Page 341 - SAIT Compendium 2016 Volume2

IN 18 (3)
Result:
(a) Calculation of taxable income
Gross income
Consulting fees
SA source (R200 000 × 60%)
Foreign source (R200 000 × 40%)
Dividend income
Less:
Exempt income
Section 10B(3) exemption for foreign dividends [R60 000 × 25 / 40]
Income
Less:
Section 11(a) deduction
Expenses attributable to SA-sourced service income
(Calculation: R50 000 × 60%)
Expenses attributable to foreign- sourced service income (Calculation: R50 000 × 40%)
Taxable income before the deduction of donations
Less:
Donation to approved public bene t organisation Section 18A –
Actual donation R20 000
Limited to 10% of R172 500 = R17 250 Apportionment of R17 250: (R90 000 / R172 500 × R17 250) = R9 000
(R82 500 / R172 500 × R17 250) = R8 250
Taxable income before section 6quat(1C) deduction
Less:
Section 6quat(1C) deduction
Foreign taxes attributable to SA- sourced service income = R18 000 Calculation: R30 000 × 60%
Limited to R81 000 [section 6quat(1D)] Taxable income
(b) Calculation of normal tax payable before rebates
IN 18 (3)
Income Tax acT: InTeRPReTaTIon noTes
South African source
Foreign source
Total
RRR
120 000
(Nil)
120 000 (30 000)
90 000
(9 000)
81 000
(18 000)
63 000
140 000
(37 500)
102 500 (20 000)
82 500
(8 250)
74 250
(Nil)
74 250
260 000
(37 500)
222 500 (50 000)
172 500
(17 250)
155 250
(18 000)
137 250
R
24 705
R
12 000 4 000
16 000
120 000 80 000 60 000
Nil
37 500
37 500
30 000
20 000
50 000
Normal tax payable: (Rates of tax – 2015 year of assessment) R137 250 × 18%
(c) Calculation of the section 6quat(1) rebate
Qualifying foreign taxes in respect of consulting fees Calculation: R30 000 × 40%
Qualifying foreign taxes in respect of foreign dividends Total
Under paragraph (ii) of the proviso to section 6quat(1A) the amount of foreign taxes attributable to the exempt foreign dividends of R37 500 under section 10B(3) potentially quali es for the foreign tax rebate under section 6quat(1). Limited to: 13 365
Calculation of the limitation:
Taxable income derived from all foreign sources _______________________________________ × Normal tax payable
Total taxable income derived from all sources
_R__7_4_2__5_0_ × R24 705 R137 250
= R13 365
120 000 Nil Nil
Nil 80 000 60 000
saIT comPendIum oF Tax LegIsLaTIon VoLume 2 333