Normal Tax

Normal tax
Add Salary
Add contributions by employer
Add bonuses
Add fringe benefits
• ROU Asset =CV 3,5% *12 months Less business use less fuel less business portion of expenses
Add interest income
• Interest from a South African source, earned by any natural person under 65 years of age, up to R23 800
per annum, and persons 65 and older, up to R34 500 per annum, is exempt from income tax.
= gross income
Less employee contributions limited to the lesser of 27,5% odf gross income
Less retirement fund contributions for that year section 11F(2)
• Amounts contributed to pension, provident and retirement annuity funds during a year of assessment are
deductible by members of those funds. Amounts contributed by employers and taxed as fringe benefits are treated
as contributions by the individual employees. The deduction is limited to 27.5% of the greater of the amount of
remuneration for PAYE purposes or taxable income (both excluding retirement fund lump sums and severance
benefits). The deduction is further limited to the lower of R350 000 or 27.5% of taxable income before the
inclusion of a taxable capital gain. Any contributions exceeding the limitations are carried forward to the
immediately following year of assessment and are deemed to be contributed in that following year. The amounts
carried forward are reduced by contributions set off against retirement fund lump sums and retirement annuities.
= taxable income
Add taxable income from lump sum
• Retirement lump sum less traders less contributions from previous years disallowed
= total taxable income
Tax per table
Less rebate
Less section 6a medical aid rebate
Donations tax
Section 54- 64
Include @20%:
• Annuities gifted not for maintenance, value as per section 62
• Property gifted at fair value market price at the time of donation
Do not include:
• No donations tax on performance bonus
• No donations tax on gift returned within 6months
• No donations tax on winning a court case
• No donations tax on donation to public benefit organisation section 18A receipt
- Deductions in respect of donations to certain public benefit organisations are limited to 10% of taxable
income (excluding retirement fund lump sums and severance benefits). The amount of donations exceeding
10% of the taxable income is treated as a donation to qualifying public benefit organisations in the following
tax year.
Small business corporation
Qualification criteria:
In order for the company to be classified as a SBC , the entity needs to satisfy the definition of SBC in terms of
S12E of the ITA 58 of 1962
• is a registered private company, thus satisfies S12E (4)(a)
• S12E (4)(a)(i)-(iii)
• Investment income S12E (4) (b)
• Personal service S12E (4)(c)
Since all criteria has been meet , the company can be classified as a SBC for taxes purposes.
Tax payable/ refundable

1) start with Profit before Tax
2) Sales adjustments (if any)
3) Cost of sales adjustments (if any)
4) Exempt local dividend as per S10(1)(k)
5) Interest received adjustment as per S10(1)(i)
6) Reversal of accounting profit for sale of asset
7) Recoupment on sale of asset = SP limited to cost - Tax value. Tax value = cost - capital allowances S13(1)
8) Taxable capital gain/loss (for all gains and losses) S26A inclusion
Proceeds ( Selling price- recoupment) Sch 8 p35
Less base cost (cost - capital allowances) Sch 8 p20
= capital gain/loss * inclusion rate
9) Lease adjustments
10) Lease premium for one month of ROU
11) Lease deduction ( premium/ no years/ no. months) S11(f)
12) Add depreciation
13) Less wear and tear S12E and S13(1)
14) Add cost claimed for accounting purposes
15) Less actual cost incurred relating to 14
16) Other tax deductible expenses
17) = taxable income
18) Tax per SBC Table
19) Less 1st provisional payment
20)Less second provisional payment
21) = net tax payable/ refundable
Penalties
1. Taxable income greater than 1 mil - estimate less than 80% of actual taxable income
Taxable income less than 1 mil - estimate less than 90% of actual taxable income Sch4 p20
2. tax on 80% of SBC Table
3. less first and second provisional payments
4. = difference
5. Penalty in 20% of difference
Employees tax
Annual salary
+Annual employers contribution
= remuneration
Less pension contributions
=taxable income
Less tax per tables
Less rebate
Less medical credit S6A
/12 to get per month
Provisional payments
First provisional payment
1. Start with latest preceding year to notice of assessment
2. Add 8*p.a if more than 18 months has passed between 1st of preceding year and latest notice of assessment
3. tax per SBC Table
4. 50%
Second provisional payment

