Page 336 - SAIT Compendium 2016 Volume2

IN 18 (3) Income Tax acT: InTeRPReTaTIon noTes IN 18 (3) (e) Calculation of the section 6A and 6B rebate
Section 6A tax credit
Medical scheme fees tax credit (R514 per section 6A × 12) = R6 168
Section 6B tax credit
Additional medical expenses tax credit = 25% of the excess of [{(Medical aid contributions as exceeds 4 × medical scheme fees tax credit) + qualifying medical expenses} as exceeds 7,5% taxable income]
25% of the excess of [{(R25 000 – (R6 168 × 4) + R16 152} – (taxable income × 7.5%)] = 25% of the excess of [(R328 + R16 152) – (R330 887 × 7.5%)]
= 25% of the excess of [R16 480 – 24 816,53]
= 25% of the excess of (-R8 336,53)
A negative gure means there is no excess and the additional medical expenses tax credit is Rnil.
(f) Calculation of the normal tax payable after taking into account rebates
Normal tax paid before rebates Less: Primary rebate
Less: Section 6A tax credit Section 6B tax credit Section 6quat rebate
PAYE Amount payable
Example 3 – Pensioner receiving foreign dividends and foreign interest
Facts:
R
73 413,10
(12 726,00) 60 687,10 (6 168,00)
-
(13 775.98) (25 078.00)
15 665,12
B (the taxpayer), age 70 and single, is a resident. For the 2015 year of assessment B earned a pension of R100 000 from a South African source.
In addition the taxpayer received the following income:
Dividends Interest
South African source Foreign source
The following withholding tax was paid in respect of foreign-source dividends and interest: Withholding tax on foreign dividends
Withholding tax on foreign interest
Other information:
• An amount of R38 000 for out-of-pocket expenses incurred by the taxpayer quali es as qualifying medical expenditure
under section 6B.
• The taxpayer donated R5 000 to a public bene t organisation which has been approved for section 18A purposes. The
taxpayer has a section 18A receipt for the donation.
• A balance of excess foreign taxes of R5 500 was brought forward from the 2014 year of assessment.
Result:
(a) Calculation of taxable income
Gross income
Pension income Dividend income Interest income Less:
Exempt income
Section 10B(3) exemption for foreign dividends
South Foreign source Total African source
RRR
221 500
(34 500)
Nil
100 500
(35 313)
35 313
322 000
(69 813)
35 313
RR Nil
121 500
56 500 44 000
5 650 2 000
100 000 Nil 121 500
Nil 56 500 44 000
100 000 56 500 165 500
328
saIT comPendIum oF Tax LegIsLaTIon VoLume 2