Mr. Johnson was born in June 1971 and earns R47 400,00 which on the last day
of the month to be paid to him.
The following deductions are made from his salary:
• 7.5% of his gross salary for pension fund contributions.
• 1% of his gross salary for WVF. (The maximum WVF contribution is R177,12)
• R2 800 for medical aid contributions for him and his wife.
Study the table in APPENDIX A, the tax rates for the year ended
28 February 2022, and answer the questions that follow:
2.1.1 Explain what an IRP5 is. (2)
2.1.2 Calculate Mr. Johnson's taxable income for the year. (7)
2.1.3 Calculate Mr. Johnson's medical credit for the financial year. (2)
2.1.4 Calculate the annual tax payable by Mr. Johnson for the
financial year from 1 March 2021 to 28 February 2022. (5)
2.1.5 Calculate Mr. Johnson's monthly taxes

2.1.1. An IRP5 is the employee's tax certificate, detailing all the employee-related incomes, deductions, and related taxes. The IRP5 assists the employee in making his tax returns for the subsequent year.

2.1.2. Mr. Johnson's taxable income for the year is R490,414,56.

2.1.3 Mr. Johnson's medical credit for the financial year is R33,600.

2.1.4 The annual tax payable by Mr. Johnson for the financial year from 1 March 2021 to 28 February 2022 is R118,988,24.

2.1.5 Calculate Mr. Johnson's monthly taxes are R9,915,69.

Data and Calculations:

Gross Pay = R47,400,00

Pension fund contributions = 7.5% (R3,555,00)

WVF contribution = 1% (R177,12)

Medical aid contributions = R2,800

Annual medical credit = R33,600 (R2,800 x 12)

Total deductions = R6,532,12 (R3,555,00 + R177,12 + R2,800)

Taxable income = R40,867,88 (R47,400 - R6,532,12)

Annual taxable income = R490,414,56 (R40,867,88 x 12)

Johnson's Tax liability:

Annual tax liability = R110 739 + 36% of taxable income above R467 500

= R110,739 + 36% of R22,914,56 (R490,414,56 - R467,500)

= R110,739 + R8,249,24

= R118,988,24

Monthly Tax = R9,915,69 (R118,988,24/12)

Thus, the taxable income (gross pay minus deductions) forms the basis for determining the tax payable by Mr. Johnson during the tax year.

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Question Completion:

Appendix A (Tax Rates)

Taxable Income Rate of tax (R)

R1 – R216 200 18% of taxable income

R216 201 – R337 800 R38 916 + 26% of taxable income above R216 200

R337 801 – R467 500 R70 532 + 31% of taxable income above R337 800

R467 501 – R613 600 R110 739 + 36% of taxable income above R467 500