INDIVIDUALS

Study outcomes

• After studying this module and all the study material referred to herein you must:
• know and apply the tax framework for individuals
• be able to calculate the tax payable for an individual
• know the difference between a deduction and a rebate
• understand the tax effect for marriages in and out of community of property
• understand the taxability of children
• Insert the taxable portion of allowances received by employee on the framework
• understand how fringe benefits are calculated, and be able to calculate the benefit for a company car and
company’s contribution to a retirement fund
• calculate deductions applicable to individuals
• Know where on the framework taxable capital gains should be included for individuals
• know where employees’ tax fits in on the tax framework
• Know where medical credits should be deducted on the framework.

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 Topics to be covered
• Family matters
• Gross Income
• Fringe benefits
• Amounts specifically included in taxable income (allowances received)
• Exemptions
• Deductions
• Tax payable & Tax thresholds
• Comprehensive example

4
 Family Matters
• Minor children (under 18 years) (8.3)
Married persons (8.4) – taxed in own name unless they are married in
community of property (8.4.2)
• Divorced (8.11)

5
 Gross Income
• What is included in an individual’s gross income?
Salary and other income they receive from employer as well as from investments
As well as special inclusions to gross income.
Dividends, Interest, annuities, alimony, royalties
Fringe benefits
Exemptions:
Same as company, with some exceptions
• Bursaries, Uniform allowance, Relocation Benefits
• Dividends & Interest, Tax free investment, Capital portion of purchased annuities
• Alimony

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Section 10(1)(nA) – Uniform Allowance
(4.12.1, 13.5.1)
• Must be as a condition of his/her employment
• To wear uniform while on duty
• Must be clearly distinguishable from ordinary clothing

8
Uniform allowance - Example 1
•John works as a cashier at the butchery and where he works
he is not required to wear a uniform.
However, John had a special uniform made for him that he
wears every time he goes to work so as to preserve his civilian
clothing. His employer agreed to reimburse him on the R2000
he spent.
Is the amount exempt from tax?
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Solution 1
•It is not a condition of John’s employment to wear
uniform while on duty, John chose to wear the uniform
so his clothes could be preserved. Therefore, he will
not be entitled to the section 10(1)(nA) exemption for
the R2 000 he received from his employer.

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Uniform Allowance – Example 2

Eddy works as a security guard, he is required to wear

uniform to work each day. His employer paid him
R4_000 as a uniform allowance to obtain and maintain
the required uniform:

Is this amount exempt from tax?

11
Solution 2

•As a security guard’s uniform is clearly

distinguishable from ordinary clothing,
Eddy will be entitled to an exemption on
the R4 000 ‘uniform allowance’ that he
received
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Relocation benefits (4.12.2. 13.5.2)
An Exemption will be granted if:
• Employee moves at the insistence of his employer
• Employer bears the cost
• Transportation must involve a change of residence for the employee
This must be as a result of these events:
• Appointment
• Transfer
• dismissal

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Relocation Benefits
These are the amounts that will be exempt:
• Transportation costs to new residence
• Selling costs of previous residence plus settling-in costs
Example of settling in cost:
• Motor vehicle registration, telephone , water and electricity connection,
school uniform cost.
• Hiring of temporary accommodation

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Bursaries (4.15, 13.5.7)
Exempt if it is:
• A bona fide scholarship or bursary
• Granted to assist or enable any person to study
• At a recognized educational or research institute

Additional rules if an employer grants employee or a relative of an

employee or disabled relative of an employee

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 Bursaries
• Employee must agree to reimburse employer if they fail to complete
his or her studies
Relative of employee
• If it is granted to relative of employee, it is limited to R20 000 in respect
of NQF 1 – 4 or;
• R60 000 limit if it is related to NQF level 5 – 10
• Will not be exempt if the employee’s remuneration > R600 000

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 Bursary
Disabled persons
• If it is granted to disabled relative of employee, it is limited to R30 000
in respect of NQF 1 – 4 or;
• R90 000 limit if it is related to NQF level 5 – 10
• Will not be exempt if the employee’s remuneration > R600 000

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Bursaries - Example
Kyle works at a mine and his employer gave his young brother
a scholarship worth R50 000 to complete his primary school.
Kyle earns R650 000 per annum.

