Unit 2 - Individuals - EE Tax & Provisional Tax

Question 1

When is EE tax done?

Answer 1

Monthly

Do calc on a monthly basis!!

Question 2

What is the format used to calculate EE tax?

Answer 2

Step 1: Calc. balance of remuneration
(Monthly remuneration -
deductions)

Step 2: Calc. annual equivalent of balance
of remuneration.

Step 3: Calc. the annual tax thereon - tax rebates & medical rebates

Step 4: Apportion annual tax for part of the
year

Remember tax rebates & medical rebates

Do calc. on a monthly basis!!

Question 3

What is the format used to calculate EE tax if EE receives an annual payment?

Answer 3

Such as, B-Day bonus/13th cheque

Step 1: Calc. tax on the annual equivalent
of the balance of remuneration
- Calc. balance of remuneration
(Monthly remuneration -
deductions).
- Calc. annual equivalent of the
balance of remuneration.
- Calc. the annual tax thereon

Step 2: Calc. tax on the balance of
remuneration + annual
remuneration amounts. (As you do
with Aggregates of RLSB) - tax
rebates - medical rebates.

Step 3: Calc EE tax on bonus (annual
remuneration amount)
Step 2 - Step 1

Remember tax rebates & medical rebates

Question 4

What does remuneration include?

Answer 4

Salary & wages, leave pay, bonuses, gratuities, commissions, fees, overtime pay, emoluments, pensions, superannuation allowance, retiring allowance

• Any subsistence allowance granted to EE
  in a month - that is neither spent by the
  EE while away from home for at least 1
  night nor refunded to ER = deemed to be
  remuneration in the following month

Question 5

Par(a) of the definition of remuneration includes?

Answer 5

• Annuities & living annuities
• Other amounts pd for services rendered
• Restraint of trade receipts
• Amounts pd for variation of office
• RLS
• Any amount received/ accrued in commutation of amounts due under any contract of employment/service

Question 6

Par(b) of the definition of remuneration includes?

Answer 6

• Fringe benefitsExcl Fringe benefits relating to the use of
  a motor vehicle.

Question 7

Par(bA) of the definition of remuneration includes?

Answer 7

The full amount of:
- Allowances & advances required to be
included in taxable income

Excl. travel allowance, allowance portion
of subsistence allowance, allowance pd
to the holder of any public office, &
allowances that are exempt ito s10.

Question 8

Par(c) of the definition of remuneration includes?

Answer 8

For EE tax purposes only:

• 50% of allowances pd to the holder of
  public office

Question 9

Par(cA) of the definition of remuneration includes?

Answer 9

For EE tax purposes only:

• 80% of any travel allowance
• 20% of travel allowance if ER is satisfied
  that at least 80% of the use of the vehicle
  will be for business purposes

Excl any travel allowance based on actual distance traveled.

Question 10

Par(cB) of the definition of remuneration includes?

Answer 10

For EE tax purposes only:

• 80% of the right of use of motor vehicle
  fringe benefit
• 20% of the right of use of motor vehicle
  fringe benefit if ER is satisfied that at least
  80% of the use of the motor vehicle will
  be for business purposes

Question 11

Par(cC) of the definition of remuneration includes as remuneration?

Answer 11

100% of any travel allowance that is based on the actual distance traveled by EE, to the extent that the allowance exceeds R4,64 per km.

Question 12

Par(d) of the definition of remuneration includes?

Answer 12

Any gain determined in s8B if the proceeds are included in EE income ito that section

Question 13

Par(e) of the definition of remuneration includes?

Answer 13

Any gain determined in s8C on the vesting of shares

Question 14

Par(f) of the definition of remuneration includes?

Answer 14

Any amount required to be included in the income of a person ito s7(11).

s7(11) = Maintenance to a former spouse of a member of a retirement fund, pd by the fund, that is deemed to be income of member

Question 15

Par(g) of the definition of remuneration includes?

Answer 15

Any dividends that are taxable ito proviso dd, ii, jj, kk to s10(1)(k) are deemed to be income of the member

Question 16

What is excluded from the definition of remuneration?

Answer 16

• Fees pd to a person for a service
  rendered in the course of any trade
  carried on independently (i.e. auditors,
  medical practitioners, lawyers,
  independent businesses
• Disability pensions ito certain Acts
• Amounts pd to EE to reimburse him for
  expenditure incurred in the course of his
  employment.
• Annuities under an order of
  divorce/similar separation