Question Bank 1

SCHOOL OF ACCOUNTANCY
Department of Taxation
Question Bank
TAXATON IIIA
(CITA 032)
COMPILED BY: MULWELI ELIA RAKHADANI CA(SA)
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Question Description & Topics Marks Time
CITA032 Test 1 2022
1 Topics: Gross Income, Gross Income Special Inclusions, 80 2.4 hours
Exempt Income, General Deduction, Special Deduction,
Capital Gains Tax, Employees Tax, and Provisional Tax.
CITA032 Test 2 2022
2 Topics: Gross Income, Gross Income Special Inclusions, 100 3 hours
Capital Gains Tax, Employees Tax, Provisional Tax, Trusts,
Donations Tax, and Estates Duty
CITA032 Exam 2022
Capital Gains Tax, Trusts, Donations Tax, and Estates Duty
4 CITA032 Supp Exam 2022
Topics: Gross Income, Gross Income Special Inclusions, 100 3 hours
Capital Gains Tax, non-resident, Trusts, and Donations Tax
5 CITA032 Sick Test 2021
Capital Gains Tax, Employee’s Tax and Non-resident.
CITA032 Test 1 2021
6 Topics: Gross Income, Gross Income Special Inclusions, 80 2.4 hours
Capital Gains Tax, Employee’s Tax and Provisional Tax
7 CTAA032 Test 2 2021
Topics: Gross Income, Gross Income Special Inclusions,
Exempt Income, General Deduction, Special Deduction, 100 3 hours
Capital Gains Tax, Trusts, and Retirement Benefits.
8 CTAA032 Exam 2021
Capital Gains Tax, Donations Tax, Trusts, Estate Duty and
Retirement Benefits.
CTAA032 SUPP Exam 2021
Capital Gains Tax, Non-residents, Trusts and Retirement
Benefits.
10 CTAA032 Special Exam 2022
Capital Gains Tax, Provisional Tax, Donations Tax, Non-
residents, Trusts, Estate Duty and Retirement Benefits.
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APPENDIX A:
- 2023 Tax Tables
- 2023 Rebates and credits
- 2023 Appendix C
- 2023 Rates
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QUESTION 1 (80 MARKS)
Question 1.1 (60 MARKS)
Mike Monare is a senior lecturer at the University of Venda, Limpopo. He is a 40-year-old South African
resident and a qualified accounting professional. He is married to Joyce Monare in community of property.
Below is Mike’s transactions from his employment and transactions entered in his personal capacity for his
2023 year of assessment:
Transactions from his employment
1. He earned a basic salary of R40 000 per month in the 2022 year of assessment, the University
increased his monthly salary by 7,5% in the 2023 year of assessment. He received a bonus equal
to his monthly salary in December 2022.
2. The University paid monthly contributions of R1 200 to Medi Health SA, a registered medical
scheme for Mike’s benefit. The members of the medical scheme are Mike and his wife with him
being the main member and the wife considered a “dependant” as defined.
3. The University paid total contributions of 15% of Mike’s pensionable salary to Mike’s pension fund.
The pensionable salary of Mike according to the rules of employment of the University is 80% of his
basic salary.
4. Mike completed 10 years of service at the University in the current year of assessment and he
received an Apple watch from the University. The University paid R8 000 for the watch and
presented it to Mike as a long service award.
5. Mike was granted the right to use the University-owned car which had a cost price of R375 000
(including VAT) from 1 March 2022 with no maintenance plan, the car was bought for cash by the
University on 1 September 2021. Mike kept an accurate logbook proving that he travelled a total of
18 000kms of which 10 500kms was for business purposes. He is responsible for the full cost of
fuel relating to his private use of the car, he spent R12 000 for the year on fuel.
Transactions entered into in his personal capacity.
6. He earned the following amounts from his investments in South African and across the globe:
- Dividends amounting to R185 000 from companies in Europe. He has equity holding and voting
rights less than 10% in all these companies.
- Interest income of R135 000 from South African Banks, of the total interest income, R15 000 is
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from his Tax-Free Investment. He made monthly contributions of R3 000 with the exception of
December 2022 which is the month he received bonus and he contributed double his monthly
contributions as he felt he had excess funds to invest.
7. He paid monthly contributions of R2 200 to his medical aid. (Refer to point 2 above).
8. Mike has incurred an amount of R22 500 relating to qualifying medical expenses, R2 500 was
claimed from his medical scheme.
9. Mike paid monthly contributions of R2 400 per month to his pension fund (refer to point 3 above).
10. He paid a speeding fine of R300 in November 2022 when his students were writing a test, he was
rushing to the venue where the assessment was being written.
YOU ARE REQUIRED TO:

# MARKS
1. Discuss the normal tax implications for Mike Monare relating to his contributions 5
to his Tax-Free Investment (Refer to point 6) for the 2023 year of assessment.
2. Calculate the normal tax liability for Mike Monare, using the information provided 54
for his 2023 year of assessment. Please provide reasons where applicable.
(Assume a remuneration of R683 922 for his 2023 year of assessment,
accurately determined)
Logic and presentation 1
5
Beauty Phala is a South African resident, aged 46, who is residing in Polokwane in the Limpopo province.
She is married out of community of property to her beloved husband Joseph Phala. Beauty has queries
relating to assets disposal transactions, and employees and provisional taxes for her 2023 year of
assessment.
Assets disposal transactions:

1) She sold a boat which was 12, 5 meters long which she bought when her family was still residing in
Eastern Cape before moving to Polokwane. She realized that the boat was idling in Polokwane since
there are no places close by to sail. She bought the boat for R550 000 in 2013 and sold it for R300
000 on 28 February 2023.
2) She sold one of her cars for R100 000 on 15 January 2023, the car was purchased for R300 000 in
2018.
Employees and provisional taxes information:
3) She earns a basic monthly salary of R80 000 and received a bonus of R120 000 in December 2022.
4) She was granted the right of use of a company car in the 2023 year of assessment with R60 000
being the fringe benefit (amount included in gross income).
5) She belongs to a pension fund and monthly contributions of R11 500 were paid, with 60% of the
contributions made by her employer and the balance made by her.
6) The following information is relating to her provisional taxes for the 2022 year of assessment:
Item Year Amount
Taxable income (estimate) 2023 R1 200 000
Assessed taxable income 2022 R1 150 000
The 2022 assessment was issued by SARS on 20 August 2022 and the 2021 assessment was issued on
30 June 2021.
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# MARKS
1. Discuss the capital gains tax implications for Beauty Phala for her 2023 year of 5
assessment.
2. Calculate the employee tax that is withheld by Beauty Phala’s employer from her 9
monthly salary in the 2023 year of assessment.
3.
Discus the basic amount of Beauty Phala for her 2023 year of assessment 5
relating to her first provisional payment.
Beauty Phala is a South African resident, aged 46, who is residing in Polokwane in the Limpopo province.
She is married out of community of property to her beloved husband Joseph Phala. Beauty has queries
relating to assets disposal transactions, employees and provisional taxes for her 2023 year of assessment.
Employees and provisional taxes information:
1) She earns a basic monthly salary of R80 000 and received a bonus of R120 000 in December
2023.
2) Her balance of remuneration, correctly determined amounted to R123 400 per month for the year
of assessment excluding the bonus in item 1 above.
3) Her annual equivalent (including bonus) correctly determined is R2 920 800.
4) Employees tax withheld from her monthly salary by her employer amounted to R41 671 during
the year of assessment.
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The following information is relating to her provisional taxes for the 2023 year of assessment:
Item Year Amount

Taxable income (estimate) 2023 R2 200 000
The 2022 assessment was issued by SARS on 01 August 2022 and the 2021 assessment was issued on 30 June
2021.