Will this amount be exempt?

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Solution

Kyle earns more than R600 000 per annum, therefore

he will not be entitled to the exemption.

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Fringe benefits and Allowances
 What are fringe benefits and allowances?
• Fringe benefits – extra benefit that is over and above the salary your
employer gives you. Usually in a form other than cash

• Allowances – money granted by employer to employee where

employee will incur business related expenditure on behalf of
employer.

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Allowances – Section 8(1)
(13.3)

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 Allowances/Advances
• For this section, an employee is referred as a recipient and the employer is
referred to as a principle.
• Allowances received by a recipient from a principle are included in the taxable
income of the recipient.
The portion that the recipient actually expended is excluded in respect of:
• Travel allowances
• Subsistence allowances
• Any other allowances received by virtue of employee’s duties

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 Reimbursive Allowances
• Reimbursive allowances are excluded from the taxable income of the
recipient(put you in the position you were previously)
• The reimbursement has to be paid by the employer to employee
• The employee must have been instructed by the employer to incur that
expenditure
• The employee must account for the expenditure and provide proof to
employer

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 Travel Allowance (13.3.1)
There are two allowances:
• Allowance in respect of transport expenses - S8(1)(b)(i)
• Motor car travel allowance - S8(1)(b)(ii)

Have to look at your private vs business travel

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Travel Allowances (13.3.1)
• Taxable portion in respect of allowance = portion of travel allowance expended for
private travel

• You first INCLUDE the GROSS TRAVEL ALLOWANCE in taxable income

• Then EXCLUDE the portion expended for BUSINESS USE
• Business use is calculated as follows:
• Business use = business km’s x cost per km
• OR Business use = actual expenditure e.g. public transport)
• For your level we will give this to you

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 Travel Allowances
• If we give you a deemed cost, this is how we calculated it:

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 Travel Allowances: Example
• Charles earned a salary of R80 000 per month during the 2023 year of
assessment.
• He owns a BMW that cost him R750 000 (incl VAT, excl Finance charges.)
• He was paid a travel allowance of R12 000 per month for the whole tax
year
• He travelled 12 000km’s during the whole year, of which 8 000 km’s were
for business purposes per his logbook.
• The deemed cost per kilometer is R16,488
• Calculate his taxable income.

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 Travel Allowances
• Sundry Issues
• The employee doesn’t have to be the owner of the vehicle(“other” for value)
• If the employee has a right of use vehicle AND is granted a travel allowance for
the same vehicle, then:
•No deductions against the travel allowance will be allowed

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 Travel Allowances
• Reimbursive Travel allowance:
• Also known as the simplified method
• Employee must not receive any other travel allowance
• It is 418c per kilometer (2023)
• 2022: 382c per kilometer.

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 Subsistence allowance (13.3.4)
• Employee must include allowance granted by employer on:
• Any accommodation
• Meals and other incident costs
• Must be obliged by reason of their duties to spend at least one night away from
usual place of residence IN THE REPUBLIC.
Employee can deduct:
• Actual amount spent (Accommodation); or
• Deemed costs:
• Meals and incidental costs – R493 per day
• Incidental costs only – R152 per day

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 Subsistence Allowance: Example
• Wandile earns a salary of R15 000 per month.
• He was away for 4 days for business purposes. The company paid his
accommodation, but he had to pay for meals and other costs. The
company paid him an allowance of R500 per day.
• Wandile has records for expenses to the value of R1 523.
• Calculate his taxable income

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Fringe benefits
 7th Schedule Fringe benefits:
Who does calculation?
• Employer calculates taxable value on a
MONTHLY basis to withhold PAYE. (Do not do
PAYE at your level)
• Employee calculates taxable value at the end of
the year of assessment – This is what we do at
your level.

