ACTIVIY 10 Mpilenhele is 25 yeara old and his annual taxable income is R121 367,20. He is the only member of bis medical aid Use the 2018/2019 SARS tax tuble in the example above to anover the Eollowiog questions 1. Bplain the fifferencebetween basic nalary and grous licome. 2. Definc the terimi tax thenhold 3. What is the tax zebate for Mpilenhle? 4. What is the tax bracket upplicable to Mpilenkles tarable Incume? 5. Identify the minimum tax parable for tax bracket 4 6. Calculate Mpileohle's annual income payable.

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Sure, let's address each of your questions step-by-step using the **2018/2019 SARS tax tables** for South Africa.

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### **1. Explain the Difference Between Basic Salary and Gross Income**

- **Basic Salary:**
  - This is the fixed amount of money an employee receives from their employer before any additional benefits, allowances, or deductions. It does not include bonuses, overtime pay, or any other forms of compensation.
  
- **Gross Income:**
  - Gross income encompasses the basic salary **plus** all other earnings an employee receives. This includes bonuses, commissions, allowances (like transport or housing), and any other taxable benefits. Essentially, it's the total income earned before any deductions (like taxes, retirement contributions, or medical aid deductions).

**_Example:_**
If Mpilenhele has a basic salary of R100,000 annually and receives a bonus of R20,000, his gross income would be R120,000.

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### **2. Define the Term "Tax Withheld"**

**Tax Withheld** refers to the portion of an employee's earnings that is deducted by the employer and sent directly to the South African Revenue Service (SARS) on behalf of the employee. This deduction accounts for the employee's income tax liabilities based on their taxable income. At the end of the tax year, the amount withheld is reconciled with the actual tax liability, resulting in either a payment or rebate.

**_Key Points:_**
- Ensures employees pay their taxes regularly throughout the year.
- Prevents large tax bills at the end of the fiscal year.
- The amount withheld depends on the employee's earnings and applicable tax brackets.

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### **3. What Is the Tax Payable for Mpilenhele?**

To determine **Mpilenhele’s tax payable**, we'll follow these steps:

1. **Determine Taxable Income:**
   - Given as **R121,367.20** annually.

2. **Apply the 2018/2019 SARS Tax Tables:**
   - **Tax Bracket for Mpilenhele:** 
     - **Up to R189,880:** 18% of taxable income.
  
3. **Calculate Preliminary Tax:**
   - **18% of R121,367.20 = R21,846.10**

4. **Subtract Primary Rebate:**
   - In the 2018/2019 tax year, the **primary rebate** for individuals below 65 was **R14,958**.
   - **Tax Payable = R21,846.10 - R14,958 = R6,888.10**

5. **Account for Medical Aid Tax Credit:**
   - Since Mpilenhele is the sole member of his medical aid, he is entitled to a medical aid tax credit.
   - **Medical Aid Tax Credit for an Individual (2018/2019):** **R3,720** annually (R310 per month).
   - **Final Tax Payable = R6,888.10 - R3,720 = R3,168.10**

**_Conclusion:_**
- **Total Tax Payable by Mpilenhele:** **R3,168.10** annually.

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### **4. What Is the Tax Bracket Applicable to Mpilenhele's Taxable Income?**

Based on Mpilenhele’s **annual taxable income of R121,367.20**, he falls into the **first tax bracket** for the 2018/2019 tax year.

- **First Tax Bracket:**
  - **Up to R189,880:** Taxed at **18%** of taxable income.

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### **5. Identify the Minimum Tax Applicable for Tax Bracket 4**

For the **2018/2019 tax year**, the **fourth tax bracket** is structured as follows:

- **Tax Bracket 4:**
  - **Income Range:** R410,731 to R552,100
  - **Tax Calculation:** 
    - **R110,593** plus **36%** of taxable income **above R410,730**.

**_Minimum Tax for Tax Bracket 4:_**
- When income is at the lower limit of this bracket (**R410,731**):
  - **Minimum Tax = R110,593**

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### **6. Calculate Mpilenhele's Annual Income Payable**

To determine **Mpilenhele's annual net income (income after tax)**:

1. **Start with Gross Taxable Income:**
   - **R121,367.20**

2. **Subtract Total Tax Payable:**
   - As calculated earlier, **R3,168.10**

3. **Calculate Net Income:**
   - **R121,367.20 - R3,168.10 = R118,199.10**

**_Conclusion:_**
- **Mpilenhele’s Annual Net Income Payable:** **R118,199.10**

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### **Summary**

1. **Basic Salary vs. Gross Income:** Basic salary is fixed compensation; gross income includes all earnings before deductions.
2. **Tax Withheld:** Portion of earnings deducted by employer for tax purposes.
3. **Tax Payable:** R3,168.10 annually after applying rebates and tax credits.
4. **Applicable Tax Bracket:** First tax bracket (up to R189,880 at 18%).
5. **Minimum Tax for Bracket 4:** R110,593.
6. **Annual Net Income Payable:** R118,199.10 after tax deductions.

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**_Note:_** It's essential to consider all relevant deductions, rebates, and credits when calculating tax liabilities. Always refer to the latest SARS guidelines or consult with a tax professional for accurate and personalized tax advice.
**Mpilenhele's Tax Details:** 1. **Basic Salary vs. Gross Income:** - **Basic Salary:** Fixed monthly pay. - **Gross Income:** Includes basic salary plus bonuses and other earnings. 2. **Tax Withheld:** - Amount deducted by employer for taxes. 3. **Tax Payable:** - **R3,168.10** annually after deductions. 4. **Tax Bracket:** - **First Bracket (Up to R189,880):** 18% tax rate. 5. **Minimum Tax for Bracket 4:** - **R110,593** at the lower limit of the fourth tax bracket. 6. **Annual Net Income Payable:** - **R118,199.10** after taxes. **Summary:** - **Gross Income:** R121,367.20 - **Tax Withheld:** R3,168.10 - **Net Income:** R118,199.10

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