Question

Mr. Johnson was born in June 1971 and earns R47 400,00 which on the last day

Answer 1

2.1.1. An IRP5 is the employee's tax certificate, detailing all the employee-related incomes, deductions, and related taxes.  The IRP5 assists the employee in making his tax returns for the subsequent year.

2.1.2. Mr. Johnson's taxable income for the year is R490,414,56.

2.1.3 Mr. Johnson's medical credit for the financial year is R33,600.

2.1.4 The annual tax payable by Mr. Johnson for the financial year from 1 March 2021 to 28 February 2022 is R118,988,24.

2.1.5 Calculate Mr. Johnson's monthly taxes are R9,915,69.

Data and Calculations:

Gross Pay = R47,400,00

Pension fund contributions = 7.5% (R3,555,00)

WVF contribution = 1% (R177,12)

Medical aid contributions = R2,800

Annual medical credit = R33,600 (R2,800 x 12)

Total deductions = R6,532,12 (R3,555,00 + R177,12 + R2,800)

Taxable income = R40,867,88 (R47,400 - R6,532,12)

Annual taxable income = R490,414,56 (R40,867,88 x 12)

Johnson's Tax liability:

Annual tax liability = R110 739 + 36% of taxable income above R467 500

= R110,739 + 36% of R22,914,56 (R490,414,56 - R467,500)

= R110,739 + R8,249,24

= R118,988,24

Monthly Tax = R9,915,69 (R118,988,24/12)

Thus, the taxable income (gross pay minus deductions)  forms the basis for determining the tax payable by Mr. Johnson during the tax year.

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Question Completion:

Appendix A (Tax Rates)

Taxable Income              Rate of tax (R)

R1 – R216 200                18% of taxable income

R216 201 – R337 800    R38 916 + 26% of taxable income above R216 200

R337 801 – R467 500   R70 532 + 31% of taxable income above R337 800

R467 501 – R613 600   R110 739 + 36% of taxable income above R467 500