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 7th Schedule Fringe benefits:
General rule 13.4.1, 13.4.2
• Employee
• Fringe benefits ≠ cash
• Taxable amount i.t.o “Gross Income” par (i)
•= cash equivalent of the value of the benefit
•→ value of the benefit in terms of 7th Schedule
less consideration paid by employee

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 Fringe benefits
• Know the list of fringe benefits

• Understand what the fringe benefits are

• Know the exclusions (or no value) for the fringe benefits

• Include the taxable portion in individual’s Taxable Income

calculation

• Deduction (same as salaries) for Employer

36 36
• Part 3
Fringe benefits
• Assets acquired for less than actual value
• Right to use sundry assets
• Right to use motor vehicle
• Meals, refreshments and refreshment vouchers

• Part 4
• Residential accommodation
• Free or cheap services
• Low interest rate loan & subsidies
• Discharge / release of debt
• Medical aid contributions
• Costs relating to medical services
• Retirement contributions payed by employers
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 Assets acquired @ less than
actual value/no value (13.4.3)
• ER gives employee (ownership of) any asset
• Benefit = value of asset less consideration paid by
employee
• Value of asset: Will be supplied for your level
–NB: VAT
– now included in Value (2019 amendment)
– But excluded from consideration paid by EE

–Exclusions

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 Assets acquired @ less than
actual value/no value
Example:
• A computer was acquired by the employer at a cost of
R15 000 (including VAT) and used in the business for three years.
It is sold to an employee for R2 000 (excluding VAT). The value for
fringe benefit purposes of the computer on the date of sale is
R3 000.

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 Right of use of any asset Note on difference
between RIGHT of
(13.4.4) use, and
OWNERSHIP

• Employee granted right use asset for private/domestic purposes for free /
consideration less than value (3 scenarios)
• Excludes:
– Incidental private use (asset used mainly for business)
– Amenities enjoyed at place of work (but not if UNIFORM)
– Telephone / computer mainly used for business
– Equipment/machine used for short periods occasionally, and value of private
use is negligible
– Books/recordings/art
–Value will be supplied your level

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 Right of use of any asset
• Example:
• Mr Zulu is allowed to use a personal computer, which is owned by
his employer, for private purposes. The computer cost the employer
R17 250 (including VAT). Mr Zulu does not pay anything for the use
of the computer.
• Calculate the amount of taxable benefit if:
• Mr Zulu uses the computer for six months in current YoA. (R1 294)
• Mr Zulu uses the computer over the useful life. (R17 250)

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 Right of use of motor vehicle
(13.4.5)
• Benefit = value of private use less consideration paid by employee
• Value of private use =
• "Determined value" of vehicle
• Cost price INCLUDING VAT
• Employers who are vehicle dealers/manufacturers/rental co
• If OWNED/LEASE by ER:
Apportioned
• x 3,5% per month (NO maintenance plan); OR for part of the
month
• x 3,25% per month (maintenance plan)
• Operating lease for ER:
• Actual cost PLUS Fuel

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 Right of use of motor vehicle
(13.4.5)
•What if Employee receives
“2 hand” vehicle?
nd

•What if more than 1 vehicle?

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 Right of use of motor vehicle
(13.4.5)
•If employee has accurate record of
business kms?
•If employee has paid certain costs?
•If employee paid the fuel for private trips?

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 Right of use of motor vehicle
• Example:
• An employer purchases a car for R100 000 (motor car as defined) and 25
months later gives the use of the car to an employee. The employer pays all
the costs relating to the car. There was no maintenance plan included in the
cost.
• The determined value is:
R100 000 – 15% = R85 000 (1st 12 months)
R85 000 – 15% = R72 250 (2nd 12 months)
• The monthly fringe benefit is:
R72 250 X 3,5% = R2 529
• If the employee is required to pay R300 per month
for the use of the car, the R2 529 is reduced to
R2 229.

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 Right of use of motor vehicle
• Exclusions:
• Vehicle used by employees in general (pool cars), and
• Private use is infrequent and incidental to business use, and
• Vehicle not normally kept at employee’s residence when not in use
OR
• Employee is regularly required to use the vehicle for performance of his duties
outside normal hours of work and
• Not permitted to use for private travel except for traveling to work

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 Right of use of motor vehicle
• Example:
• Mr Twala is granted the right to use a vehicle for the full year that was acquired
by his employer at a cost of R414 000; including VAT.
• There is no maintenance plan on the vehicle.
• Calculate the fringe benefit to be included in Mr Twala’s gross income for the
year of assessment.