# MARKS
1. Calculate the employees tax on the bonus received by Beauty Phala in December 5
2022.
2. Calculate Beauty Phala’s first provisional tax payment for the 2023 year of 5
assessment.
Erica Selema is a South African tax resident and employed by Best for You Events (Pty) Ltd (BFY), an events
management company which is also a South African tax resident and she has received the following benefits
from BFY in the 2023 year of assessment:
Right of use of accommodation
Erica was provided with a right of use of residential accommodation for the full year of assessment. The
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accommodation is rented by BFY from an unconnected third party for a monthly rental of R7 500 and BFY is
also required to pay for water and electricity costs, BFY has incurred R5 000 and R6 500 on water and
electricity respectively. The residential accommodation is provided to her fully furnished.
Additional information:
She earned the following amounts from the company in 2023:
 Cash salary per month amounting to R24 750
 Bonus paid in December 2022 amounting to R9 900
 Her earnings from her employer for 2023 year represents her 2022 earnings but increased by 10%.
Meals and drinks
BFY provided her with meals and drinks worth R500 in the last week of March 2022, the company organized
a training to improve her efficiency at work and the meals drinks were provided during the training time.
Loan
BFY advanced a loan to her on 01 March 2022 of R50 000 with interest charged at 2% simple interest per
annum. The loan (capital and interest) was repayable on 28 February 2023, the amount repayable was
deducted from her February 2023 salary. Assume that market related interest for similar loans is 12% and
that the official rate of interest was 4,25% throughout the year of assessment.
Travel allowance
She was required to travel for business purposes to meet up with the company’s clients and assess venues
that the clients plan to have their events. She was granted an allowance of R5 per km for actual distance
travelled, she travelled 1000 km for the 2023 year of assessment.
Travel costs for holiday trip
BFY paid for her travel costs (flight and shuttle) for a holiday trip she took in June 2022. The flight ticket
(return trip) was purchased for R7 000 and the shuttle cost (return trip) amounted to R1 500. The cost of the
lowest fare for the flight (return trip) was R5 000.
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# MARKS
1. Calculate Erica Selema’s taxable amounts for the 2023 year of assessment relating 24
to the benefits received from her employer. (Please provide reasons were
applicable)
QUESTION 2 Please do not do this question as it (100 MARKS)
Question 2.3 relates to Retirement Benefits (15 MARKS)
You have been provided with two queries relating to two taxpayers who are South African tax residents
relating to their 2023 year of assessment as follows:
Resident 1: Belinda Sebake
Belinda Sebake retired on 30 June 2022 and received a lump sum of R500 000 from her Retirement Annuity
Fund on 15 July 2022. No Pension Fund and Retirement Annuity Fund contributions were brought forward
from the prior year of assessment and all current year contributions to retirement funds were allowed as
deductions against income tax in terms of section 11F.
Resident 2: Remember Chauke
Remember Chauke is a 35 year South African Tax resident who was retrenched by his employer in the 2023
year of assessment. The employer is still suffering the effects brought about covid-19, although it tried to
keep all its employees since 2021 it just could not return to its glory days and these prolonged financial
difficulties meant that the company had to cut down on some costs in order to ensure that it continues running.
As part of its cost-cutting plans, some employees including Remember had to be retrenched. He was
retrenched on 28 February 2023, and he received a retrenchment package (a lump sum) amounting to
R150 000.
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# MARKS
1. Discuss the Income Tax implications for the two taxpayers for their 2023 year of 14
assessment relating to the lump sums they have received.
Benjamin Thoka is a widower aged 48 years and a South African tax resident. He created a trust on 1 March
2022 for the benefit of his son and granddaughter. The son is 16 years old and the granddaughter is 28 years
old.
The trust had the following transactions for the period 1 March 2022 to 28 February 2023:
Description Note Amount (R)
Dividends earned 1 250 000
Rentals earned 2 950 000
Expenses incurred to earn the above income 3 (250 000)
Notes
1. Dividends earned are from shares donated to the Trust by Benjamin at the date of its creation. The shares
were bought by him in 2011 for R500 000 and had a market value of R2 500 000 at the date of donation.
2. He sold residential properties to the trust for their market value of R4 000 000 on 1 March 2022. The
properties were sold on a loan account to the trust and the terms of the loan are as follows:
 Interest: market related interest of 10% per annum
 Repayments structure: only interest payments will be made for the first 3 years and then capital
repayments will occur in equal instalments over 20 years.
3. Five (5) percent of expenses incurred related to dividends and the balance related to rentals. The expenses
are tax deductible where applicable.
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 Other information:
 - No beneficiary has vested rights in terms of the trust deed, this rights are vested on the discretion of
the trustees of the trust.
 - The trustees vested 90% of the dividends equally to the beneficiaries with the balance being retained
in the trust. The trustees are planning to invest the balance in interest bearing investments.
 - The net rentals were all vested equally to the beneficiaries.

# MARKS
1. Calculate the taxable income for the 2023 year of assessment of all the taxpayers 29
referred to in the information above.
(Please ignore capital gains taxes (CGT))
You are employed at a prominent Tax Advisory firm in Polokwane and have been assigned two clients for
the period 21 September 2023 to 30 September 2023. Refer to the queries from these clients below:
Client 1: Dickson Baloyi
Dickson Baloyi (32 years old) died unexpectedly on 30 November 2021, leaving his surviving spouse Helga
Baloyi, and his son Rejoice Baloyi. Dickson and Helga are married out of community of property.
Dickson had the following assets in his estate at the time of his death:
 A holiday house valued at R2 200 000.
 An insurance policy on his life for R1 000 000, he is member of a partnership and this policy was taken
out by other partners. The partners are the beneficiaries and will use the proceeds to purchase
Dickson’s interest in the partnership. The premiums (plus interest at 6% per annum until date of his
death) amounts to R450 000, he was not responsible for payment of these premiums.
 Membership interest in the partnership valued by professional valuator amounting to R1 150 000.
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 Immediately prior to her death, she held the right to an annuity of R600 000 per year purchased from
an insurance company. On the date of his death, the annuity ceased. His age at the date of her death
was 55 years.
Expenses incurred in winding up her estate were as follows:
 Total expense R150 000 (funeral costs – R30 000, valuation fees – R15 000, and executor's
remuneration and Master' s fees – R105 000)
Client 2: James Moroka
Mr James Moroka (55 years old) donated a right of ownership of a farm on which bona fide farming activities
are carried on in South Africa to his son, Lerato Moroka (30 years). The right of use of this farm is held by
his daughter, Masego Moroka (33 years). The price which can be obtained between a willing buyer and seller
for the full ownership of the farm is R2 000 000 on the date of donation of the right of ownership, 1 July 2022.

# MARKS
1. Relating to client 1, calculate the estate duty payable by Dickson Baloyi for the 10
2023 year of assessment.
2. Relating to client 2, calculate the value of the donation made by James Moroka for 9
donations tax purposes for the 2023 year of assessment.
13
Part A
Neville Makana (45 years old) is a resident of South Africa and married out of
community of property to Maria Makana. During 2023 year of assessment, Neville
made the following donations:
1. On 1 March 2022, he gave Solomon (his son) who is 19 years old an annuity
of R7 500 per month for a period of five years.
2. On 31 August 2022, he donated his car worth R180 000 on this day to his
brother, Joseph. He was going to climb the ‘Kilimanjaro’ mountain and donated
his car in case he dies while climbing the mountain.
3. On 1 September 2022, he donated his holiday home to his daughter, Caroline.
The house had a market value of R1 250 000 on the date of donation. He
canceled this donation on 28 February 2023.
Part B
Dineo Pule emigrated from South Africa on 1 March 2020 to Germany. She has never
visited South Africa after leaving until the current year of assessment – she spent 191
days in South Africa during the 2023 year of assessment. She is 42 years old.
Dineo earned the following amounts in South Africa in the 2023 year of assessment:
1. Interest amounting to R135 000 from South African banks, this interest is not
from Tax Free Investment.
2. Rent earned from residential properties she owns in South Africa amounting to
R450 000.
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You are required to: Marks
1. Relating to Part A, calculate the donation tax paid by Neville Makana 15

on each of the donations that he made in the 2023 year of
assessment.
2. Relating to Part B, discuss the normal tax implications for Dineo Pule 9
relating to R135 000 interest for the 2023 year of assessment.
(assume that the interest is from a South African source)
3. Relating to Part B, discuss with reference to case law the source of 5
R450 000 rent earned by Dineo Pule.
Communication – logic and presentation 1
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Marcus Maja a South African tax resident died on 10 February 2023. His death
comes after a long illness which left him so incapacitated that he had to even leave
his job on 15 June 2022.
Marcus Maja’s executor found the following items in his estate:
1. A primary residence valued at R4 200 000 at the time of his death.

2. A positive bank balance of R2 200 000 made of R500 000 (before taxes) lump
sum from employer paid to him when he left his job, R1 400 000 (before
taxes) lump sum from his pension fund paid to him on 1 October 2022 and the
balance is money in his savings account.
3. Unlisted shares valued at R565 000 at the time of Marcus's death. The
executor subsequently sold the shares for R535 000.
4. Proceeds of R500 000 from an insurance policy he took on his life. He paid
total premiums of R90 000 on the policy over a period of 48 months until he
died.
5. A car valued at R215 000 at the time of his death.
The following expenses amounting to R196 000 were incurred in relation to his
estate and funeral:
6. Master's fees of R1 000 and executor’s remuneration of R100 000.

7. Funeral expenses (including costs to wind up his estate) of R95 000.
Other information:
- He contributed to his pension fund until he left his job and contributions to the
amount of R65 000 were not deducted, they were limited by the application section
11F.
- Marcus was 37 years old at the time of his death.
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Please do not do required 1 and 2 as
they relate to Retirement Benefits.
1. Calculate the taxable amount of the lump sum from pension fund 3
received by Marcus Maja on 1 October 2022.
2. Calculate the tax on the lump sum from pension fund received by 7
Marcus Maja on 1 October 2022.
3. Calculate the estate duty payable on Marcus’s estate for the 2023 14
year of assessment.
Communication – logic 1
17
Meshach Mamabolo, a South African tax resident created a trust on 1 March 2019
for the benefit of his wife, Dikeledi Mamabolo and his son, James Mamabolo. His
wife is 40 years old and their son is 16 years old. The following information relates
to the Trust’s property and income for the 2023 year of assessment:
Property and income

1. The Trust owns a portfolio of shares as its only property, this portfolio of
shares with a market of R15 000 000 was donated to the Trust by Meshach
on 1 March 2022. Assume a base cost of R2 500 000 as determined in terms
of the eighth schedule for the shares.
2. The Trust earned dividend income of R1 500 000 from all the shares in the
portfolio it owns. This is the only income of the Trust for the 2023 year of
assessment. Of the R1 500 000 dividend amount, 60% relates to local
dividends and the 40% relates to foreign dividends (interest held in the
foreign companies is less than 10%).
Other information:
- The beneficiaries have vested rights in terms of the trust deed of 50% each to the
income of the Trust. The dividend income accrued evenly through the year of
assessment to the Trust.
- The assets/property of the Trust are not vested in any beneficiary in terms of the
Trust deed, the trustees have a right to exercise their discretion in relation to these
assets including any capital gains.
- Meshach has been living with cancer for a couple of years now, this is the reason
he started the family trust as he wanted to care for his loved ones even after dying.
He died and left behind his wife and son on 31 August 2022.
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# MARKS
1. Discuss the tax implications for the 2023 year of assessment of all the taxpayers 24
referred to in the information above. (Please use reference to case law where
applicable)
2. Calculate the taxable income of Meshach Mamabolo and his wife for the 2023 20
year of assessment pertaining to the information above.
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Solomon Dlamini studied Mathematical Sciences at the University of Limpopo and

works as a Mathematician. You met Solomon at the University during the studies and
became good friends. Solomon was computing his normal tax liability calculations for
the 2023 year of assessment and got stuck, he provided you with the calculation and
further information for the parts he could not perform for you to assist as follows:
NOTE Calculations (or reason (s) Amount R

