Pete Loren is a 35 year old provisional taxpayer. Pete really struggles with this “tax thing” and he fell behind with his tax returns. He is starting to catch up and he asked you to help him avoid further penalties.

Pete’s taxable income and tax assessments details are as follows:

2020 taxable income was R430 000 (notice of assessment received 15 July 2022).

2021 taxable income was R480 000 (notice of assessment received 11 December 2022).

2022 taxable income was R570 000 (notice ofassessment received 20 May 2023).

2023 taxable income was R640 000 (notice of assessment was received 27 September 2023).

Pete’s employees tax for the year remained constant at R6 000 per month.

YOU ARE REQUIRED TO:

A) Calculate Pete’s first and second provisional tax payments for his 2023 year of assessment to avoid any penalties (what he should have paid).

B) Assume that Pete made a second provisional tax payment on 14 March 2023, based on an estimate of R500 000. Calculate the consequences this payment. Pete Loren is a 35 year old provisional taxpayer. Pete really struggles with this “tax thing” and he fell behind with his tax returns. He is starting to catch up and he asked you to help him avoid further penalties.

Pete’s taxable income and tax assessments details are as follows:

2020 taxable income was R430 000 (notice of assessment received 15 July 2022).

2021 taxable income was R480 000 (notice of assessment received 11 December 2022).

2022 taxable income was R570 000 (notice ofassessment received 20 May 2023).

2023 taxable income was R640 000 (notice of assessment was received 27 September 2023).

Pete’s employees tax for the year remained constant at R6 000 per month.

YOU ARE REQUIRED TO:

A) Calculate Pete’s first and second provisional tax payments for his 2023 year of assessment to avoid any penalties (what he should have paid).

B) Assume that Pete made a second provisional tax payment on 14 March 2023, based on an estimate of R500 000. Calculate the consequences this payment. QUESTION ONE

Fana Baloyi was employed by Recession (Pty) Ltd (Recession). He is 52 years old. He was retrenched on28 February 2023, as part of an overall reduction in staff. Fana is married and has two children in high school.

The following information is applicable to his 2023 year of assessment:

Monthly salary	33 000
Monthly travel allowance	3 000
13th cheque (received in his birthday month – September)	33 000
Award from employer – on retrenchment (Feb ‘ 22)	440 000
Fana’s pension fund contribution {current} (10% of salary)
Employers pension fund contribution – Rand-for-Rand
RAF contribution (current) up month before pay out	3 000
RAF lump sum – received month of 52nd birthday	600 000
Fana’s monthly contribution to medical aid	4 000
Employers monthly contribution to medical aid	2 500
Qualifying medical expenses	24 000

Fana also received the following:

Local interest	28 000
Foreign dividends	25 000

Fana’s car was purchased on 1 March 2021. The following is a cost breakdown:

Cost price	260 000
VAT	39 000
Finance charges (36 months)	99 000
	398 000

Fana incurred fuel costs of R14 350 and maintenance costs for R6 890.

He also received the right of use of a motor vehicle from his employer and therefore kept accurate records of his business travel kilometers:

Kilometers travelled	Fana’s car	Recession car
Business	2 600	8 232
Private	14 400	9 048
Total kilometers travelled	17 000	17 280

The details of the motor vehicle that Fana had the right of use of, is the retail market value R324 000 and finance charges of R86 000. Fana’s employer purchased the vehicle on
17 May 2020 and gave Fana the right of use on 1 July 2021. Fana paid fuel costs for the private travel with Recession’s car and maintenance costs of R8 400.

The day Fana was retrenched he sold his vehicle. He received R199 000. On the same day Fana sold 1 000 Woolworths shares (listed on the JSE) for R73 each. He acquired the shares in June 2011 for R9 each. He incurred brokerage fees of R220 (including VAT) on acquisition and R280 (including VAT) on disposal.

Fana contributed R45 000 to his RAF in previous years that was not allowed as deductions. Fana’s other RAF paid out R480 000 on his 50th birthday (in 2021).

You are required to calculate:

A) Fana’s tax liability for the current (2023) year of assessment.

B) Fana’s employees tax for September 2022.

Answer rating: 100% (QA)

ANSWER Lets tackle each part of the question separately Part A Petes Provisional Tax Payments for 2023 First Provisional Tax Payment Petes taxable income for 2023 is R640000 Based on the previous year... View the full answer