Question: QUESTION 3 Jose works for an IT network provider, i-Connect (Pty) Ltd. Jose is earning R45 000 per month. On 1 March 2023 i-Connect takes

QUESTION 3

Jose works for an IT network provider, i-Connect (Pty) Ltd. Jose is earning R45 000 per month. On 1 March 2023 i-Connect takes out an unapproved group life policy on Joses life. The monthly premium is R1 350. The cover amount of the life policy is R1.8 million and the benefits will be paid to Joses family on his passing. What are the tax implications in respect of the premiums paid by i-Connect (Pty) Ltd. Choose the correct answer.

	a.	i-Connect must increase the value of the life cover to make provision for the estate duty payable on the cover amount
	b.	i-Connect needs to increase Joses salary in order to make provision for the tax deduction
	c.	i-Connect can deduct all premiums paid in terms of sec 11 (w) (i)
	d.	Jose will be able to deduct the premiums in terms of sec 11 (w)(i) because this is a fringe benefit
	e.	None of the above

QUESTION 4

Jerome has been working at JT Joiners (Pty) Ltd for a number of years. JT Joiners took out a policy on Jeromes life with the understanding that he will not leave their employ for a period of 7 years, ending March 2023. Jerome received a salary increase which was used by Jerome to pay the policy premiums. The policy was ceded to the company. Jerome resigned from the company and will be leaving at the end of March 2023. What is the estate duty and tax implications for Jerome? Choose the correct answer.

	a.	The policy proceeds will be tax-free for Jerome and will also be disregarded for CGT purposes. The proceeds will however form part of Jeromes deemed property for estate duty purposes.
	b.	Jerome has been paying the premium of the policy so the premium plus 6% will be excluded for income tax purposes.
	c.	Due to the increase in salary Jerome will pay the additional income tax on his salary and policy proceeds will be taxed at Jeromes marginal tax rate.
	d.	The company will qualify for a tax deduction in respect of premiums paid.
	e.	None of the above

QUESTION 5

Always-online (Pty) Ltd took out a policy on the life of James. Always-online (Pty) Ltd has been paying the premium of R18 500 per annum for the past 3 years. Sadly James passed away and the policy proceeds of R2 750 000 paid out to the company. What amount of cover (if any) will be deemed property in Jamess estate? Choose the correct answer (rounded)

	a.	R2 200 000
	b.	R2 687 570
	c.	R0 because the policy proceeds paid to the company and is not included in the estate
	d.	R2 750 000
	e.	None of the above

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