Description/Item where applicable
Gross Income 634 500
Salary Accurately calculated 516 000
Bonus Accurately calculated 43 000
Medical aid (ER) - fringe benefit Note 5 Accurately calculated 14 400
Pension fund (ER) - fringe benefit Note 1 Accurately calculated 61 100
Less: Exemptions 0
Income 634 500
Less: Deductions and allowances 0
s23(o) prohibits the deduction
Fine of unlawful activities 0
Sub-total (A) 634 500
Less: Section 11F Note 1 ??
Sub-total (B) ??
Add: Travel allowance - s8(1) Note 2 ??
Add: Taxable capital gains - s26A Note 3 ??
Sub-total (C) ??
Less: Donations Note 4 ??
Taxable income ??
Note 1
Solomon is a member of a pension fund and his employer contributes double his
contributions. He has also calculated accurately the following amounts:
 Taxable income (including capital gains) of R1 298 500

 Remuneration of R665 258
Note 2
He received a travel allowance of R8 500 monthly from his employer. He travelled a

total of 30 000 km of which 18 000 km were for business in the current year from 1
March 2022. He bought his car in 2020 for R205 000 including VAT. He kept record of
his actual travel expenses and are provided below:
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 Insurance : R14 200
 Licence : R650
 Maintenance : R3 650
 Fuel : R24 800
Note 3
He disposed of the following assets under the current year of assessment:
Disposal 1: House
He sold a house situated in Polokwane for R2 000 000 on 1 February 2023, he

purchased the house in 2013 for R450 000. He renovated the house in 2020 at a cost
of R250 000. This house is not his primary residence.
Disposal 2: Furniture
He sold furniture which was in the Polokwane house (refer to disposal 1 above) on 15
February 2023 for R100 000, this was purchased for R300 000 in 2020.
Note 4
He has made the following donations in the 2023 year of assessment:
- Donated R50 000 cash on 15 June 2022 to his childhood school in the villages
where he grew up, the school is an approved Public Benefit Organisation
(PBO).
- Donated shares to his brother on 28 February 2023. He bought the shares for
R100 000 in 2016 and the shares had a market value of R500 000 on the date
of the donation.
Note 5
Solomon belongs to a medical aid and has made contributions of amounting to

R21 600. He is the main member of the medical aid scheme and his disabled son is a
dependent as defined. He did not incur any medical expenses out of his pocket in the
current year of assessment.
Additional information
Solomon is 48 years old and his son is 20 years old and they are both residents of
South Africa.
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1. Calculate the normal tax liability for Solomon Dlamini for the 2023 59
year of assessment. Provide brief reasons were necessary. (Start
with your answer with subtotal A of R634 500)
2. Discuss Solomon Dlamini’s donations tax implications for donations 10

he made in the 2023 year of assessment. (Refer to note 4)
You have been provided with Tax queries below from parties who are not connected
for the 2023 year of assessments:
Query 1
Joseph Mapaya is a South African tax resident and plans to open a family trust. He
has a few queries relating to this plan of creating a trust. The trust will be a
discretionary inter-vivos trust with the trustees having a discretion of distributing the
income of the trust to the beneficiaries.
Joseph needs to know who will get taxed on interest income earned by the trust if the
trust invested money obtained from him as an interest free loan if the income is
retained in the trust.
His other question is who will get taxed on interest earned by the trust if the trust
invested money obtained from him as an interest free loan but this is in terms of a will
(the trust will only be created at the time of his death) if the income is retained in the
trust.
Query 2
Monica Lunga is 26 years old and born in Zimbabwe, she has been visiting South
Africa each year since the 2018 year of assessment.
She has provided you the following information relating to the days she has spent in
South Africa in each of year of assessment:
22
Year of 2018 2019 2020 2021 2022 2023
assessment
Number of 185 190 115 140 200 95*

days
*She has spent less days in South Africa in 2023 year of assessment as she visited
home a number of times because her father was ill. Her father sadly died late
September 2022 and she went home for a much longer period (1 October 2022 to 31
August 2023) as she was still grieving the death of her beloved father.
She also provided with the following amounts earned in the 2023 year of
assessment, please note that the amounts accrued evenly in the year of
assessment:
- Dividends from South African companies amounting to R120 000.

- Royalties paid by a resident of the United States of America (USA) for a right
to use her intellectual property in the USA amounting to R240 000.
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No You are required to: Marks
1. Relating to Query 1, respond to Joseph Mapaya’s first question by 5

discussing the taxpayer (s) that will be taxed on the interest income
that will be earned and retained by the Trust.
2. Relating to Query 1, respond to Joseph Mapaya’s second question 5

by discussing the taxpayer (s) that will be taxed on the interest
income that will be earned and retained by the Trust.
3. Relating to Query 2, discuss whether Monica Lunga will be 10
considered a resident of South Africa for the 2023 year of
assessment.
4. Relating to Query 2, discuss if the dividends and royalties will be 9
included in Monica Lunga’s gross income for the 2023 year of
assessment. (Assume that she was a resident for eight months
and a non-resident for 4 months.)
24
You are employed by TK Tax Experts, a tax consultancy firm in Polokwane and you
have been assigned to the queries below:
Query 1
Nyiko Baloi aged 35, is a CFO of Polokwane Cements (Pty) Ltd (PC) a company
operating in Polokwane, Limpopo which manufactures cement. Nyiko has been
employed by the company since he was 28 years old as a junior employee and he is
now the CFO. The company has a February year end.
Nyiko had the following transactions for the year of assessment ended 28 February
2023:
1) A monthly salary from Polokwane Cements (Pty) Ltd of R55 000 and a bonus
of 15% of his annual salary paid end of February each year. Due to poor trading
conditions no bonuses were paid by PC in 2023.
2) Dividend income amounting to R100 000 from South African companies, this
dividends are not from a Tax-Free Investment in terms of section 12T.
3) Interest income of R35 000 from his Tax- Free Investment for which he has
made contributions of R3 000 per month.
4) PC paid monthly contributions of R4 000 Nyiko’s medical aid scheme for his
benefit, he is the only member of this scheme.
5) Total monthly pension fund contribution of R5 000, of which 50% was made by
PC.
6) Travel allowance of R7 500 monthly. He is required to use his car for business
travel and he travelled a total of 30 000 km of which 18 000 km were for
business in the current year from 1 March 2022. He bought his car in 2020 for
R205 000 including VAT. He did not keep record of his actual travel expenses.
Assume the following additional information for Nyiko for the 2023 year of assessment:
 His taxable income is R830 000 for year, before allowing any deduction in terms
of s11F.
 His taxable income is R850 000 for year, before allowing any deduction in terms
of s11F but including taxable capital gains.
 His final taxable income on which his tax per table is calculated is R802 000 for
year.
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Query 2
Meiki Mohlala is 40 years old and an employee of BK Supermarket (Pty) Ltd (BK). BK
has a December year end. Meiki had a taxable income of R420 000 before taking into
account the following transactions for the 2023 year of assessment:
1) She sold her holiday house for R2 500 000 on 20 February 2023. She
purchased the house in 2013 for R700 000 and renovated the house at a cost
of R200 000 in 2018.
2) She bought gold worth R200 000 on 1 March 2022. The price of gold increased
exponentially in the 2023 year of assessment and Meiki decided to realize her
investment by selling her Gold on 28 February 2023 for R700 000. Meiki bought
the Gold for investment purposes, however she realized that she can make a
decent profit if she sells her gold now. This is the first time she had owned and
sold gold in her life.
3) She sold furniture in her holiday house (refer to 1 above) on the same day of
selling the house for R50 000, she purchased the furniture for R200 000 in
2021.
4) She donated R25 000 to a registered Public Benefit Organization and obtained
a receipt from the Organization in terms of section 18A
Please do not do Query 3 as it relates to

