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Mathematical Literacy Level 3 Module 10

The document covers Mathematical Literacy at NQF Level 3, focusing on Value Added Tax (VAT) and the Unemployment Insurance Fund (UIF). It explains the differences between VAT-inclusive and VAT-exclusive pricing, how to calculate VAT, and the responsibilities of employers regarding UIF contributions. Additionally, it includes examples and exercises related to payslips and VAT calculations.

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Keana April
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© © All Rights Reserved
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Download as PPTX, PDF, TXT or read online on Scribd
3 views

Mathematical Literacy Level 3 Module 10

The document covers Mathematical Literacy at NQF Level 3, focusing on Value Added Tax (VAT) and the Unemployment Insurance Fund (UIF). It explains the differences between VAT-inclusive and VAT-exclusive pricing, how to calculate VAT, and the responsibilities of employers regarding UIF contributions. Additionally, it includes examples and exercises related to payslips and VAT calculations.

Uploaded by

Keana April
Copyright
© © All Rights Reserved
Available Formats
Download as PPTX, PDF, TXT or read online on Scribd
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Mathematical

Literacy
NQF 3

Maths Lit NQF Level 3


Working with value added
tax and unemployment
insurance
Module 10

Maths Lit NQF Level 3


Overview
10.1 VAT-inclusive versus VAT-exclusive
10.2 Understanding the Unemployment Insurance
Fund
10.3 Reading and interpreting payslips

Maths Lit NQF Level 3


VAT-inclusive versus VAT-exclusive
Unit 10.1

VAT
Value Added Tax
• Value Added Tax (VAT) in South Africa is charged on most goods and
services at 14%.
• It is published annually by the Minister of Finance who has the power to
change this rate at any time.
• VAT is collected by vendors (businesses) and paid over to SARS monthly.
• Some services and foodstuffs are exempt from VAT.

Maths Lit NQF Level 3


VAT-inclusive versus VAT-exclusive
Unit 10.1
• Most prices advertised include VAT. The VAT payable has already
been added to the price.

VAT
included
• Some prices advertised exclude VAT and the VAT is added to the
advertised price.

+ VAT
Maths Lit NQF Level 3
Calculating VAT on VAT-exclusive
prices
Unit 10.1
The price of a car is advertised as R359 950 without VAT.
We can calculate the VAT:
14% × R359 950 = R50 393
Add VAT to the advertised price:
Total cost = R359 95 + R50 393 = R410 343
o r m ula
F

VAT on advertised price = 14% of price

Maths Lit NQF Level 3


Example 10.1 page 202
Unit 10.1

Answer the questions relating to the quotation:

Maths Lit NQF Level 3


Example 10.1 page 202 continued ...
Unit 10.1

1. What is the price quoted to the customer for the


service?
2. What does “All prices exclude VAT” mean?
3. How does it benefit Water Savers if they quote a
price that excludes VAT?
4. a) Calculate the VAT to be charged on the service.
b) Calculate the total cost to the customer.

Maths Lit NQF Level 3


Example 10.1 page 202 continued ...
Unit 10.1

1. R6 350,00
2. It means that the cost of VAT has not been added to
the price. It has to be added to the final price given
to the customer if he accepts the quote.
3. The price looks lower than it actually is.
4. a) 14% of R6 350 = R889,00
b) Price of service + VAT = R6 350 + R889 = R7 239

Maths Lit NQF Level 3


Calculating VAT on VAT-exclusive
prices
Unit 10.1

Determine the price before the VAT is added


Method 1 Method 2
Selling price is 100%. VAT is 14% R420,00 includes 14% VAT
R420,00 is 114% of selling price (100% of the cost of the goods)
+ (14% VAT on that cost)
420,00 ÷ 114% = 368,42
R420,00 = 114% of cost of goods
100
Tax is calculated on R368,42: ∴ Cost of goods = 114 × 420,00
14% of R368,42 = R51,58
= R368,42
14
Breakdown of total charge: VAT = 114 × 420,00 = R51,58
Cost of goods + VAT
= R368,42 + R51,58 = R420,00

Maths Lit NQF Level 3


Example 10.2 page 203
Unit 10.1

Study the till slip below, then answer the questions


that follow.
1. What did the customer pay for the
goods?
2. a) Which items are exempt from
VAT? Explain how you can identify
them.
b) What is the value of the goods
that are exempt from VAT? Find the
information on the till slip.
3. The value of the goods on which
VAT was calculated, is R278,89.
Show the calculations for this
amount.
4. Show that the tax has been
correctly calculated.

