Question 1 (Marks 50: 60 minutes) Zululand Technology House (Pty) Ltd ("ZTH"), is a company resident in Zululand for income tax purposes. It was founded in 2013 by Mawethu Zikhali the Chief Executive Officer. The company's financial year ends on 30 June and this date has been approved by the Zululand Revenue Service (SARS) as the company's year of assessment. ZTH is a technological innovative company that specialises in providing software- driven business solutions to commerce and industry with a focus on resource tracking systems. ZTH Ltd's philosophy is "employing and retaining the best". ZTH technology sector has been under severe pressure over the last number of years due to their failure to attract and retained skilled and talented employees due to the lack of an attractive benefits package offered in the industry. As retaining a talented workforce in ZTH industry is not easy, it is crucial for the company to tailor their company's benefit packages to suit their means and give them a competitive advantage. ZTH Benefits package includes, medical aid, pension fund, the right of use of company car and cell phone, residential accommodation, study allowance and a subsidy in respect of interest on any loan to employees. Manqoba Nkosi Manqoba Nkosi ("Manqoba") is a 37-year-old Zululand resident employed at ZTH as the internal auditor. Manqoba joined ZTH on 1 July 2016. Manqoba is married out of community of property to Langelihle Nkosi. In terms of ZTH's employment contracts with its internal auditors, all internal auditors are entitled to a cash salary of R66 825 per month. Apart from her salary he also received an entertainment allowance of R2 200 per month. He is required to regularly entertain other employees when performing audits, and this is therefore, a necessary part of her employment. Manqoba does not have to account to her employer for what he spends, although he can prove that he spent R18 333 in the current year of assessment. ZTH internal auditors are also entitled to the use of ZTH-owned smartphone that may be used for private purposes. From 1 July 2020 until 28 February 2021 Manqoba had the right of use of ZTH-owned smartphone, which had open market value of R11 978, 1 --
whilst it had a cost the company R6 356 on 1 July 2020. Manqoba estimated that 80% of her calls were for private purposes. Internal auditors are required to travel regularly to audit other branches of ZTH throughout the country, and as a result from 1 April 2020 Manqoba was entitled to the right of use of new company car (Mercedes-Benz X - Class x 350D) with a retail market value of R1 099 998. The Mercedes has a maintenance plan and Manqoba bore the full cost of fuel. This amounted to R9 167. He kept accurate records of 18 333 km during the 2021 year of assessment in the company car, of which 8 556 km were for business purposes. ZTH recognised the financial difficulties faced by employees throughout South