Query 3
Retirement Benefits
Impossible Khosa is a 35 years South African Tax resident who was employed by MJ
Casino (Pty) Ltd (MJ). Just like many players in the casino industry, MJ was affected
severely by covid-19 pandemic and needed to cut down on some costs in order to
ensure that it continues running. As part of MJ’s cost cutting plans, it had to reduce
the number of its employees. Impossible was amongst the employees who had to be
let go on 28 February 2023 and he received an outplacement package (a lump sum)
amounting to R150 000 to assist him survive until he finds a job.
26
Query 4
Erica Selema is a South African tax resident and employed by Best for You Events
(Pty) Ltd (BFY) and she has received the following benefits from BFY in the 2023 year
of assessment:
Right of use of accommodation
Erica was provided with a right of use of residential accommodation for the full year of
assessment. The accommodation is rented by BFY from an unconnected third party
for a monthly rental of R7 500 and BFY is also required to pay for water and electricity
costs, BFY has incurred R5 000 and R6 500 on water and electricity respectively. The
residential accommodation is provided to her fully furnished.
- She earned the following amounts from the company in 2023:

o Cash salary per month R24 750
o Bonus paid in December 2022 R9 900
- Her earnings from her employer for 2023 year represents her 2022 earnings
but increased by 10%.
Meals and drinks
BFY provided her with meals and drinks worth R500 in the last week of March 2022,
the company organized a training to improve her efficiency at work and the meals
drinks were provided during the training time.
Loan
BFY advanced a loan to her on 01 March 2022 of R50 000 with interest charged at
2% simple interest per annum. The loan (capital and interest) was repayable on 28
February 2023, the amount repayable was deducted from her February 2023 salary.
Assume that market related interest for similar loans is 12% and that the official rate
of interest was 4, 25% throughout the year of assessment.
Travel allowance
She was required to travel for business purposes to meet up with the company’s clients
and assess venues that the clients plan to have their events. She was granted an
allowance of R5, 00 per km for actual distance travelled, she travelled 1000 km for the
27
Travel costs for holiday trip
BFY paid for her travel costs (flight and shuttle) for a holiday trip she took in June
2022. The flight ticket (return trip) was purchased for R7 000 and the shuttle cost
(return trip) amounted to R1 500. The cost of the lowest fare for the flight (return trip)
was R5 000.
1. Relating to Query 1, calculate monthly employee’s tax to be withheld 22

from Nyiko Baloi’s salary.
2. Relating to Query 2, calculate Meiki Mohlala’s taxable income for the 10

2023 year of assessment. (Please start with the taxable income of
R420 000 as provided)
3. Relating to Query 3, discuss the income tax implications of the 10
outplacement package of R150 000 received by Impossible Khosa
for his 2023 year of assessment.
4. Relating to Query 4, calculate Erica Selema’s income tax 22
implications for the 2023 year of assessment relating to the benefits
received from her employer.
Communication – presentation and logic 1
Question 5.2 (35 Marks)

This question consists of four (Part A to Part D) independent scenarios.
Part A
Jack Stones, a Chartered Accountant (CA (SA)), born and bred in the Republic, was
temporarily seconded to London, United Kingdom (UK) by his employer on 1 March
2020 to 31 August 2021. The employer in London was extremely impressed with
Jack’s dedication and professional behavior and offered him a permanent job which
he accepted and started with his duties on 2 March 2022 after leaving the Republic on
1 March 2022. He intends to spend five years in UK and obtain international
28
experience and then after seek employment opportunities in Ireland and then will
return to the Republic and open his own practice, as such he did not officially emigrate
from the Republic when he left on 1 March 2022. Jack’s family remained in South
Africa when he left for London and he visits them in December for his vacation leave.
Part B
Boipelo Moeng, a resident of Botswana was employed on a temporary basis in South
Africa for the period 1 March 2022 to 31 August 2022 and was physically present in
South Africa for the entire duration of her employment contract. She got employment
in Botswana after her employment contract came to an end in South Africa. She has
earned the following income for the period 1 March 2022 to 28 February 2023:
1. Salary amounting to R120 000 from the South African employer and R80 000
from Botswana employer.
2. Dividends income of R50 000 from South African companies and R20 000 from
companies in United States of America (USA) while she was in South Africa.
3. Royalties paid by a South African residents of R50 000 on 15 February 2021,
when she has returned to Botswana. The royalty is not attributable to a
permanent establishment of Boipelo in the Republic.
Part C
Gloria Kasongo, born and bred in the Congo is employed as lecturer at a prominent
University in South Africa. She has been an employee of the University from 1 January
2015 and has always visited Congo to see her family during the University summer
vacation for staff between December and January of 20 days each year.
29
Since 2021 the University has been trying to encourage its staff to start recognizing
and implementing The Fourth Industrial Revolution (4IR) processes in the work, Gloria
was one of the few staff members who responded fast to this and she started to have
her academic activities online. Since she started to have her academic activities
online, she began to spend more time in Congo than in South Africa, more particularly
the period from 1 December 2022 to 31 August 2023 she has been in Congo and after
this period she has since been in South Africa.
Part D
Milton Maaka, a South African tax resident is a qualified doctor. He has received
R100 000 from fifty (50) people he has met at different events (musical) in different
parts of Gauteng. He was drinking at a first event he attended on a Sunday and one
person who was next him complained about being too tired to report for work the next
day (Monday), he told the person that he is a doctor and can issue a doctor’s sick note
to him in return for a fee of R2000. He promised to prepare the sick note the following
day (Monday), scan and email. Milton did not have any intention to issue the sick note
to him and since they have not exchanged numbers (he took the person’s email only),
the person was not able to track him down. Milton saw this an opportunity to make
quick easy money and promised a further 49 people doctor’s sick notes without issuing
them throughout the 2023 year of assessment.
30
1. Relating to Part A, discuss with reference to case law whether Jack 5

Stones is a resident of South Africa in the 2023 year of assessment.
2. Relating to Part B, discuss if the amounts earned by Boipelo Moeng 12

will be included in her gross income in the 2023 year of assessment.
3. Relating to Part C, discuss whether Gloria Kasongo is a resident of 12
South Africa in the 2023 year of assessment.
4. Relating to Part D, discuss with reference to case law whether Milton 5
Maaka should include the R100 000 in her gross income in the 2023
year of assessment.
31
Pheaga Malope “Pheaga’’ aged 45, is employed by Premium Milling Company (Pty)
Ltd “PMC” a company operating in Belfast, Mpumalanga. Pheaga has been employed
by PMC since he was 28 years old as a junior employee and he is now a senior
manager. PMC has a December year.
Pheaga had the following transactions for the year of assessment ended 28 February
2023:
1. A monthly salary from PMC of R35 000 and a bonus of 15% of his annual salary
paid in December 2022.
2. Pheaga has a number of investments and has earned the following investment
income, all from South African companies:
- Dividends amounting to R150 000, paid in monthly annuities of R12 500 from
JSE listed companies.
- Interest income of R135 000 from South African Banks. Of the total interest
income, R15 000 is from his Tax Free Investment for which he has made
contributions of R2 750 a month.
3. Pheaga paid monthly contributions of R4 000 to Medi Health SA, a registered
medical scheme. The members of the medical scheme are Pheaga and his wife
with him being the main member and the wife considered a “dependant” as
defined.
4. Pheaga belongs to pension fund and pays total contributions of R2 500 monthly
to the fund. The total contributions paid are allowed as deduction under section
11F.
5. Pheaga has incurred an amount of R42 500 relating to qualifying medical
expenses, R7 500 was claimed from his medical scheme.
Other information:
A. Provisional Payments information
Pheaga has made his first and second provisional payments on the last day of a six-
month period and the last day of a twelve-month period respectively. He has received
his assessments from SARS as follows:
 2022 assessment on 15 August 2022, with a taxable income of R470 000.

 2021 assessment on 10 December 2022, with a taxable income of R400 000.
32
His capital gains was R50 000 and R85 000 for 2021 and 2022 years of assessment
respectively. His taxable income estimate for the 2023 year of assessment is R485
000, this was computed two days after the payment of second provisional taxes.
B. Employees’ Tax information
Pheaga has calculated the following information relating to his 2023 year of
assessment employees’ taxes:
 Monthly employees’ tax: R6 283

 Annual equivalent: R390 000
 Tax on annual equivalent after all relevant rebates/credit: R66 094
YOU ARE REQUIRED TO: MARKS

Calculate the normal tax liability for Pheaga Malope, using the 30
1. information provided for the 2023 year of assessment.
Calculate the tax on bonus received by Pheaga Malope in December 8

2. 2022.
Calculate his first and second provisional payments of Pheaga for her 16
3. 2023 year of assessment.
Discuss if Pheaga Malope will needs to make a third (top up) 5

4. provisional payment and when should he make the payment if so
required.
33
Joyce Masemola, a South African resident, aged 35, is a senior lecturer at the
University of Pretoria. She started working for the University on 1 January 2023 after
leaving the University of Limpopo where she was also a Junior lecturer.
She had a taxable amount of R950 000 during the 2023 year of assessment before
taking into account the below transactions:
1) She bought a home for R 2 500 000 in Olympus, Pretoria on 15 December

2022. She owned a home in Polokwane, Limpopo which she sold it in
anticipation for her move to Pretoria. The home in Polokwane was sold for
R4 000 000 on 10 December 2022, she bought this home for R800 000 in 2018
and she further spent R400 000 renovating it in 2018. Joyce lived in her
Polokwane home for the whole time that she owned it and therefore it would be
regarded as her primary residence for tax purposes. She was using 20% of the
home for business purposes.
2) On the 12 December 2022 she sold her furniture from the Polokwane home for
R80 000. She bought the furniture for an amount of R180 000 in 2018.
3) She sold a boat which was 10, 5 meters long which she was using together with
her family during holidays for family vacations. She bought the boat for
R750 000 in 2019 and sold it for R400 000 on 5 February 2023.
4) Joyce offers tutorials to students registered at long distance learning institutions

on weekends. She received R100 000 payment from some of these students
for tutorial that will take place in March 2023 on 26 February 2023. The money
received is refundable should the students not attend the tutorials.
# YOU ARE REQUIRED TO: MARKS

