Texts: QUESTION 2
37 marks
Megan is a 36-year-old South African resident who enjoys certain fringe benefits as part of her salary package. The details of these fringe benefits are as follows:
Accommodation: Megan's employer pays R114,000 per annum (this is considered to be an arm's length transaction) to rent a house from a non-connected person. Megan paid R27,000 in total to live in this house which was rented from 1 June 2022. The house has three bedrooms, a kitchen, a bathroom, and a lounge and is furnished. Megan pays for her own electricity and water. Megan earned R320,000 in the 2022 year of assessment which is considered to be her remuneration proxy.
Use of a company car: Megan received a travel allowance of R6,800 per month from her employer for the use of a vehicle for the 12 months of the 2023 year of assessment. The vehicle was used for a total of 235 days during the 2023 year of assessment. She traveled a total of 24,700 km, and her logbook showed that 13,270 km were for private purposes. She did not keep accurate records of the costs she incurred.
REQUIRED:
2.1 With regards to the Accommodation, discuss the value of the fringe benefit which Megan will have to include in her taxable income for the 2023 year of assessment.
Support your answer with references to the Seventh Schedule of the Income Tax Act and calculations. Round your answer to the nearest rand. (22 marks)
2.2) With regards to the Use of a company car, calculate the taxable amount of Megan's travel allowance for the 2023 year of assessment.