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TXN 201 > 4. Exempt Income > Flashcards

4. Exempt Income Flashcards

1
Q

What are the two situations exempt income result from?

A
  1. Taxpayers status

2. Nature of income

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2
Q

Where is exempt income in the framework?

A

Deducted from gross income to arrive at income

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3
Q

What is the difference between exemptions and deductions?

A

Exemptions relate to income

Deductions relate to expenses

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4
Q

What are the total exemptions?

A
  1. War pension and award for disease
  2. Disability pension and workmens compensation
  3. Foreign pensions
  4. Funeral benefits
  5. Employer owned insurance policies
  6. Dividends other than foreign and headquarter
  7. Foreign and headquarter dividends
  8. Copyright
  9. Unemployed insurance benefit fund
  10. Uniforms and uniform allowances
  11. Relocation benefits
  12. Employment outside the Republic
  13. Gratuities received from public funds
  14. Alimony received
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5
Q

What is a requirement for award for disease exemption?

A

It must be a disease contracted from mining

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6
Q

What is a workman’s compensation exemption limit concerning death?

A

R300000

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7
Q

What is a pure risk policy?

A

A policy that has no cash or surrender value

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8
Q

When is a pure risk policy income exempt?

A

If premiums are paid by employer and included in taxable income as fringe benefits

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9
Q

When are other policies exempt income?

A

When an amount equal to premiums are included in taxable income as fringe benefits

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10
Q

What are some dividends NOT exempt?

A
  1. Declared by property investment scheme
  2. Dividend from restricted equity instrument
  3. Certain other companies
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11
Q

What are the four exemptions concerning foreign and headquarter dividends?

A
  1. Participation exemption
  2. Country-to-country participation exemption
  3. Previously taxed exemption
  4. Cash foreign dividends in respect of JSE listed shares exemption
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12
Q

What is a participation exemption?

A

A person must hold more than 10% equity share in foreign company

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13
Q

What is a country-to-country participation exemption?

A

Where a foreign company is in the same country, they don’t have to meet participation requirement for exemption

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14
Q

Who does the copyright exemption not apply to?

A

A company or person who is not the first owner of the work

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15
Q

What are the requirements for uniform to be exempt?

A
  1. Required for duty

2. Distinguishable from normal clothes

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16
Q

What is an example of uniform that won’t be exempt?

A

Pink clothing because it it not distinguishable

17
Q

What costs relating to relocation benefits are exempt to the employee?

A
  1. Cost borne by employer to move employer, household and possessions
  2. Cost for employee to sell house
  3. Cost to hire temporary stay until 183 days after relocation
18
Q

Who benefits from employment outside Republic exemption?

A
  1. Officer or crew member working on ship transporting goods or passengers
  2. They are outside in total for 183 days during year of assessment
    Their remuneration is exempt
19
Q

What are requirements for persons who earn income outside Republic exemption?

A
  1. Outside total 183 days

2. Outside continuous 60 days

20
Q

Where does the exemption not apply to concerning employment outside Republic

A

If its earned for holding office or rendered on behalf of employer who works in government etc.

21
Q

What is a public fund?

A

Government funds etc,

22
Q

What date must the divorce have been settled for exemption to apply?

A

21/03/1962

23
Q

What are the partial exemptions?

A
  1. Interest
  2. Bursaries or scholarships
  3. Foreign dividends
24
Q

What are the steps in calculating SA interest exemption?

A
  1. Add all local interest together along with spouses interest and divide by 50%
  2. Consider age reductions
25
Q

What is the requirement for someone to receive bursary exemption

A

If they agree to pay the employer back if they don’t finish study

26
Q

What is the exemption allowed for bursary of employees relative

A

R10000

If the employee earns a total of less than R100000 for the year of assessment

27
Q

What exemption is available to foreign dividends not fully exempt?

A

Ratio 25/40 is exempt

28
Q

How many total exemptions are there?

A

14

29
Q

Who is taxed if an employee’s dependent receives benefits?

A

The employee is still taxed on the income

30
Q

What is vital for amounts concerning death etc. policies to be exempt?

A

No premiums paid could have been deducted from taxable income

34
Q

Mnemonic for total exemptions

A

We don’t fight false enemies
Divide foreign capitals under umbrellas
Relocate ending growth alimony

TXN 201 (9 decks)

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