1. Calculate the taxable income of Joyce Masemola, taking into account 14
transaction 1 to 3 above for the 2023 year of assessment.
2. Discuss with reference to case law, whether the R100 000 received from 5
the students should be included in Joyce Masemola gross income for the
Communication 1
34
This question consists of two independent parts.
Part A
Lebogang Makwela “Lebogang” who is employed by Jake Scrap Metal (Pty) Ltd (JSM) since
01 March 1992 as Chief of Operations (COO). Lebogang is a South African resident who is
49 years old and married out of community of property. He started working for JSM as a
general worker and through his dedication and hard work, he worked his way up to the COO
position.
He had the following transactions relating to his employment (cash and non-cash benefits) for
the 2023 year of assessment:
1. Monthly cash salary of R60 000 and a bonus of R200 000, the bonus was paid on 28
February 2023.
2. Shopping voucher as a long service award which cost the employer R150 000 to be
used in any shop at the mall, this was awarded on 28 February 2023. This is the second
long service award to him, the first was given to him on 28 February 2015 which
amounted to R75 000.
3. Bursary award to his disabled son who studies Bachelor of Arts (NQF level 5), this year
is his first year of his studies and JSM is committed to fund his studies until completion,
provided he pass all his modules each year. In the current the bursary amounted to
R20 000.
4. Pension contribution of 7, 5% of his cash salary, he is a member of the company’s
pension fund and JSM made contributions of R1 for each R1 that he contributed for
his benefit.
5. Accommodation and subsistence allowance of R4 500. He was required to attend
Management training in Magoebaskloof in the last week of the year of assessment, he
spent two (2) nights in Magoebaskloof. Of the total allowance received by him, R3 000
was accommodation allowance, and the balance was for meals and incidental costs.
Lebogang kept accurate records of expenditure incurred while in Magoebaskloof for
accommodation only and it reflected that he spent R1 100 per night – he did not refund
35
any amount to his JSM.
6. Travel allowance to get to Magoebaskloof for the training (refer to 5 above) amounting
to R3 000. The training was for three days, they had to travel back to their usual place
of residence on the last day of training. He travelled 200 km while in Magoebaskloof
with 20 km being private travel. He did not keep proof of his actual travel costs for this
training trip. His bought his car in 2021 for a cash cost of R150 000 including VAT.
7. On 1 March 2022, Lebogang was granted the right to use the company-owned car
(which has a maintenance plan) which was purchased on 01 September 2021 at its
retail market value of R183 000 (including VAT of R22 500 and finance charges of
R10 500). He kept an accurate log book proving that he travelled a total of 12 000 km
of which 7 500 km was for business purposes. He keep accurate records of
expenditure incurred as follows:
 Fuel: R10 000
 Maintenance: R3 400
 Insurance: R9 600
8. Medical aid contributions amounting to R65 000 in total, JSM made full medical aid
contributions to Lebogang’s medical scheme for his benefit. He is the main member,
and his wife and son are dependants.
9. Interest payments to House Finance Bank, a registered South African Bank. It is JSM’s
practice to assist employees at Management level with housing assistance and has
renegotiated a loan (house bond) agreement between Lebogang with his interest
changed from 8% per annum to 5% per annum paid at the end of each month. JSM
committed to pay the debt should Lebogang default which is the main reason for the
significant drop in the interest rate. JSM will also be paying 3% of the interest charge
and Lebogang will pay the balance. The loan was renegotiated on 01 March 2022 and
the balance owing by Lebogang was R1 200 000. The bank also suspended capital
repayments on this loan for three years in order to provide some relief to Lebogang to
lessen Covid-19 pandemic distress.
36
He had the following other transactions not relating to his employment for the 2023 year
of assessment:
10. Retirement Annuity Fund contributions of R5 500 per month for to his Retirement
Annuity Fund.
Additional information relating to the year of assessment:
 Average Repo rate (1 March 2022 to 31 July 2022): 6,25%
 Average Repo rate (1 August 2022 to 28 February 2023): 3,5%
 Average Prime Rate (1 March 2022 to 31 July 2022): 9,75%
 Average Prime Rate (1 August 2022 to 28 February 2023): 7,0%
 Assume that his remuneration as defined for year of assessment is R1 200 000.
Part B
Helen Jacobs retired on 31 December 2022 and received a lump sum of R500 000 from her
Retirement Annuity Fund on 15 January 2023 and monthly annuity of R30 000 payable at the
end of the each month from January 2023 for a period of 20 years or until the month following
the month she dies, the earlier date and received a lump sum of R400 000 from her Pension
Fund on 28 February 2023 and monthly annuity of R35 000 payable at the end of the each
month from February 2023 until she dies. All previous years’ Pension Fund and Retirement
Annuity Fund contributions were allowed as deductions against income tax, in full.
37
Part A 49
i) Calculate Lebogang Makwela’s normal tax liability for the 2023 year of
assessment. Provide brief reasons where necessary and for nil amounts.
Presentation mark 1
Part B
i) Calculate Helen Jacobs’ income tax implication relating to the annuities 2
received for the 2023 year of assessment.
ii) Calculate Helen Jacobs’ taxes on the lump sums received for the 2023 8
year of assessment. Please do not do this question as it
relates to Retirement Benefits
Total for Question 1 60

You are employed at a Tax Consulting firm in Pretoria and have been allocated work
on the clients below. The clients are unrelated, and all the people are South African
Tax residents.
Client 1: Suzan Maleka

Suzan won Powerball jackpot in 2017 and invested her money in Property consisting
of ten (10) residential units in Pretoria and Johannesburg, Gauteng. She was of the
opinion that investing her money with banks will not give her decent return on
investment and therefore invested in Properties that would produce rental income. Her
intention is to hold the properties to earn rentals and for capital appraisal.
Suzan had the following disposal transaction relating to the units between 01 March
2022 and 28 February 2023, these were the only disposals since she bought the
residential units:
First sale: 3 units

Three clients approached Suzan in the first week of March 2022 with purchase
proposal of the units they were occupying. She never intended to sell the units but the
offers were too good to not consider and she finally decided to sell after performing
38
the Net Present Value (NPV) of the units and compared this to the offers, and realizing
that the offers have a premium. She sold each unit for R1 250 000, each unit was
purchased for R350 000.
Second sale: 7 units
Due to interest rates being at all times low since around July 2022 throughout the year
of assessment, more people wanted to purchase property rather than renting. Suzan
saw this an opportunity to actually realize her investment and make a profit while doing
so. To unlock more value, she advertised her units on Radio, Television, Social Media
platforms (Twitter, Instagram and Facebook) and Billboards in and around Gauteng
through her marketing team. She sold each unit for R1 750 000, each unit was
purchased for R350 000 in the last week February 2023.
Client 2: Sinqobile Madubela

Sinqobile Madubela (43 years old) married out of community of property to Afika
Madubela (42 years old), created a discretionary trust in 2018. The two beneficiaries
of the trust are: Afika the wife, Athenkosi Madubela (26 years old) their son, and
Anelisiwe Madubela (21 years old) their daughter. Sinqobile did not establish the trust
with the sole or main purpose of reducing, postponing or avoiding his tax liability. He
donated interest and dividends earning investments to the trust at the time of creation.
The trust had the following income for the 2023 year of assessment:
Interest income: Note 1 R600 000
Dividends income: Note 2 R800 000
Total Income: R1 400 000
Note 1
The interest income earned by the trust in any year of assessment vest equally to the
beneficiaries at the end of February each year, the trustees distributed the R600 000
to the beneficiaries on 02 March 2023.
Note 2
The trustees vested and distributed R100 000 to Athenkosi on 01 December 2022 and
the balance was vested to Anelisiwe on the same day on the condition that she passes
39
all her final year modules. Anelisiwe got her results in December 2022 and passed
three of her four modules, she qualified for a supplementary examination for one
module which she wrote in January 2023. She got her supplementary examination
results on 01 March 2023 and passed the module, the trustees distributed the dividend
income to her on this date.
Client 3: Fatima Umar

Fatima Umar is a Nigerian resident who has an investment in a South African listed
company. She holds 30% voting and participating rights in the company. She is too
concerned about the political instability in South Africa and therefore has sold her
shares in the company during the 2023 year of assessment.
The company had the following assets at market values on the date (15 February
2023) she sold her shares:
Asset Cost Market Value

Land R1 500 000 R7 000 000
Buildings R2 000 000 R10 000 000
Inventory R1 700 000 R1 500 000
Receivables R500 000 R500 000
Cash and cash equivalents R1 000 000 R1 000 000
TOTAL R6 700 000 R20 000 000
Details of shares sold:
The base cost determined in terms of the Income Tax rules for the shares on 15
February 2023 is R200 000 and the selling price is R700 000.
40
Client 1
i) Relating to the first sale of the 3 units, discuss whether the proceeds 5
will be included in Suzan Maleka’s gross income for the 2023 year of
assessment. (Please make reference to court cases)
ii) Relating to the second sale of the 7 units, discuss whether the 5
proceeds will be included in Suzan Maleka’s gross income for the 2023
year of assessment. (Please make reference to court cases)
Client 2
i) Relating to the R600 000 interest income, discuss whether the 5
beneficiaries will include this income in their gross income for the 2023
year of assessment. (Please make reference to court cases)
ii) Relating to the dividend income, discuss whether Anelisiwe Madubela 5

will include the dividend income in her gross income for the 2023 year
of assessment. (Please make reference to court cases)
iii) Discuss the taxable income for the beneficiaries relating to the given 9
information for the 2023 year of assessment.
Client 3
i) Discuss, with supporting calculations Fatima Umar’s capital gains 10
implications for the 2023 year of assessment.
Communication – logical argument 1

