Calculate the income tax consequences

Assignment Help Supply Chain Management

Reference no: EM133573771

QUESTION

Sally (60 years old) is a South African resident. Sally has been working at All Trek (Pty) Ltd for the past 25 years and she retired on 31 December 2022.

Coffee machine

All Trek (Pty) Ltd gave Sally a fancy coffee machine, as a token of appreciation for 25 years of service as they know how much she loves a good cup of coffee. All Trek (Pty) Ltd purchased the coffee machine for R15 000 in November 2022 and Sally was awarded the machine on her last day at All Trek (Pty) Ltd.

Lump sums

On her retirement on 31 December 2022, Sally received a lump sum from All Trek (Pty) Ltd of R450 000. (You can assume that this amount qualifies as a severance benefit.)

On the same date, Sally also received a retirement lump sum of R600 000 from her provident fund. She transferred 40% of the lump sum to her retirement annuity fund, and the remaining 60% will be paid out as a monthly annuity. R200 000 of her provident fund contributions made prior to 1 March 2016 were not allowed as a deduction. All contributions made after 1 March 2016 were deductible.

In July 2020, Sally received a lump sum of R350 000 when she withdrew from a retirement annuity fund. All the contributions made to the retirement annuity fund were deductible.

With reference to the information under the Coffee machine, discuss the income tax consequences for Sally's 2023 year of assessment.

1. Support your answer with references to the Seventh Schedule of the Income Tax Act and calculations.

2. With reference to the information under Lump sums, calculate the income tax consequences for Sally's 2023 year of assessment.

Reference no: EM133573771

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