QUESTION 1 (20 MARKS)
Consider the statements below and indicate which of the following statements are TRUE or
FALSE. You are only required to write the number and your answer. E.g., 1. True
1. All allowances received as a result of employment are taxable in terms of the provisions of s8 of
the Income Tax Act.
2. All allowances are remuneration as defined in the 4th Schedule.
3. Amounts paid to reimburse the exact expenditure incurred by an employee on behalf of the
company are gross income and remuneration as defined.
4. The taxpayer may elect either actual costs or deemed costs in determining the travel costs to
apply against the travel allowance (assuming the taxpayer has the necessary documentation,
including a logbook).
5. The amounts deemed to have been spent by a taxpayer on subsistence while away from home
on behalf of the employer are the only amounts that may be used to reduce the allowance
received from the employer.
6. The 7th Schedule determines the value of the fringe benefit to include in gross income.
7. In calculating the value of use of a motor vehicle, the value of the vehicle excludes value-added
tax irrespective of the employer’s vendor status (i.e. whether the employer is a VAT vendor or
not).
8. Where the employee receives use of a vehicle and a travel allowance in respect of the same
vehicle, the value determined for the use of the vehicle may neither be reduced by any
consideration paid by the employee for the use nor may the employee make use of the deemed
expenditure option to determine the travel costs.
9. Meals provided by a canteen operated by the employer for the employee are taxed as fringe
benefits in the employee’s tax return.
10. The benefit derived from a low-interest loan is the difference between the official rate and the lower
rate paid by the employee.