41

This question consists of two independent parts.
Part A 45 Marks
Jerry Maluleke is 52 years old and works for KK Attorneys, a law firm in Polokwane.
He is married out of community of property to Maria Maluleke and the union is blessed
with a daughter, Nkateko Maluleke. The Maluleke family stays in Flora Park,
Polokwane.
Jerry had the following transactions for the period 1 March 2022 to 28 February
2023:
(1) A monthly basic salary of R13 000 and a commission for the year amounting to
R264 000. Jerry is required by his employment contract to go out and entertain
potential clients, he gets paid a commission for each client that he successfully
brings to KK Attorneys.
(2) An advance of R11 000 for the 2023 year of assessment for meals and
incidental costs. Jerry had to meet potential clients in Pretoria, Johannesburg,
Cape Town and Gqeberha and spent five nights in each of these places. KK
Attorneys is a member of Diners Club and used a Diners Card to pay for his
accommodation costs for the nights spent in these places.
(3) A uniform allowance to the value of R5 000 for KK Attorneys branded uniform,
he is required to wear this uniform when on duty. The uniform is unique and
easy to identify from ordinary clothing which makes it easy for potential clients
to notice Jerry’s employer.
(4) KK Attorneys contributed R2 500 monthly to Jerry’s medical aid scheme for his
benefit, Jerry is the main member, and his wife and disabled daughter are
dependants as defined. Jerry spent R30 000 on qualifying medical expenses
and did not claim this from his medical aid scheme.
(5) Pension fund contributions for the year (employee and employer) of R40 000,
KK Attorneys contributes R1 for every R1 contributed by Jerry for his benefit.
(6) Jerry spent R35 000 on food and drinks while entertaining potential clients for
the period.
42
(7) Jerry has a designated workplace at his home (refer to 9 below for details of
the home) comprising 10% of the house and has paid the following expenses
for the entire house in the 2023 year of assessment:
Item R
Telephone costs 10 000
Cleaning services 70 000
(8) Jerry’s home in Polokwane is rented by KK Attorneys and he was granted right
of occupation since joining the company. The house is fully furnished, and KK
Attorneys incurred the following expenses in the current year relating to it:
Cost description R
Rentals 54 000
Electricity 24 000
Water 15 000
Other information
Jerry had a monthly basic salary of R11 500, commission income of R240 000 (for
the full year) and taxable portion of travel allowance of R5 000 for the 2022 year of
assessment.
Part B 14 MARKS
Phumzile Radebe (32 years old) died unexpectedly on 30 November 2022, leaving
her surviving spouse Sipho Radebe, and her son Siphesihle Radebe. Phumzile and
Sipho are married in terms of an ante-nuptial contract. Phumzile had the following
assets in her estate at the time of her death:
 A car with a value of R200 000.

 An insurance policy on his life for R1 000 000, it was paid to her husband in
terms of their ante-nuptial contract.
 Immediately prior to her death, she held the right to an annuity of R500 000
per year payable out of the rental derived from a fixed property owned by her
father. On the date of her death, the annuity ceased. Her father’s age at the
date of her death was 55 years.
• Funeral costs - R32 500

• Valuation fees - R5 000
• Executor's remuneration and Master' s fees - R65 000
43
# REQUIRED MARKS
Relating to Part A, calculate the normal tax liability for Jerry Maluleke, using the 45
1 information provided for the 2023 year of assessment.
. Show all your calculations as marks are awarded.
Relating to Part B, calculate the estate duty payable by Phumzile Radebe, using the 14
2 information provided for the 2023 year of assessment.
.
Presentation 1

You are employed by Tax Matters (Pty) Ltd (TM), a South African company based in
Nelspruit, Mpumalanga. The company offers Tax consultancy services to local and
international clients and has a February year end.
TM has the following outstanding Tax queries from its clients which have been
assigned to you. Each Tax query is independent:
Query 1: Jones Malebane
Jones Malabane is a 35 years old resident of the Republic, employed by JM Steal
Works (Pty) Ltd (JMSW) from 1 May 2022. Jones was employed by Quality Steals
(Pty) Ltd (QS) prior to being employed by JMSW, he received a lucrative employment
offer from JMSW and resigned from QS effective 30 April 2022.
Jones received a lump sum from QS after leaving amounting to R150 000 paid to him
on 15 May 2022 and he noticed that the amount paid was less than the lump sum of
R150 000 which confused him as he thought that there is no Tax implications on lump
sums.
Query 2: Joseph Moroka
Joseph Moroka is a 40 years old resident of the Republic and his disabled sister was
awarded a bursary of R50 000 to study at university for an NQF level 5 qualification
by his employer on 5 April 2022. The bursary was granted on condition that he would
reimburse the employer if his sister fails to complete her studies for reasons other than
death, ill-health or injury.
- Joseph started working on 1 March 2022 and his monthly salary is R15 000.
- Joseph does not receive any benefits over and above the salary from his employer.
44
Query 3: Samuel Marinka
Samuel is 50 years old and a resident of the Republic, he has established an inter
vivos resident trust on 1 March 2022. His wife, Selina Marinka who is 45 years old and
daughter who is 15 years old are beneficiaries of the trust. Samuel and his lawyer are
the trustees of the Trust. In terms of the trust deed, the wife and daughter must receive
50% each of the revenue receipts and accruals of the trust. The trustees may make
any further discretionary distributions to the beneficiaries, after payment of the revenue
receipts and accruals.
Samuel donated his shares held in South African companies to the Trust on 1 March
2022, the base cost of the shares determined in terms of Income Tax rules was
R500 000 and the market value of the shares was R3 750 000 on that date.
The Trust had the following income and expenses for the period 1 March 2022 to 28
February 2023:
Income
Investment Income – dividends from SA companies R350 000
Expenses
Costs incurred to earn investment income above R50 000
- The shares were held by Samuel for investment purposes before donating them
to the Trust, the Trust is holding the shares with the same purpose.
- This is the only donation made by Samuel in the 2023 year of assessment.
- Samuel did not establish the Trust with the sole or main purpose of reducing
his tax liability.
45
# REQUIRED Marks
1. For query 1, discuss the income tax implications for Jones Malebane, relating to the 10
lump sum from his employer for the 2023 year of assessment. Please do not
discuss employee’s tax implications.
2. For query 2, discuss with supporting calculations, the income tax implications for 10
Joseph Moroka relating to the bursary awarded to his sister for the 2023 year of
assessment.
3. For query 3, discuss with supporting calculations the income tax implications, for 18
the 2023 year of assessment for:
I. Samuel Marinka (14 marks),

II. His wife (3 marks) and
III. Daughter (1 mark)
Communication and logic 2
46
Ria Mike Dawson (47 years old) is a qualified Chartered Accountant, CA (SA) and a
‘resident’ of the Republic. Mike was working for a prominent Auditing Firm in Cape
Town until 28 February 2023, he left this job to join a prominent Auditing Firm based
in London, UK as an Audit Partner. Mike has no plans to return to South Africa and
therefore officially emigrated from the Republic effective 01 March 2023.
Listed below is the list of assets Mike owned at the time of his emigration, he hired a
professional valuator to perform valuation of his assets:
Item Note Original Market Value: Market value:

Cost 28/02/2023 01/03/2023
Land 1 R1 500 000 R2 350 000 R2 400 000
House – Cape 2 R700 000 R1 750 000 R1 900 000
Town
Share – listed 3 R200 000 R800 000 R805 000
companies
House – 4 R800 000 R1 700 000 R1 750 000
London, UK
Car - Audi 5 R700 000 R350 000 R340 000
Boat 6 R500 000 R250 000 R245 000
Aircraft 7 R550 000 R620 000 R310 000
Notes 1: Land
Mike inherited money from his late father’s estate in 2019 which he used to purchase
Land in Cape Town. He had no specific plans with the Land at the time of acquisition
and therefore held it for capital appreciation purposes – this purpose has never
changed.
Note 2: House – Cape Town
He purchased the house in 2016 when he was appointed as an Audit Manager at his
Audit Firm in Cape Town. He spent R200 000 renovating the house in 2021.
47
Note 3: Shares – listed companies.
Mike used funds in his savings account to invest in shares, he felt that he is not getting
value for his money by leaving it in his savings account. He purchased shares in a
JSE listed company in 2014 and this was the only purchase of shares he has ever
made.
Note 4: House – London, UK
Mike received money in 1998 from his family trust after passing his first qualifying
examination. He used the money to purchase the house in London on 1 October 1998
and has since been using it as his holiday house. He is using the house as his Primary
Residence since the date he left South Africa. The house had a market value of
R1 050 000 on 01 October 2001 and he spent R150 000 in 2020 renovating this house.
Note 5: Car – Audit
Mike traded in his old car and purchased the Audi in 2021.
Note 6: Boat
This is a personal boat which is 12, 5 meters in length, he purchased the boat in 2016.
Note 7: Aircraft
The personal aircraft (with empty mass of 470 kg) was purchased by Mike on 01 March
2020.

