Page 144 - ADVANCED TAXATION - Day 1 Slides

Solution

Step 1: R160 000 (determined value already excludes VAT)
Step 2: R160 000 × 0,3% = R480

Step 3: R480 – R150 (insurance) – R70 (maintenance) = R260
 The fuel (zero-rated), interest (exempt), and fixed cost (input
tax denied) are not deductible.

Step 4: R260 × 14/114 = R31,93
Step 5: R31,93 × 100% = R31,93 output tax per month payable
by the employer on the fringe benefit

 Additional output tax on consideration received:

The employer must also account for output tax on the
consideration paid by the employee to the employer in respect of
the insurance and maintenance. (The employer probably claimed
the VAT on these expenses paid by him.)

R150 + R70 = R220 × 14/114 = R27,02 output tax