FIN DOCS Loans

PERSONAL LOAN
Personal loans mean you borrow a fixed amount of money from a bank and pay it back with interest in
monthly payments over a period, which typically ranges from 12 to 60 months. The longer your loan term,
the more interest you’re likely to pay.
Example
24 months 36 months 48 months 60 months
Monthly repayments on R485 R343 R271 R228
R1000
Monthly repayments on R 970 R 686 R 543 R 455
R20 000
Interest rate 15% p.a. 14%p.a. 13.6% p.a. 13% p.a.
(a) Use the information in the table to calculate the total repayment amount for a loan
of R10 000 taken over 24 months.
(b) How much money will the bank make in interest over 24 months?
INCOME TAX TABLE

A tax table is a chart that displays the amount of tax due based on income received. The tax rate in the table
may be shown as a discrete amount, a percentage rate, or a combination of both. Tax tables are used by
individuals, companies, and estates for both standard income and capital gain.
Taxable income Rates of tax
R1 – R195 850 18% of taxable income
R195 851 – R305 850 R35 253 + 26% of taxable income above R195 850
R708 311 – R1 500 000 R207 448 + 41% of taxable income above R708 310
R1 500 001 and above R532 041 + 45% of taxable income above R1 500 000
TAX REBATES
South African Revenue Service (SARS), the tax collecting authority, will calculate the amount of tax that
you owe to them, based on your income and expenses throughout the year, if certain conditions apply,
they’ll reduce the amount due.
Which is called tax rebate.
The rebate applied by SARS is according to age'. There are three levels:
• Primary under 65 years: R 1 420
• Secondary between 65 and 75 years: R 7 794
• Tertiary 75 years and above: R 2 601
MEDICAL CREDITS
Medical credit is another rebate that the taxpayer can use to reduce his or her income tax payable. Medical
credit is a fixed amount that increases depending on the number of dependencies.
Medical Tax Credit Rates for the 2019 to 2021 tax years
2021 2020
For the taxpayer and one dependent; or in respect of two

dependents where the taxpayer him- or herself is not a member of R638 R620
a medical scheme or fund
For each additional dependent R215 R209
Employer – a person or institution that hires people to the job

Employee- a person or institution that is hired to do a particular job.
IRP5- tax certificate issued to employees from their employer for tax return
purpose. i.e issued every financial year assessment.
ITA34 – Notice of Assessment form, its reflects under or over payment due
Note: all types of form are found on e-
Filling :https://www.sars.gov.za/Pages/AllForms.aspx
1. Gross earnings: Amount earned before deductions per month i.e. basic
salary
plus other earnings
2. Net pay: Amount earned after deductions per month (take home) i.e. gross
minus
deductions
3. Notch; Amount earned per year/ per annual (Monthly Gross earning x 12)
4. PAYE: (Pay as You Earn) / Tax that all employees are required to pay
based on
the amount of money they earn. (The more you earn, the higher the
percentage of
tax you pay) you earn more, you pay more. i.e it is a deduction
5. Taxable income: amount that can be taxed according to SARS tax bracket
and
rate of tax.
i.e. taxable income = gross income – tax deductible deductions(pension)
6. Income: money received on a regular basis in exchange for service,
product or
activity.
7. Tax – rebate: - Re-Fund
- money given back to the tax payer
- Tax relief to citizens who pay tax
- Discounts towards tax payable according to age.
• Primary rebate is for everyone (for persons under 65
years)
• Secondary rebate (for persons 65 years and older)
• Tertiary rebate (for persons 75 years and older)
8. Medical aid tax credits – these amount(s) also serves as the discounts
towards tax
payable to persons who are registered to medical aid scheme and pays tax.
NOTE
:usually given as monthly in the tax table
9. Tax threshold - this is the minimum amount a person must earn before the
tax is
charged i.e. below the tax threshold a person’s tax payable will be cancelled
by the
rebate(s)
10. Deductions – amounts subtracted from the gross salary. E.g. UIF, TAX,
etc.
11. VAT- Value –Added- Tax at 15%
- The more you earn the more you pay tax (PAYE).
• The more you earn the more percentage you pay
Steps to consider when calculating tax payable

• Identify/calculate the annual taxable income
• Identify the tax bracket
• Use the applicable rate of tax
• Simplify the taxable amount according to the rate of tax
• Subtract the applicable rebate(s) and medical aid tax credits
• Monthly tax = annual tax payable ÷ 12 months
Errors and misconception

• Learners confuses tariff table and the tax table
• Contradict monthly gross and annual gross
• When subtracting rebate , learners forget to add primary to secondary or
tertiary rebate if a person /tax payer is above 65 or 75 years
• Confuses income tax and taxable income

FIN DOCS Loans

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PERSONAL LOAN

INCOME TAX TABLE

Taxable income Rates of tax

R1 – R195 850 18% of taxable income

For the taxpayer and one dependent; or in respect of two

For each additional dependent R215 R209

Employer – a person or institution that hires people to the job

Steps to consider when calculating tax payable

Errors and misconception

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