1) Start with taxable income for the year
2) Tax per SBC Table
3) less first provisional payment
Dividend tax - 20% with exemption of S64F
VAT *15/115
* coloured cells amount not included
Output Less Input
Sales Section 7(1)(a) Purchases of inventory Section 17(1)
Goods set aside and paid for Section 9(1) Purchase of second hand goods calculated on the lesser of
consideration or open market value S16(3)(a)(ii)(a)
Sales export is zero rated under S11(1)(a) if customer is nit Purchase of machinery Section 17(1)
registered VAT vendor of Republic
Sales to connected person @ open market value Purchase of motor car input tax denied
Bad debt recovered Purchase of van Section 17(1)
Bad debt recovered from export debtor not included S22(2) Rentals Section 17(1)
- not included for entrainment rentals
ROU vehicle (cost* 100/115*0,3% * 15/115* no months) Airfares for business trips local flight at standard rate
section 18(3)
Insurance indemnity S8(8) Travel by bus is exempt supply Section 12(g)
Insurance payment relating to total reinstatement of motor Accommodation and meals while on business trip
car for which input tax is denied, therefore not deemed supply
and not taxable S8(8)
Insurance payment deems confirmation of supply Car hire while non business trip denied under S17(2)(c)
Life insurance is exempt S8(8) Salaries are not taxable supply Section 1 - Definition of
Enterprise
Deemed tax on fringe benefit Section 18(3) Fuel zero rated S 11(1)(k)
Inventory donated S18(1) S10(7) Electricity and water
Short term insurance premiums
Long term insurance premiums exempt
Bank Charges Section 17(1)
Interest income is exempt Section 12(a)
Payment of staff membership fees prohibited Section 17(2)(b)
Bad debts Section 22(1)
Entertainment prohibited Section 17(2)(a)
Dr Item 100/115
Cr 15% VAT input/Output
Cr Liability full amount
Estate Duty tax

• Estate duty is levied on the property of residents and the South African property of non-residents less allowable
deductions. The duty is levied on the dutiable value of an estate, at a rate of 20%, on the first R30 million, and at
a rate of 25% above R 3 0 million.
• A basic deduction of R3.5 million is allowed in the determination of an estate’s liability for estate duty, as well as
deductions for liabilities, bequests to public benefit organisations, and property accruing to surviving spouses.
Estate duty payable
• Farms are reduced by 30% under fair value definition
• Property and other items at sale price as per section 5(1)(a )
• Value as per section 5 of annuity
• donated under a ‘mortis causa ’ clause so deemed property under section 3(3)(b ))
• USUFRUCTUARY INTEREST: The person holding the usufruct (the usufructuary) has the right to use the property
and to receive any income arising from this property; BUT cannot sell it because he does not own the property; if
the usufructuary dies, the usufruct normally passes to
the bare dominium holder
• BARE DOMINIUM means ownership without the right of use or the benefit of income from the property. The
holder may sell or donate the property, but subject to the usufruct. If the bare dominium holder dies, the bare
dominium does NOT pass to the usufructuary (unless stipulated in the bare dominium holder ’s will)
• Lesser value of bare dominium and usufruct
Less deductions
• Section 4
=Net value of Estate
Less section 4A abatement fixed deduction
=Dutiable estate
Estate duty at 20%

Normal Tax

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Normal Tax

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Normal tax

Tax payable/ refundable

Second provisional payment

Dividend tax - 20% with exemption of S64F

Sales Section 7(1)(a) Purchases of inventory Section 17(1)

Bad debt recovered Purchase of van Section 17(1)

Insurance indemnity S8(8) Travel by bus is exempt supply Section 12(g)

Inventory donated S18(1) S10(7) Electricity and water

Short term insurance premiums

Long term insurance premiums exempt

Bank Charges Section 17(1)

Interest income is exempt Section 12(a)

Payment of staff membership fees prohibited Section 17(2)(b)

Bad debts Section 22(1)

Entertainment prohibited Section 17(2)(a)

Estate Duty tax

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