Mr. Motala's annual taxable income was R453180 million for the 2020/2021 financial year.
Table 3 below shows the income tax rates for the 2021/2022 tax year.
| Tax Bracket | Taxable Income (R) | Rates of Tax (R) |
|---|---|---|
| 1 | 1-216200 | 18% of taxable income |
| 2 | 216201-337800 | 38916 + 26% of taxable income above 216200 |
| 3 | 337801-467500 | 70532 + 31% of taxable income above 337800 |
| 4 | 467501-613600 | 110739 + 36% of taxable income above 467500 |
| 5 | 613601-782200 | 163335 + 39% of taxable income above 613600 |
| 6 | 782201 and above | 229089 + 41% of taxable income above 782200 |
[source: www.SARS.gov.za]
| TAX REBATE | 2021/2022 |
|---|---|
| Primary | 15714 |
| Secondary (65 and older) | 8613 |
| Tertiary (75 and older) | 2871 |
| MEDICAL CREDITS PER MONTH FOR MEDICAL FUND MEMBERS |
|---|---|
| Main member | R310 |
| First Dependent | R310 |
| Each Additional Dependent | R209 |
3.1.1 Identify the tax bracket for a person whose taxable income is R27000 per month.
3.1.2 How old should one be to qualify for a R8 613 tax rebate?
3.1.3 Show how the value of R163 335 was calculated.
3.1.4 Calculate Mr. Motala's taxable income in thousands and write it in words.
Answer (1)
Tax Bracket 2
65 years or older
R163 335 is the fixed tax amount for Tax Bracket 5
453.18 thousand (Four hundred and fifty-three point one eight thousand).
Explanation
Understanding the Problem First, let's analyze the given information. We have Mr. Motala's annual taxable income, a tax table for the 2021/2022 year, a tax rebate table, and a medical credits table. We need to answer four questions based on this information.
Finding the Tax Bracket 3.1.1 To find the tax bracket for a person with a taxable income of R27000 per month, we first need to calculate their annual taxable income. To do this, we multiply the monthly income by 12: 27000 × 12 = 324000 Now, we look at the tax table to find the bracket that includes R324000. This falls into Tax Bracket 2, which is R216201 - R337800.
Determining the Age for Tax Rebate 3.1.2 To determine the age required to qualify for a R8613 tax rebate, we refer to the tax rebate table. The table shows that a 'Secondary (65 and older)' rebate is R8613. Therefore, one should be 65 years or older to qualify for this rebate.
Calculating the Tax Value 3.1.3 To show how the value of R163 335 was calculated, we need to understand which tax bracket this value refers to. Looking at the tax table, R163 335 is the fixed tax amount for Tax Bracket 5, which has a taxable income range of R613 601 - R782 200. The tax rate for this bracket is 39% of the taxable income above R613 600. So, the formula for calculating the tax is:
Tax = R163 335 + 39% of (Taxable Income - R613 600)
If the taxable income is exactly R613 601, then the tax is:
Tax = R163 335 + 0.39 * (R613 601 - R613 600) Tax = R163 335 + 0.39 * (R1) Tax = R163 335 + R0.39 Tax = R163 335.39
Since the value is approximately R163 335, it represents the base tax amount for individuals in Tax Bracket 5.
Calculating Taxable Income in Thousands 3.1.4 To calculate Mr. Motala's taxable income in thousands, we divide his income by 1000:
1000 453180 = 453.18
So, Mr. Motala's taxable income in thousands is 453.18 thousand. In words, this is: Four hundred and fifty-three point one eight thousand.
Final Answers Final Answers: 3.1.1 Tax Bracket 2 3.1.2 65 years or older 3.1.3 R163 335 is the fixed tax amount for Tax Bracket 5. 3.1.4 453.18 thousand (Four hundred and fifty-three point one eight thousand)
Examples
Understanding tax brackets and rebates is crucial for personal finance. For instance, knowing your tax bracket helps you estimate your tax liability and plan your budget accordingly. Tax rebates can significantly reduce your tax burden, providing extra funds for savings or investments. Calculating taxable income in thousands simplifies large numbers, making it easier to communicate financial information in reports or discussions. These concepts are applicable in everyday financial planning and decision-making.