• What if?
- Logbook: 32 000km, and 17 000km business
- Paid insurance of R2 500
- Paid private fuel of R14 000
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 Meals, refreshments and
refreshment vouchers (13.4.6)
• Given to employee for less than actual value / for free
• Benefit = value less consideration paid by employee
• Value = Cost to employer of providing the meal, refreshment or
voucher
• Exclusions

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Residential Accommodation (13.4.7)
• Benefit = value less consideration paid by employee
• Consideration paid by EE???
• Value:
• (1) House used while employed: At your level – we will
give the rental value
• (2) Amount iro holiday accommodation

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 Residential Accommodation
• Holiday Accommodation
• Accommodation hired by ER = cost incurred by
ER
• Other cases = normal daily rate per person

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 Residential Accommodation
• Exceptions:
• Commissioner can reduce rental value if unfair
• >1 Unit; then HIGHEST rental value
• No value if away from usual place of residence
• Expats (only in next level)

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 Residential Accommodation
• Example 1:
• For the year ended 28/2/2023 an employee’s remuneration was
as follows:
• Cash salary R250 000
• Use of a car (value of benefit) R120 000
• Benefit of an interest free loan R8 000
• On 1 March 2022 the employee and his family are given the use
of an 8 roomed, furnished house by the employer. The house is
owned by the employer. The employer pays for all power and
fuel. The annual rental value per the formula is R49 923. Rental
paid on a similar property will amount to R5 000 per month.
• Calculate the taxable income for the 2023 year of assessment.

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 Residential Accommodation
Example 2:
• Anika’s employer (Prok Ltd) provided her with accommodation for
the 2023 year of assessment at a monthly rental of R2 000. The
accommodation was unfurnished and no services were provided.
• The annual rental value is R27 726
• Calculate the cash equivalent if:
• Prok owns the accommodation
• Prok rents the accommodation from the owner at R2 400 per
month.

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 Free or cheap services (13.4.11)
•Employee receives service for free or for less than
cost to employer
•Value will be supplied for your level
•Travel facility
•Other service
•Exclusions

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Low interest rate loan (13.4.12)
•Employee receives loan from employer
•and no interest is paid or interest is paid at a
rate lower than the official rate.
•Fringe benefit = Interest on loan @ official
rate less interest paid by employee
•The loan amount itself is not taxable →
capital in nature
•No value (ignore housing loan)

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 Low interest loan
Example:
• On 1 March 2022 Jaco’s employer granted Jaco a loan at
3%.
• The loan was for R10 000.
• The loan is repayable at the end of a period of five years.

• On 1 September 2022 Maria’s employer granted her an

interest free loan.
• The loan was for R20 000. No repayment has been made.

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 Low interest loan

• You are required to calculate the fringe benefit for the 2023 year of
assessment. The repurchase rate was:
Time period official rate %
1 February 2022 – 31 March 2022 5%
1 April 2022 – 31 May 2022 5.25%
1 June 2022 - 31 July 2022 5.75%
1 August 2022 -30 September 6.50%
1 October 2022 - 30 November 2022 7.25%
1 December 2022 - 31 January 2023 8.00%
1 February 2023 - 31 March 2023 8.25%
1 April 2023 - 31 May 2023 8.75%
1 June 2023 - 9.25%
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 Subsidies (13.4.13)
• ER pays subsidy in respect of capital or interest on behalf of EE to
a 3rd party
• Fringe benefit = 2 possible situations (but only ONE applicable to
your level):
• Amount paid by ER = subsidy (amount ER paid is then taxable, and will
be supplied for your level)

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 Discharge/release of obligation (13.4.14)
•Employer pays employee’s debt to a 3rd party OR
•Employer releases employee from an obligation payable to
employer
•Fringe benefit = amount paid by ER
•No Value

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 Medical aid contributions (13.4.15)
•Benefit (par 2(i)) = Cash equivalent (par12A) =
amount of the employer’s contributions to the
medical aid fund

•No value:
• Retired (age or illness);
• Dependents of deceased employee
• Dependents of deceased retired employee

