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Tutorial Activity

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khmaponya
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© © All Rights Reserved
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UNIVERSITY OF CAPE TOWN

DEPARTMENT OF FINANCE AND TAX


PERSONAL FINANCIAL MANAGEMENT (FTX2000S)
TUTORIAL ACTIVITY 11 – TAX PLANNING - 14 OCTOBER 2024

Source: Personal Financial Management (FTX2000S) 16 January 2020 Supplementary Q6 Adapted

1. Vanessa Hendricks who is 55 years old, had the following income details for the year ended 28 February
2024:

R
Gross salary 400 000
Interest income 30 000
Dividends received 20 000
Rent income 120 000
Expenses related to the rental income:
Insurance 4 000
Repairs and maintenance 16 000
Rates and taxes 24 000
Employees tax deducted (gross salary) 105 000

2. Assuming Vanessa earns a monthly net salary (disposable income) of R30 000 and she is planning to
purchase a flat for her son who intends to study at university. Vanessa is currently indebted to the tune
of R1 000 of her disposable income. The standard debt to disposable income ratio is 35 % and any ratio
above 35 % is considered to be very risky by lenders (Banks).

YOU ARE REQUIRED TO:

1. Refer to the information in 1 above. Calculate Vanessa’s Normal Tax Liability after taking into account
all the information above for the year of assessment ending 28 February 2024.
Hints: Calculate Gross income (including gross salary, interest, dividends)
Please use the answer sheet provided to answer this part of the question.
(12 marks)
TAX RATES - INDIVIDUALS – 2023/2024 Rates of tax
Taxable income

Income band Tax calculation


R0 to R237 100 18% of each R1
R237 101 to R370 500 R42 678 + 26% of the amount over R237 100
R370 501 to R512 800 R77 362 + 31% of the amount over R370 500
R512 801 to R673 000 R121 475 + 36% of the amount over R512 800
R673 001 to R857 900 R179 147 + 39% of the amount over R673 000
R857 901 to R1 817 000 R251 258 + 41% of the amount over R857 900
R1 817 001 and above R644 4819 + 45% of the amount over R1 817 000
Table 3E: Tax bracket for 2023/2024
Tax threshold below 65 R95 750 Age 65 and under 75 R148 217

Tax rebates
Amounts deductible from the tax payable
2023 / 2024
Persons under 65 R17 235
Persons 65 and under 75 R26 679
Persons 75 and over R29 824
Page 1 of 2
Self Study
PART A (33 MARKS : 44 MINUTES)
Source: Personal Financial Management (FTX2000S) 2019 Final Q2 Part A Adapted

1. Zanomzi Tekule had the following income details for the year ended 28 February 2024:

R
Gross salary 650 000
Interest income 45 000
Dividends received (Net of Dividends Withholding Tax) 70 000
Rent income 250 000
Expenses related to the rental income:
Insurance 9 000
Repairs and maintenance 30 000
Rates and taxes 40 000
Interest on loan 50 000
Employees tax deducted (gross salary) 200 000

2. Zanomzi earns a monthly net salary (disposable income) of R39 000 and he is planning to purchase a
flat for his son from CampusKey Properties for R1 500 000 who intends to study at university. He is
currently indebted to the tune of R7 000 of his disposable income. Zanomzi will pay a deposit of R400
000. The balance will be obtained as a loan from Nkoana Bank at 12 % per annum, compounded
monthly. The first instalment will be paid at the end of the first month.
The standard debt to disposable income ratio is 35 % and any ratio above 35 % is considered to be very
risky by lenders (Banks).

YOU ARE REQUIRED TO:

1. Calculate the monthly instalment that Zanomzi would have to pay if he agrees to repay the amount
over 15 years (180 months).
(4 marks)

2. Calculate the Loan to Value ratio of the flat. Of what significance is the Loan to Value ratio to bank
managers?
(2 marks)

3. Refer to the information in 1 above. Calculate Zanomzi’s Normal Tax Liability after taking into account
all the information above for the year of assessment ending 28 February 2024.
Hint: Calculate Gross income (including gross salary, interest, dividends,)
Please use the answer sheet provided to answer this part of the question.
(11 marks)

Page 2 of 2

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