Question

Okkie is 59 years old, a resident of the RSA and has worked for Heights Properties Ltd in Cape Town as a property manager for the past 25 years.
Okkie elected to retire on 31 December 2018 from Heights Properties Ltd and received the following as a result of his retirement:
- R120 000 as a lump sum from Heights Properties Ltd
- R800 000 as a lump sum from H PF (Heights Properties Ltd requires that all its employees must be members of H PF)
- R12 000 per month as an annuity from H PF with effect from 1 January 2019.
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Since 1 March 2018, Okkie received a cash salary of R150 000 per month from Heights Properties Ltd.
Okkie owns an investment property since 2015 and he leased it out during the last two years of assessment for R 8 000 per month.
Except for the items listed above, Okkie did not have any other income or expenditure for the last two years of assessment. All his contributions to the PF have been allowed as deductions in the past.
Calculate the normal tax payable by Okkie for the 2019 year of assessment.

South African Income Tax

Answer 1

The Normal Tax payable by Okkie for the 2019 Year of Assessment will be as follows :-

i ) 1,20,000 lumpsump recevied is taxable, because no further information is provided in the question.

II) 8,00,000 Lumpsump received from H PF is not taxable.

iii) 12,000 will be received from Jan'01, 2019 , so income will be taxed only for 2 months (Jan & Feb ) = 12000*2.

iv) Received a cash salary of 1,50,000 per month from March-18, so taxable income will be for 12 months (Mar to Feb) = 150000*12

v) Rental income will for 12 months = 8000 * 12 = 96000

Particualrs	Amount
Lumpsump received	120000
Annuity from H PF	24000
Cash salary	1800000
Rental income	96000
Total Income	2040000

As no rate of tax is informed in the question, only taxable income is calculated.