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Cost relating to medical services (13.4.16)
• Benefit (par 2(j) = Cash equivalent (par12B) = amount incurred by
the employer iro
• Medical, dental or similar services;
• Hospital, nursing services; or
• Medicines
✓for employee, spouse, children, relative or dependent
✓divided by number of entitled employees

• Exclusions

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Contributions to Retirement funds (13.4.18)
• For Your level: ONLY defined contribution components

• Fringe benefit = amount contributed by ER

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Deductions
 Topics to be covered
• Gross Income
• Fringe benefits
• Amounts specifically included in taxable income (allowances
received)
• Exemptions
• Deductions
• Tax payable
• Credits against tax payable
• Comprehensive Examples

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FRAMEWORK
CGT TI
Gross Income X
Exemptions (x)
INCOME – Subtotal 1 AAA
Deductions (x)
SUBTOTAL 2 BBB
Less: Assessed loss from previous year (xx)
SUBTOTAL 3 CCC
Taxable portion of Travel allowance, subsistence X
allowance
SUBTOTAL 4 DDD
Less: Retirement fund contributions
Plus: Aggregate Capital gain x
Taxable capital gain @ 40% X
SUBTOTAL 5 EEE
Donation (x)
TAXABLE INCOME XXX

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FRAMEWORK
CGT TI
Taxable Income XXX

Tax per tables YYY

Rebates (Primary, Secondary, (a)
Tertiary)
Medical Credit – Part A (b)
Medical Credit – Part B (c)
Employee’s Tax paid (d)
Provisional Tax paid (e)
Tax PAYABLE ZZZ

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Deductions
What can an Individual deduct for Income Tax
purposes? (5.5.1, 8.8)
•Sole proprietor – all deductions and allowances per Act
•NOT Sole proprietor (employment, passive investments) –
deductions are LIMITED.
•Can be BOTH

•Private and domestic expenditure is NOT deductible

•…unless “home study”

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Deductions to be covered

•Expenses iro employment (section 23(m))

•Home study (section 23(b))
•The deduction in respect of retirement fund contributions
(section 11F)
•Donations to universities, colleges and educational funds
(section 18A)

69
Expenses iro employment (5.5.11, 8.8)
➢Employed person may only deduct (Section 23(m))
➢Home study
➢Deductions and allowances under sections 11(c), 11(e),
11(i), 11(j) and 11(nA) or 11(nB)
➢Contributions to retirement funds (s11F)
➢Donations (s18A)
➢This section does not apply to:
➢An agent or representative
➢Whose remuneration is normally mainly derived in the form of commission on
sales/turnover

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Home study (5.5.1, 5.6.11)

•Expenses for home study disallowed unless:

•Specifically equipped for EE’s trade; and
•In terms of EE’s employment contract; and
•Regularly and exclusively used; and
•EE’s income is mainly from commission/variable payments,
and no office provided by ER; OR
•EE’s duties mainly performed in his study

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Home study (5.5.2, 5.6.11)
•What can the EE deduct?
• Use ratio of floor area:
• Rental paid/interest paid on bond, repairs to HOUSE, rates and taxes
•Deductions and allowances under sections 11(c), 11(e),
11(i), 11(j) and 11(nA) or 11(nB)

•BUT remember when calculated CGT: Part of house

used for non-domestic purposes!!!

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Home study example
• Magda Moolman works at NewBank, and was instructed to work
from home (employment contract was changed) due to Covid-19.
• Her remuneration consists of salary (R650 000 for the year), and
use of a laptop with a cost price of R18 000 for business purposes.
• She has equipped her study to perform her duties, and use it solely
for work purposes at home.
• The floor space of the study is 8% of the space of her house.
• She worked 11 months of the year of assessment from home.

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Home study example
• She incurred the following expenses in respect of the home office:
Description R
Interest paid on bond (full year) 47 500
Rates and taxes (Full year) 36 000
Repair of Roof 12 000
New study chair 2 999
Paper for the printer 850
Printer (IN 47 = 5 years) R9 000

• Calculate Magda’s taxable income for the year.

