Assignment Task

Question 

Sophia Bennett is 47 years old and unmarried. She was employed as a marketing manager at Digiwave (Pty) Ltd for a number of years, however in January 2024 she resigned from her employment.

The following information relates to Sophia`s 2024 year of assessment:

1) Sophia earned a cash salary of R40 000 per month from Digiwave (Pty) Ltd until her resignation.

2) Digiwave (Pty) Ltd purchased a Chery Tiggo on 22 January 2023 at a retail market value of R414 000 (including VAT of R54 000), which included a maintenance plan covering a total of 60 000 km. Sophia had use of this vehicle from 31 January 2023 until her resignation to travel to various clients as well as for private purposes. Sophia paid for all the fuel (private and business), which amounted to R29 500 during the period of assessment. She kept all the fuel receipts as well as her detailed logbook. She travelled a total of 15 400 km during the current year of assessment, of which 9 240 km was for business.

3) Sophia contributed 8% of her basic salary to the Allan Moore Pension Fund. Additionally, she paid R3 000 per month towards medical aid. She and her 6-year-old daughter are members of the medical aid fund. Unfortunately, Sophia cancelled her medical aid upon her resignation and her last contribution was made on 31 January 2024.

4) Sophia began trading in her own name on 02 February 2024 by running an online retail store. She withdrew the total amount of R960 000 in her pension reserve on 31 January 2024 to fund her new business venture. This is the first time she has received any amount from a retirement fund. A tax directive was received from the South African Receiver of Revenue by the Allan Moore Pension Fund.

5) During the 2024 year of assessment, Sophia`s online store made an assessed loss of R33 000.

Required:

Q.2.1 Calculate the employees` tax to be withheld by Digiwave (Pty) Ltd from Sophia

Q.2.2 Bennet`s remuneration for the month of January 2024. Round to the nearest rand.

Q.2.2 What is the purpose of a tax directive for lump sums?

Q.2.3 Calculate the actual tax payable on the lump sum received from Allan Moore Pension Fund for January 2024.

Q.2.4 Provide brief reasons why, purely from a tax perspective, Sophia should not have opted to have the maximum amount paid out to her from the pension fund upon her resignation on 31 January 2024.

Calculations are not required.