of R95 000. He had to pay an instalment of R2 500, at the end of each month commencing from 31 March 2022 for a period of 26 months, on the loan. Wiseman performed so well in his position at Amapiano that the company, instead wrote off the outstanding amount (R65 000) on this loan on 28 February 2022 in lieu of paying Wiseman an annual bonus. YOU ARE REQUIRED TO: a) Calculate the total amount which will be included for the right of use of the motor car for employees' tax purposes in Wiseman's remuneration for the year of assessment ended 28 February 2022. (3) b) Calculate Wiseman Madala's taxable income for the year of assessment ended 28 February 2022. Provide reasons for amounts, which in your opinion are either not taxable or not deductible. Show all calculations. (24) c) Calculate Wiseman's normal tax liability for the year of assessment ended 28 February 2022. Assume that Wiseman's taxable income for the year of assessment is R450 000. (9) d) Discuss, with reference to the Income Tax Act, the effect of Wiseman's medical aid fund contributions and medical expenses on the calculation of her employees' tax for the year of assessment ended 28 February 2022. (4) 45 MADKe