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Contributions to Retirement funds s11F 8.8.1
• Contributions to:
• Pension fund, provident fund and Retirement Annuity fund
• Deduction is the lesser of:
❖R350 000; or
❖27,5% of higher of “remuneration” or taxable income before s11F;
or “Remuneration will be supplied”
❖Taxable income BEFORE s11F AND taxable capital gain
•Excess carried forward to future years

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Contributions to Retirement funds
• What is “contributions”
• 1) Excess that could not be deducted in previous years +
• 2) Own contributions to funds in current year +
• 3) Employer’s contributions that was included as a fringe benefit in
current year.

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 Retirement Funds – Example 1
• Harry earns a salary of R420 000 and a bonus of R21 000 per year.
He is a member of his employer’s pension fund. The company
contributes R36 000 and his own contributions amount to R36 000
per year. (Remuneration as defined is R477 000.)
• Harry also earned local interest of R40 000.
• Harry is 35 years old.
• You are required to calculate Harry’s taxable income.

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 Retirement Funds – Example 2
• Mafusi Gumede is a 40 year old South African resident. She is a single mother of two and for the current
year of assessment she has earned the following revenue and expenses:

R
Salary 448 484
Fringe benefit value Company Car 38 025
Local dividends – amount received in bank account 24 579
Rent received on house in Durban rented out 438 575
Expenditure incurred on rental property 44 093
Pension fund contributions (ER does not contribute) 49 644
Retirement annuity fund (R11 512 of previous year not 109 824
allowed as deduction) (Remuneration as defined is
R478 904)
Taxable capital gain 24 117
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 Donations
• Deduction p.a.
• 10% of subtotal (TI Before Donation deduction)
• Limited to actual
• Individual must meet same requirements as company making a
donation - Receipt / Certificate etc.

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Tax payable
FRAMEWORK
CGT TI
Taxable Income XXX

Tax per tables YYY

Rebates (Primary, Secondary, (a)
Tertiary)
Medical Credit – Part A (b)
Medical Credit – Part B (c)
Employee’s Tax paid (d)
Provisional Tax paid (e)
Tax PAYABLE ZZZ

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 Tax payable
•Individuals pay tax according to a sliding scale
•Tax calculated on TAXABLE INCOME (Income less
deductions)
•Rebates are deducted from Tax Payable
•Then CREDITS are deducted from Tax Payable

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 Tax per table
•

83
 Tax per table
•Calculate Deborah’s tax per table if her taxable
income for the 2023 year of assessment is:
• R115 200
• R630 000
• R1 683 700

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 CREDITS against tax payable
•Primary (R16 425), secondary (R9 000) and
tertiary (R2 997) Rebates
•Medical rebates
•Taxes already paid:
• Employees tax
• Provisional tax

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 CREDITS against tax payable
•Calculate Deborah’s tax per table if her taxable
income, and taxes deducted as PAYE for the
2023 year of assessment is:
Taxable income Age (Years) Taxes paid as
PAYE/Prov Tax
R115 200 62 R14 000
R630 000 66 R98 000
R1 683 700 78 R503 000

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 CREDITS against tax payable
•Medical, dental and other health expenses
(8.9)
•Two parts:
• Section 6A for contributions to a Medical Scheme
• Section 6B for QUALIFYING expenses NOT covered by
Medical Scheme

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 Medical Expenses
•Credit:
•Part A
•Part B
•Important terminology
• Qualifying medical expenses
• Dependant
• Disability
• Physical impairment
• Child

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 Medical Expenses
•Medical scheme fees credit – Part A:
•ONLY if contributing to Medical Scheme
•R347 for TP
•R694 for TP and 1 dependant
•R694 for TP and 1 dependant + R234 for each additional
dependant
• For each month fees are paid

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 Medical Expenses
•Medical scheme fees credit – Part B:
•Qualifying medical expenses
•For your level the amount will be supplied

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 Medical Expenses - Example
• Koos Karr is 58 years old. He is married and has one child of
eleven years old. Koos had the following income and expenditure
for the current year of assessment:
• Salary 180 000
• Bonus 18 000
• Interest from a foreign bank 5 000
• Medical aid contributions 18 000
• Taxable capital gain 17 000

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 Medical Expenses – Example 1
• Koos contributed R1 500 per month to the medical aid fund and his
employer contributed R500 per month. His Part B medical credit
amounts to R1 263.

• Calculate Koos’s income tax payable for the current year of

assessment

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