Exempt Income

Question 1

The 16 exempt incomes following the rhyme ‘a bacon dog I hike with is not applicable oqu’ are:

Answer 1

S(10)(1)(a) & (bA) Government & foreign governments
S(10)(1)(c) Salaries of (former) presidents, ambassadors & staff
S(10)(1)(cN) PBO's
S(10)(1)(d) Retirement & benefit funds
S(10)(1)(g) War pensions & mining diseases
S(10)(1)(gA) Disability pensions
S(10)(1)(gB) Workmens compensation / death / hazard pensions
S(10)(1)(gC) Foreign pensions
S(10)(1)(h) Interest (non-residents)
S(10)(1)(i) Interest
S(10)(1)(k) Dividends
S(10)(1)(nA) Uniform allowance
S(10)(1)(o)(ii) Employment outside SA
S(10)(1)(q) Bursaries & study loans
S(10)(1)(u) Alimony and maintenance
S(10)A Purchased annuities

Question 2

S(10)(1)(q) Bursaries: Conditions for exemption include:

Answer 2

Nina file bursaries always have a written agreement
If an employer grants it to an employee:
1. The employee must agree to reimburse it if they fail to complete
If granted to a family member of an employee who earns:
1. More than R100 000 per year: deduction is limited to R10 000 per year
2. Less than R100 000 per year: no limit!

Question 3

S(10)(1)(o)(ii) Employment outside SA is exempt income provided that…

Answer 3

The person was outside the republic:

1. For 183 days in any 12 month period
2. Continuous 60 full days in any 12 month period
3. Services were rendered during these periods
4. Remuneration includes fringe benefits & employee share schemes

Question 4

S(10)(1)(q) Bursaries: The requirements of a bursary are:

Answer 4

1. A bona fide scholarship or bursary
2. Granted to enable or assist any person to study
3. At a recognized research or educational institution

Question 5

S(10)(1)(gC) Foreign pensions: Social security

Answer 5

Any amount under social security of any other country received by or accrued to any resident

Question 6

S(10)(1)(h) Non-resident interest exemption:

Answer 6

Exempts income:

1. Received / accrued
2. By any non-resident (individual, company or trust)
3. Unless they:
   a) are a natural person physically present for 183 days or more
   b) carried on business through establishments at any time

Question 7

S(10)(1)(i) Resident individual interest exemption: Conditions

Answer 7

Foreign dividends: R3 700 of dividends first and then interest
SA dividends & interest:
SA dividends are exempt!
SA interest:
R22 300 under 65
R32 000 over 65
(both reduced by any portion of the R3 700 already claimed!)

Question 8

S(10)(1)(c) Salaries & pensions: exempts

Answer 8

1. Pension of present, vice and surviving spouses
2. Salaries of foreign diplomats & domestic / private servants
3. Salaries of foreign subjects in SA temporarily

Question 9

S(10)(1)(nA) Uniform allowance: Conditions

Answer 9

1. It is a condition of employment

2. The uniform is clearly distinguishable from ordinary clothing

Question 10

S10A: Purchased annuities: Formula:

Answer 10

Y = A / B x C

Capital = lump sum paid / total expected return x annuity amount