Sean Fento is married out of community of property to Sally Fento. Sean contributes R1 800 per month to his registered medical aid for each registered member in his medical aid. His employer contributes R900 per month to Sean’s medical aid fund for each registered member in his medical aid. Sean and Sally are the only registered members of Sean’s medical aid. YOU ARE REQUIRED to calculate the taxable portion of the fringe benefit for the current year of assessment.a.R10 800b.R900c.R21 600d.R43 200
Question
Sean Fento is married out of community of property to Sally Fento. Sean contributes R1 800 per month to his registered medical aid for each registered member in his medical aid. His employer contributes R900 per month to Sean’s medical aid fund for each registered member in his medical aid. Sean and Sally are the only registered members of Sean’s medical aid. YOU ARE REQUIRED to calculate the taxable portion of the fringe benefit for the current year of assessment.a.R10 800b.R900c.R21 600d.R43 200
Solution
The taxable portion of the fringe benefit is calculated as follows:
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Determine the total contribution made by the employer. In this case, the employer contributes R900 per month for each registered member. Since there are two registered members (Sean and Sally), the total monthly contribution is R900 * 2 = R1,800. Over a year (12 months), this amounts to R1,800 * 12 = R21,600.
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According to South African tax laws, the first R900 of the total contribution made by the employer per month for each registered member is exempt from tax. Therefore, the exempt portion for the year is R900 * 2 members * 12 months = R21,600.
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Subtract the exempt portion from the total contribution to find the taxable portion of the fringe benefit. In this case, the taxable portion is R21,600 - R21,600 = R0.
Therefore, none of the options (a. R10 800, b. R900, c. R21 600, d. R43 200) is correct. The taxable portion of the fringe benefit for the current year of assessment is R0.
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