1. Discuss with calculations Mike Dawson’s income tax implications for the 2023 29
year of assessment.
Communication skills – logical argument 1

Total for question 1 30
48
Ignore Mutari “Ignore" is 37 years old and was born and raised in Zimbabwe. He is
employed by a prominent University in the Western Cape, South Africa since 1 March
2018. Ignore has been in South Africa ever since he was employed by the University
and only visits home (Zimbabwe) during summer vacation period for University staff
which is 15 days between December and January each year. Ignore had never been
to South Africa before until he started working at the University.
Ignore had the following transactions for the 2023 year of assessment:
1) A basic salary from the University of R850 000 for the year and a bonus of 12%
of the yearly salary.
2) Interest income for the year of R70 000 with R30 000 being from Zimbabwean
banks and the balance from South African banks.
3) Revenue amount of R150 000 from his printing business. Ignore has started an
Internet Café business in 2021 as a Sole Proprietor. He spent R50 000 on
running costs (printing paper, ink, cartages, toner and electricity).
4) Due to poor trading conditions business was slow from the 2022 year of
assessment and two (2) of his printers became redundant. He sold these
printers for a total amount of R10 000 on 28 February 2023, these printers were
purchased for R17 500. SARS considers the printers not to be attributable to a
permanent establishment in South Africa. SARS grants an allowance on the
printers in accordance with section 11 (e) of the Income Tax Act on a five-year
basis which is apportioned for part of a year. Total section 11 (e) allowance to
date of sale is R8 500, with R3 000 relating to the current year of assessment.
5) Ignore has developed private learning materials which are copyright protected
for use by University students in Zimbabwe and he has received royalties
amounting to R80 000 for the use of these learning materials. These learning
materials were prepared in South Africa.
49
1. Discuss if Ignore Mutari is a resident of South Africa for the 2023 year of 5
assessment.
2. With regards to transaction 5, discuss if the royalties received by Ignore Mutari 5
will be included in his gross income for the 2023 year of assessment. (Assume
that Ignore is a non-resident)
3. Calculate with the taxable income of Ignore Mutari for the 2023 year of 19
assessment. Please provide reasons for nil effects. (Assume that Ignore is a
non-resident)
Communication skills – logical argument and presentation 1
You are working in the Tax division at Polokwane Auditors, an audit firm based in
Polokwane, and you have been assigned Tax matters of the clients below.
Martha Selepe
Martha was given the right of use of motor vehicle from 1 May 2022. The Motor car
was purchased by her company on 01 March 2021 for an amount of R460 000
(including VAT) which is the retail market value and excluding the finance cost of
R31 500. The motor vehicle has no maintenance plan. She kept a logbook which
reflected that she travelled 43 000 km in the current year, 13 300 km of which were
private. She bore full costs of insurance R13 200 for the year, maintenance R6 500
for the year and fuel cost R2 100 per month and retained proof of all the expenditure
incurred.
Sibusiso Legodi
Sibusiso, age 36, South African resident. He left his previous employer, TK Minerals
(Pty) Ltd which is based in Johannesburg on 30 May 2023 and joined Splendid
Minerals (Pty) Ltd a company based in his home Province, Limpopo on 01 June 2023.
He received a lump sum of R500 000 relating to his previous employer, he opted not
to transfer the amounts accruing from this pension fund to the pension of the current
50
employer. This was his first lump sum from the retirement funds, however he received
a lump sum amounting to R400 000 in 2015 from Best Mineral (Pty) Ltd, a company
he worked for before working for TK Minerals. Best Minerals ceased trading and
therefore the lump sum received by Sibusiso from the company was considered to be
a Severance Benefit, the whole amount of the lump sum was not taxable. Total
contributions to retirement funds were allowed a deduction under section 11F.
Mike Smith
Mark Smith, age 45 created an inter vivos discretionary trust on 01 March 2022 with
his wife, Janine Smith who is 40 years old and their son, Jayson Smith who is 23 years
old being beneficiaries of the trust. The trustees are Mark and his lawyer and every
member of the Smith family and Mike’s lawyer are residents of the Republic. No
beneficiary has a vested right to the retained income of the trust. Mike did not establish
the Trust with the sole or main purpose of reducing, postponing or avoiding his tax
liability.
Transfer of assets to the trust on the date of creation by Mike took place as follows:
Sale of rent-producing property
He sold a rent-producing property to the trust at its market value of R6 000 000 through
a loan account (interest charged at 0%) with no repayment terms. Assume SARS
considers that a market- related interest of 6% should have been charged. The trust
had the following transactions for the year relating to the property:
Gross rental income: R570 000
Property expense (all tax deductible): R150 000
Net rental income: R420 000
The trustees distributed R200 000 and R70 000 to Janine and Jayson respectively of
the net rental income during the 2023 year of assessment and the balance was
retained in the trust.
Donation of shares
He donated his shares in a JSE listed company with a market value of R1 500 000
on the date of donation. Dividends income amounting to R150 000 was earned by
51
the trust in the 2023 year of assessment and was distributed to the beneficiaries in
equal proportion in the same year with the trust not retaining any amount.

1. Relating to Martha Selepe, calculate the fringe benefit relating to the right of 10
use of the motor car for the 2023 year of assessment.
2. Relating to Sibusiso Legodi, calculate the tax on the lump sum from the 10
pension fund for the 2023 year of assessment.
3. Relating to Mike Smith, calculate the taxable income with brief discussion for 19
section 7 implications, for all the taxpayers for the 2023 year of assessment:
I) Mike Smith (4 marks)
II) Janine Smith (6 marks)
III) Jayson Smith (5 marks)
IV) The Trusts (1 mark)
V) Section 7 brief discussion (3 marks)
(Please ignore CGT and Donations Tax implications)
Communication skills – logical argument and presentation 1

Mankweng Media Pty Ltd (hereafter “MM”) is a media company operating in Turfloop,
Mankweng. One of the employees of MM is Kgothatso Moloto (“Kgothatso”) who has
been working at MM since March 2011. She started as a general employee and over
the years was promoted. She is now the Chief Executive Officer, a position she has
held since 2012. Kgothatso is married out of community of property. Kgothatso’s
mental health took a serious knock as a result of the covid-19 pandemic which made
her work become too much to handle and she therefore resigned from work on 31
August 2022.
She received the following benefits from MM from 1 March 2022:
1. Monthly salary of R55 000. She also received a bonus of R200 000 on 31 May
2022.
2. She was a member of the company’s pension fund. MM contributes R1 for each
52
R1 the employee contributes. Kgothatso contributes 8, 5% of her cash salary
to the pension fund.
3. Kgothatso was granted a 10% simple interest loan by a financial institution on

1 March 2022 for financing the purchase of her residence. The amount of the
loan is R300 000, for the first three years she only has to repay interest and not
the capital. MM paid 6% of the interest until date of her resignation with the
difference paid by Kgothatso. She is responsible for payment of the entire 10%
interest after her resignation. Assume that the official rate of interest was 7%
for the entire year of assessment.
4. Kgothatso was granted the right to use the company-owned Evoque Range
Rover which had a cost price of R750 000 (including VAT) from 1 March 2021,
MM bought it for cash. Kgothatso kept an accurate logbook proving that she
travelled a total of 18 000kms of which 10 500kms was for business purposes.
Kgothatso did not keep accurate records of expenditure incurred.
5. MM pays medical aid contributions for all employees in the executive

management. There are 50 employees in total and 10 executive management
employees. MM contributed a total of R800 000.
6. MM also paid Retirement Annuity Fund contributions of R7 500 per month for
Kgothatso’s benefit until 31 August 2022.
She also made the following contributions during the current year of assessment:
7. Kgothatso contributed R5 500 per month for Provident fund.
8. Kgothatso started paying her own medical aid contributions from 1 September
2022, which amounted to R2 500 per member. There are currently three
dependents on her medical aid being her husband Thabang, her 25-year-old
daughter Masego and her father, who is a person with a disability. Kgothatso’s
daughter is studying at University of Limpopo and fully depends on her parents
for her maintenance. She has not become liable for normal tax. Kgothatso did
not pay for medical expenses out of her own pocket – all costs were covered
by her medical aid scheme.
Kgothatso was 57 years old on the date she resigned; she received the following
benefits on her resignation:
9. Long service award which comprised a Chetè and Laroche watch which cost
the employer R450 000.
10. Kgothatso got the Evoque Range Rover free from her employer. The vehicle
53
had a market value of R600 000.
11. Kgothatso received a R1 500 000 lump sum from his employer on 31 August
2022.
12. Kgothatso received a lump sum of R500 000 from the Retirement Annuity
Fund and monthly annuity of R64 500 from 30 September 2022. She retired
from the Retirement Annuity Fund on 1 September 2022.
Other:
13. Kgothatso’s daughter is funded by MM, in the current year she received
funding equal to R40 000. She is studying for an NQF level 6 qualification at
the University of Limpopo. Her remuneration proxy is R2 000 000.
14. Kgothatso earned local interest of R30 000 and foreign interest of R15 000 for
the period 1 March 2022 to 28 February 2023.
- Total contributions made by her and her employer to the retirement funds of
R167 100 are deductible under section 11F.
1. Calculate Kgothatso Moloto’s normal tax liability for the 2023 year of 59
assessment. Provide brief reasons where necessary. (Show all your
calculations as marks will be awarded).

