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