Maths Lit NQF Level 3


Example 10.2 page 203 continued ...
Unit 10.1

1. R376,41
2. a) Milk and eggs. They are marked with an asterisk (*).
b)
R58,48
3. Total amount – VAT exempt items
= R376,41 – R58,48
= R317,93

R317,93 ÷ 1,14 = R278,89

4. 14% of R278,89 = R39,04

Maths Lit NQF Level 3


Example 10.3 page 204
Unit 10.1

1. Calculate the VAT amount that has been left blank on the
invoice:

2. Give 2 reasons why a business might find it useful to show


the price before VAT and the VAT amount, on an invoice.

Maths Lit NQF Level 3


Example 10.3 page 204 continued ...
Unit 10.1

14
1. 114 × 4 845,00 = R595,00

2. A business would use the two amounts for business


calculations:
* the price before VAT to calculate their income
* the VAT amount to calculate what to pay to SARS.

Maths Lit NQF Level 3


Exercise 10.1
Unit 10.1
Complete Exercise 10.1 on page 205 of your Student’s Book

Maths Lit NQF Level 3


Understanding the
Unemployment
Unit 10.2
Insurance Fund

UIF 2%
Unemployment Insurance Fund

• The Unemployment Insurance Act states that every employer should


deduct 1% of basic salary from their employees. The employer should
contribute another 1% of the employee’s basic salary.
• This 2% is paid into the Unemployment Insurance Fund (UIF).

Maths Lit NQF Level 3


Benefits of UIF to employees
Unit 10.2

An employee is entitled to 1 day's pay for every 6 days worked to a


maximum of 238 days.

A claim can be made:


1 if the employee is retrenched

2 if the employee takes maternity leave

3 if the employee adopts a baby and takes leave

4 if the employee is terminally ill

5 if the employee dies and has dependents

Maths Lit NQF Level 3


Employers' responsibilities
Unit 10.2

The Unemployment Insurance Act is a law which states that:

“Every employer has to


register each
employee for UIF.”

Maths Lit NQF Level 3


Example 10.4 page 207
Unit 10.2

Magdaline’s payslip showed that her gross income for


August 2017 was R13 345,00.

1. Calculate the amount her employer had to deduct


for UIF payment.
2. Show that her employer submitted R266,90 to the
fund.

Maths Lit NQF Level 3


Example
Unit 10.2
10.4 page 207 continued ...

1. 1% × R13 345,00 = R133,45

2. The employer also had to contribute 1% of


Magdalene’s salary towards UIF.

Employee’s contribution + employer’s contribution


= R133,45 + R133,45
= R266,90

Maths Lit NQF Level 3


Exercise 10.2
Unit 10.2
Complete Exercise 10.2 on page 207 of your Student’s Book

Maths Lit NQF Level 3


Reading and interpreting payslips
Unit 10.3

Period of
payment

PAYE
UIF

All deductions

Other possible deductions:


• Medical aid contribution
Gross earnings Nett earnings • Pension contribution
• Loan repayments

Maths Lit NQF Level 3


Example 10.5 page 208
Unit 10.3

The payslip below shows what Andile Sibeko earned


for the month of June 2018.

Maths Lit NQF Level 3


Example 10.5 page 208 continued ...
Unit 10.3

1. How much did Andile earn before deductions?


2. Check that the UIF calculation is accurate.
3. Check that the total deductions are correct.
4. How was Andile’s nett pay calculated? Show the
calculations.
5. How was Andile paid?

Maths Lit NQF Level 3


Example 10.5 page 208 continued ...
Unit 10.3

1. R7 375,00
2. 1% × R7 375,00 = R73,75
3. R1 080,15 + R73,75 + R325,75 = R1 479,65
4. R7 375,00 – R1 479,65 = R5 895,35
5. The money was paid into his Ithembekile cheque
account.

Maths Lit NQF Level 3


Exercise 10.3
Unit 10.3
Complete Exercise 10.3 on page 209 of your Student’s Book

Maths Lit NQF Level 3


Module assessment
Module 10
Complete Module assessment on page 210 of your Student’s Book

Maths Lit NQF Level 3


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Maths Lit NQF Level 3

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