54
Scenario 1
Michael Naicker is a 55 years old South African resident and a provisional taxpayer.
He earns income in the form of remuneration from his permanent employment and
investment income. He presented you with the following information relating to his
provisional payments for the 2023 year of assessment:
Year of assessment SARS income tax notice of Assessed Taxable income

assessment date
2020 4 June 2021 R 1 251 000
2021 17 July 2022 R 1 120 000
2022 20 August 2023 R 1 387 000
- Michael has estimated his taxable income for the 2023 year of assessment to
be R1 5200 000.
- His employer deducted R15 000 per month for employee tax purposes.
Scenario 2
Boipelo Moeng, a resident of Botswana was employed on a temporary basis in South
Africa for the period 1 March 2022 to 31 August 2023 and was physically present in
South Africa for the entire duration of her employment contract. She got employment
in Botswana after her employment contract ended in South Africa. She has earned the
following income for the period 1 March 2022 to 28 February 2023:
1. Salary amounting to R120 000 from the South African employer and R80 000
from Botswana employer.
2. Dividends income of R50 000 from South African companies and R20 000 from
companies in United States of America (USA) while she was in South Africa.
She holds 12% equity interest in the USA companies.
3. Royalties paid by a South African residents of R50 000 on 15 February 2023,

when she has returned to Botswana. The royalty is not attributable to a
permanent establishment of Boipelo in the Republic.
Scenario 3
Milton Maaka, a South African tax resident is a qualified doctor. He has received R100
000 from 50 people he has met at different events (musical) in different parts of
Gauteng. He was drinking at a first event he attended on a Sunday and one person
who was next to him complained about being too tired to report for work the next day
(Monday), he told the person that he is a doctor and can issue a doctor’s sick note to
55
him in return for a fee of R2000. He promised to prepare the sick note the following
day (Monday), scan and email. Milton did not have any intention to issue the sick note
to him and since they have not exchanged numbers (he took the person’s email only),
the person was not able to track him down. Milton saw this an opportunity to make
quick easy money and promised a further 49 people doctor’s sick notes without issuing
them throughout the 2023 year of assessment.
Scenario 4
Neo Mokobane “Neo” is 50 years old and a resident of the Republic, he has
established an inter vivos resident trust on 28 February 2023. His wife, Joyce
Mokobane who is 45 years old and daughter who is 15 years old are beneficiaries of
the trust. Neo and his lawyer are the trustees of the Trust. In terms of the trust deed,
the wife and daughter must receive 50% each of the revenue receipts and accruals of
the trust. The trustees may make any further discretionary distributions to the
beneficiaries, after payment of the revenue receipts and accruals.
Neo donated his shares held in South African companies to the Trust on 28 February
2023, the base cost of the shares determined in terms of Income Tax rules was R500
000 and the market value of the shares was R3 750 000 on the date. This is the only
donation made by him for the 2023 year of assessment.
Scenario 5
Phumzile Radebe (32 years old) died unexpectedly on 30 November 2022, leaving
her surviving spouse Sipho Radebe, and her son Siphesihle Radebe. Phumzile and
Sipho are married in terms of an ante-nuptial contract.
Phumzile had the following assets in her estate at the time of her death:
- A car with a value of R200 000.
- An insurance policy on his life for R1 000 000, it was paid to her husband in
terms of their ante- nuptial contract.
- Immediately prior to her death, she held the right to an annuity of R500 000 per
year payable out of the rental derived from a fixed property owned by her father.
On the date of her death, the annuity ceased. Her father’s age at the date of
her death was 55 years. The annuity is correctly valued in terms of the Estate
Duty Act at R3 572 070.

- Total costs – R102 500
56
NO You are required to: Marks
1 Scenario 1 5
Discuss the basic amount of Michael Naicker for the 2023 year of assessment.
(Do not calculate the provisional payments).
2 Scenario 2 14
Discuss Boipelo Moeng’s income tax implications for the incomes she earned
in transaction 1 to transaction 3 for the 2023 year of assessment.
3 Scenario 3 5
Discuss with reference to case law whether Milton Maaka should include the
R100 000 in his gross income in the 2023 year of assessment.
4 Scenario 4
Discuss Neo Mokobane’s tax implications relating to the donation made 10
for the 2023 year of assessment.
5 Scenario 5
Discuss and calculate Phumzile Radebe’s gross property for estate duty 5
purposes for the 2023 year of assessment.
57
APPENDIX A
Natural persons and special trusts – 2023
Taxable income Rate of tax
From But does not exceed
R0 --------------------- R226 000 R0 + 18% of each R1
R226 001 --------------------- R353 100 R40 680 + 26% of the amount above R226 000
R353 101 ------------------ R488 700 R73 726 + 31% of the amount above R353 100
R488 701 -------------------- R641 400 R115 762 + 36% of the amount above R488 700
R641 401 ----------------- R817 600 R170 734 + 39% of the amount above R641 400
R817 601 ---------------- R1 731 600 R239 452 + 41% of the amount above R817 600
R1 731 601 + R614 192 + 45% of the amount above

R1 731 600
Travel Allowance 2023
Value of the vehicle (incl. VAT) Fixed cost (p.a.) Fuel cost (c/km) Maintenance cost
(R) (R) (c/km)
0 – 95 000 29 836 131.7 40.9
95 001 – 190 000 52 889 147.0 51.1
190 001 – 285 000 76 033 159.7 56.3
285 001 - 380 000 96 197 171.8 61.5
380 001 - 475 000 116 438 183.8 72.3
475 001 - 570 000 137 735 210.8 84.9
570 001 - 665 000 159 031 218.0 105.5
Exceeding 665 000 159 031 218.0 105.5
58
Retirement fund lump sum withdrawal benefits – 2023
Not exceeding R25 000 0 per cent of taxable income
Exceeding R25 000 but not 18% of amount by which taxable income exceeds R25 000
exceeding R660 000
Exceeding R660 000 but not R114 300 plus 27% of amount by which taxable income
exceeding R990 000 exceeds R660 000
Exceeding R990 000 R203 400 plus 36% of amount by which taxable income
exceeds R990 000
Retirement fund lump sum benefits and severance benefits – 2023
Not exceeding R500 000 0% of taxable income
Exceeding R500 000 but not 18% of amount by which taxable income exceeds R500 000
exceeding R700 000
Exceeding R700 000 but not R36 000 plus 27% of amount by which taxable income
exceeding R1 050 000 exceeds R700 000
Exceeding R1 050 000 R130 500 plus 36% of amount by which taxable income
exceeds R1 050 000
59
Additional Information Amount/Rates
2023 2022
Primary rebate R16 425 R15 714
Secondary rebate (65 years or older) R9 000 R8 613
Tertiary rebate (75 years or older) R2 997 R2 871
Tax threshold for individuals under 65 years of age R91 250 R87 300
Tax threshold for individuals 65 years or older R141 250 R135 150
Tax threshold for individuals 75 years or older R157 900 R151 100
Medical credits: Main Member R347 R332
Medical credits: First dependent R347 R332
Medical credits: Additional dependant R234 R224
Travel allowance: simplified rate R4.18 R3.82
Fringe benefits – Company car without maintenance plan 3.5% 3.5%
Fringe benefits – Company car with maintenance plan 3.25% 3.25%
Subsistence allowance: Meals and incidental cost R493 R452
Subsistence allowance: Only incidental cost R152 R139
Donations tax rate (first R30 million) 20% 20%
Donations tax rate (above R30 million) 25% 25%
Estate duty levied (first R30 million) 20% 20%
Estate duty levied (above R30 million) 25% 25%
60

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SCHOOL OF ACCOUNTANCY

COMPILED BY: MULWELI ELIA RAKHADANI CA(SA)

Question 1.1 (60 MARKS)

Transactions from his employment

Transactions entered into in his personal capacity.

YOU ARE REQUIRED TO:

Logic and presentation 1

Question 1.2 (20 MARKS)

Assets disposal transactions:

Logic and presentation 1

QUESTION 2 (100 MARKS)

Question 2.1 (10 MARKS)

Employees and provisional taxes information:

Item Year Amount

YOU ARE REQUIRED TO:

QUESTION 2 (100 MARKS)

Question 2.2 (25 MARKS)

Right of use of accommodation

She earned the following amounts from the company in 2023:

 Cash salary per month amounting to R24 750

 Bonus paid in December 2022 amounting to R9 900

Meals and drinks

Travel costs for holiday trip

Logic and presentation 1

QUESTION 2 Please do not do this question as it (100 MARKS)

Question 2.3 relates to Retirement Benefits (15 MARKS)

Resident 1: Belinda Sebake

Resident 2: Remember Chauke

Logic and presentation 1

QUESTION 2 (100 MARKS)

Question 2.4 (30 MARKS)

Description Note Amount (R)

Dividends earned 1 250 000

Rentals earned 2 950 000

Expenses incurred to earn the above income 3 (250 000)

 Interest: market related interest of 10% per annum

 - The net rentals were all vested equally to the beneficiaries.

YOU ARE REQUIRED TO:

Logic and presentation 1

QUESTION 2 (100 MARKS)

Question 2.5 (20 MARKS)

Client 1: Dickson Baloyi

 A holiday house valued at R2 200 000.

Expenses incurred in winding up her estate were as follows:

Client 2: James Moroka

YOU ARE REQUIRED TO:

Logic and presentation 1

Question 3.1 (30 MARKS)

1. Relating to Part A, calculate the donation tax paid by Neville Makana 15

Question 3.2 (25 MARKS)

Marcus Maja’s executor found the following items in his estate:

1. A primary residence valued at R4 200 000 at the time of his death.

6. Master's fees of R1 000 and executor’s remuneration of R100 000.

- Marcus was 37 years old at the time of his death.

You are required to: Marks

Question 3.3 (45 MARKS)

Property and income

Logic and presentation 1

Question 4.1 (70 MARKS)

Solomon Dlamini studied Mathematical Sciences at the University of Limpopo and

NOTE Calculations (or reason (s) Amount R

 Taxable income (including capital gains) of R1 298 500

He received a travel allowance of R8 500 monthly from his employer. He travelled a

He disposed of the following assets under the current year of assessment: