TAX 2A: Taxation 2A Study Guide (University of Johannesburg BCom Accounting)

This study guide is tailored for University of Johannesburg (UJ) students registered for TAX2A Taxation 2A in the BCom Accounting and related programmes. It consolidates key examinable concepts aligned with the South African Income Tax Act (primarily the Income Tax Act 58 of 1962) and typical TAX2A outcomes. The material focuses heavily on individual taxpayers but also introduces basic company and VAT concepts that commonly appear in second‑year tax modules at UJ and comparable South African universities.

The notes are structured around exam‑relevant themes: residence and gross income, exemptions and special inclusions, deductions and capital allowances, capital gains tax (CGT), and practical computation of taxable income and normal tax for individuals. Throughout the guide, emphasis is placed on exam technique, typical UJ-style questions, and common mistakes to avoid.

1. Core Framework of South African Income Tax (TAX2A Focus)

1.1 The Role of Taxation 2A in BCom Accounting at UJ

In the University of Johannesburg BCom Accounting curriculum, TAX2A (Taxation 2A) is usually the first serious, in‑depth tax module. By the time students take TAX2A, they are expected to:

Understand basic accounting and business law.
Have a conceptual overview of tax from introductory modules.
Be able to apply statutory provisions to practical scenarios.

TAX2A focuses mainly on:

Individual income tax (earnings, benefits, fringe benefits, retirement funds).
Basic corporate tax (limited scope, usually introduction only).
Capital Gains Tax (CGT) at an intermediate level.
Value-Added Tax (VAT) basics (in many curricula this is more detailed in Tax 2B, but UJ Taxation 2A often tests introductory VAT principles).
Detailed normal tax computation for individuals based on a full tax year.

In exam terms, TAX2A typically expects:

A systematic, step-by-step calculation of taxable income and normal tax.
Accurate citation of sections and paragraphs of the Income Tax Act where required.
Short theoretical questions on definitions, principles, and policy reasons for specific rules.

1.2 Structure of the South African Income Tax System

South Africa uses a residence‑based income tax system:

Residents are taxed on worldwide income.
Non‑residents are taxed mostly on South African‑source income and certain deemed‑source amounts.

Key features:

Tax year for individuals: 1 March – 28/29 February.
Tax type: Normal tax levied under the Income Tax Act 58 of 1962.
Revenue authority: South African Revenue Service (SARS).

The basic computation for an individual taxpayer in TAX2A looks like this:

Determine gross income
Less: Exempt income
= Income
Plus: Special inclusions (if not already in gross income)
= Total income
Less: Deductions (general & specific)
= Taxable income before CGT
Plus: Taxable capital gain
= Taxable income
Apply tax tables (individual marginal rates)
= Normal tax before rebates
Less: Rebates (primary, secondary, tertiary)
= Normal tax payable
Less: Tax credits (e.g. medical scheme tax credit, PAYE)
= Net tax payable / refundable

In exams, lay out this structure clearly. Examiners at UJ and other South African universities value logical layout and clear labelling of each step.

1.3 Sources of Law and Interpretation (Exam-Relevant Overview)

For TAX2A, students should know the main sources of tax law:

Statute:
- Income Tax Act 58 of 1962
- Tax Administration Act 28 of 2011
- Value-Added Tax Act 89 of 1991 (for VAT questions)
Case law:
Key decisions that define concepts like “gross income” and “trade”, for example:
- CIR v Lategan (1943) – definition of “amount” and timing.
- CIR v Genn & Co (1955) – “received by” concept.
- CIR v People’s Stores (Walvis Bay) (Pty) Ltd (1990) – fringe benefits & cash equivalents (advanced relevance).
- Port Elizabeth Electric Tramway Co Ltd v CIR (1936) – deductibility and trade expenses.
Interpretation notes & rulings (SARS) – help understand how SARS applies the law.
Practice (administrative procedures, assessment, objections).

Exam questions often expect you to apply statutory wording together with principles from case law, especially for:

Gross income definition.
Whether an amount is capital or revenue.
Whether an expense is deductible under section 11(a).

1.4 Key Definitions and Concepts Tested in TAX2A

Some definitions are repeatedly tested:

Gross income – for any year or period of assessment, in relation to any resident, the total amount, in cash or otherwise, received by or accrued to such resident, excluding receipts or accruals of a capital nature, but including specific amounts in paragraphs (a)–(n) of the definition.
Resident – defined differently for natural persons and other persons:
- Individuals: ordinarily resident test, or the physical presence test.
- Companies: place of effective management.
Trade – broad definition, includes every profession, business, employment, venture, etc.
Year of assessment – 12‑month period for which tax is assessed.

Examples of exam-type questions:

Define gross income and identify five important elements of the definition.
Explain the term resident for an individual, and apply it to a scenario where a person works overseas but has family and assets in South Africa.

Mastery of these definitions is essential, because they underpin almost every tax calculation.

2. Residence, Gross Income and Exempt Income

2.1 Determining Tax Residence (Individuals)

The starting point in almost every TAX2A exam is to decide whether a natural person is a resident or non‑resident, because that determines the scope of taxable income.

2.1.1 Ordinarily Resident Test

An individual is a resident if they are “ordinarily resident” in South Africa. This is a factual and subjective test, informed by case law.

Key points (from cases like Cohen v CIR):

“Ordinarily resident” means the country to which the person will, as a matter of habit, return from their wanderings.
Important factors (non‑exhaustive):
- Location of family and home.
- Location of assets, e.g. house, business, investments.
- Permanence of stay abroad (temporary vs permanent).
- Intention of the taxpayer – often supported by objective evidence (permanent job contracts, permanent residence permits).

If a student is given a scenario in which a South African doctor works in Canada for two years but leaves spouse and children at home in Johannesburg, with no permanent immigration plans, they will usually still be considered a South African resident.

2.1.2 Physical Presence Test

If a person is not ordinarily resident, they might still be a resident if they meet the physical presence test:

The test is met if the person is:

Present in South Africa for more than 91 days during:
- The current year of assessment, and
- Each of the five preceding years of assessment, and
Present in South Africa for more than 915 days in total during those five preceding years.

If the test is met, the person becomes a resident from the first day of the current year of assessment.

However, a person will cease to be a resident under this test if they are physically outside South Africa for at least 330 consecutive days, starting after they leave. For exam purposes:

Show the day counts clearly.
Indicate in which year of assessment they become resident or cease to be resident.

2.1.3 Non-Residents

If an individual is neither ordinarily resident nor meets the physical presence test, then they are a non‑resident. Non‑residents are taxed on:

South African‑source income (e.g. rental from SA property, remuneration from services rendered in SA).
Certain deemed‑source amounts, such as interest from SA (subject to exemptions), royalties, etc.

In TAX2A, exam questions may require:

Filtering which amounts are taxable for a non‑resident.
Distinguishing source rules for different types of income (e.g. source of employment income vs source of rental income).

2.2 Gross Income: Definition and Elements

The definition of gross income (in section 1) is central to TAX2A:

“Gross income”, in relation to any year or period of assessment, means, in the case of any resident, the total amount, in cash or otherwise, received by or accrued to or in favour of such resident, excluding receipts or accruals of a capital nature, but including specific amounts in paragraphs (a)–(n).

For TAX2A purposes, break it down into core elements:

Total amount
- Not just cash; includes non‑cash benefits, e.g. free accommodation, company car.
- Tested frequently via fringe benefit questions.
In cash or otherwise
- “Otherwise” includes assets, rights, services; the money’s worth principle.
- Must be capable of being valued in money.
Received by or accrued to
- “Received by”: actually received by the taxpayer or on their behalf.
- “Accrued to”: taxpayer has an unconditional right to the amount (even if not yet paid).
In favour of the taxpayer
- If the benefit is for the taxpayer’s own benefit, it’s within scope.
Excluding capital nature
- Revenue vs capital distinction essential.
- Proceeds from routine sales of trading stock: revenue.
- Proceeds from selling a personal car (not used for trade): capital.
Special inclusions
- Certain capital items are pulled into gross income by paragraph (a)–(n):
  - e.g. certain lump sums from retirement funds, restraint of trade payments, alimony (historically), amounts from share incentive schemes.

Exam technique:

When given a list of receipts, classify each as:
- Included in gross income (revenue nature or specific inclusion).
- Capital nature, possibly relevant for CGT instead.
Provide brief reasons with section or paragraph references where possible.

2.3 Examples: Applying Gross Income in Exam Questions

Consider the following receipts for the 2025 year of assessment for Thabo, an ordinarily resident individual:

Monthly salary: R30 000 × 12.
Annual performance bonus: R20 000.
Interest from South African bank account: R12 000.
Dividends from listed South African shares: R15 000.
Proceeds from sale of personal laptop: R4 000 (original cost R6 000).
Proceeds from sale of 1 000 listed shares (held as long‑term investment): R50 000 (original cost R20 000).
Employer gives Thabo a company‑owned cellphone for personal use (market value R3 000).

Step 1: Identify gross income items

Salary: yes – gross income (employment).
Bonus: yes – gross income (employment).
Interest: yes – gross income, later partially or fully exempt depending on interest exemption.
Dividends: generally exempt for individuals (section 10(1)(k)), but for systematic thinking include first in gross income then deduct as exempt income, or treat directly as exempt – some lecturers prefer explicit recognition.
Sale of personal laptop: usually capital, therefore excluded from gross income; possible capital loss for CGT, but personal‑use assets often disregarded.
Shares sale: capital in this context (long‑term investment, not trading), so excluded from gross income, but included in CGT calculation.
Cellphone benefit: fringe benefit – included in gross income at taxable value (determined per Seventh Schedule).

In exam computation:

Start from “gross income” list and clearly show which items are excluded or treated under CGT or as exempt income.

2.4 Exempt Income: Key Provisions for TAX2A

Exempt income is excluded from normal tax. Some exemptions particularly relevant in TAX2A include:

2.4.1 Dividends Exemption – Section 10(1)(k)

Most local dividends received by individuals are exempt from normal tax.
Dividends from foreign companies listed on the JSE may be partially exempt or subject to different rules.
Although exempt from normal tax, dividends may be subject to Dividends Tax (DT), which is a withholding tax at shareholder level (usually 20%).

For exam purposes:

Show that dividends are excluded from taxable income, but mention the section 10(1)(k) exemption if theory is tested.

2.4.2 Interest Exemption – Section 10(1)(i)

For individuals under 65:

A portion of interest income from SA sources is exempt, historically around:
- R23 800 (below age 65).
- R34 500 (65 and older).
  (Always check your prescribed material for exact current exam figures being used in your year, as lecturers sometimes fix numbers for exam consistency.)

Points to remember:

Applies only to natural persons.
Applies mainly to South African‑source interest (interest from SA banks).
Does not apply to interest earned from tax‑free investments, as those may already be fully exempt under other provisions.

Exam technique:

Sum total interest from qualifying sources.
Deduct the appropriate exemption amount.
Include only the excess interest in taxable income.

2.4.3 Foreign Employment Income Exemption – Section 10(1)(o)(ii)

This exemption is often referenced conceptually in TAX2A:

Applies to South African residents working overseas.
If a resident is employed for more than 183 days in a 12‑month period outside SA, of which 60 days are continuous, a portion of foreign employment income may be exempt (currently capped).
Common in advanced or Tax 3 modules; in Tax 2A usually tested conceptually, but some lecturers can ask computational questions using simplified figures.

2.4.4 Other Common Exemptions

Other exemptions that may appear in multiple‑choice or short theory questions:

Scholarships and bursaries (section 10(1)(q)) in certain circumstances.
Certain pensions and war pensions, limited categories.
Amount received by way of alimony or maintenance in some older contexts, depending on the year and legislative changes (your notes may emphasise the current position relevant to your module year).

When preparing for TAX2A at UJ, always cross‑reference your course pack and prescribed text, as not all exemptions are examinable at this level.

2.5 Typical Exam Pitfalls Related to Gross Income and Exemptions

Common mistakes:

Ignoring capital vs revenue distinction; including capital receipts in gross income incorrectly.
Assuming all interest is taxable without applying the interest exemption.
Forgetting to distinguish residents vs non‑residents in terms of worldwide income vs SA‑source only.
Not adjusting for timing (amounts accruing at year‑end vs during the next year).
Failing to label items “Exempt – s10(1)(k)” or similar; marks are often awarded for noting the correct reason for exclusion.

To avoid these errors, structure your answer lines clearly and reference the relevant section or exemption whenever you exclude an amount from taxable income.

3. Deductions, Allowances and Assessed Losses

3.1 General Deduction Formula: Section 11(a) and Section 23(g)

In TAX2A, the general deduction formula is fundamental. It consists of:

Positive test – section 11(a):
Allows a deduction for expenditure and losses actually incurred in the production of income, provided such expenditure is not of a capital nature, and is laid out for the purposes of trade.
Negative tests – section 23:
- Section 23(g): prohibits deductions of expenses not laid out or expended for the purposes of trade.
- Other subsections disallow certain private or domestic expenses, e.g. section 23(b) for domestic/private costs.

From case law (e.g. Port Elizabeth Electric Tramway Co Ltd v CIR), the expenditure must:

Be actually incurred – not just anticipated.
Be in the production of income – there must be a nexus (connection) between the expense and income.
Not be of a capital nature – routine, recurring expenses are generally revenue; once‑off, asset‑creating expenses often capital (and dealt with via capital allowances or CGT).
Be incurred in the course of trade – trade is broadly defined, but purely private activities do not qualify.

In exams:

When a list of expenses is given, you must check each item against the general deduction formula and the negative tests.
Provide short justifications, e.g.
“R2 500 entertainment for client meeting – deductible under s11(a); incurred in production of income, not of a capital nature.”

3.2 Specific Deductions Relevant to Individuals

Certain deductions are specifically allowed for individuals and sometimes override or supplement the general deduction formula:

3.2.1 Retirement Fund Contributions (Section 11F)

Section 11F provides a deduction for:

Contributions to pension funds, provident funds, and retirement annuity funds.
Deduction limited to the lesser of:
- 27.5% of remuneration or taxable income (before the deduction), and
- An annual monetary cap (e.g. R350 000 per year; refer to your exam year’s figures).

Unutilised contributions may be:

Carried forward to future years.
Treated as non‑taxable when lump sums or annuities are paid.

Exam approach:

Identify total contributions made in the year (split between employer and employee if needed).
Apply the 27.5% limit and monetary cap.
Track unused amounts (especially in comprehensive questions covering multiple years).

3.2.2 Medical Expenses and Medical Scheme Fees

South Africa uses a medical tax credit system, not pure deductions. For TAX2A:

Section 6A: Medical scheme fees tax credit (MTC) – fixed monthly credit per beneficiary.
Section 6B: Additional medical expenses tax credit (AMTC) – based on certain percentages of qualifying expenses.

Although credits are not deductions in calculating taxable income, they are often tested alongside deduction topics. In exam scenarios:

Calculate taxable income first.
Then apply tax credits to derive final tax liability.

Make sure to distinguish:

Contributions to a medical scheme vs
Out‑of‑pocket qualifying medical expenses.

3.2.3 Home Office Expenses (for Employees)

Home office expenses deduction is allowed under certain conditions, but often heavily tested in TAX2A as a conceptual question:

Must have a dedicated room used exclusively and regularly for trade.
Employee must earn mainly commission (over 50% of income from commission or variable payments), or be required to work from that home office.
Expenditure must be apportioned between private and business use (e.g. electricity, rent, interest on bond, etc.).

Typical exam twist:

Students try to deduct full rental of a flat or house, but only a portion is allowed if strict requirements are met.
For employees on fixed salary, without commission, home office deductions are often disallowed, unless very specific conditions are met.

3.3 Capital vs Revenue Expenditure

Being able to differentiate capital from revenue is crucial in TAX2A, because:

Capital items are not deductible under section 11(a).
Instead, capital costs may qualify for capital allowances or capital gains tax relief.

Indicators of capital expenditure:

Once‑off, large expenses.
Acquisition or improvement of an enduring asset.
The expense creates or enhances the profit‑earning structure.

Indicators of revenue expenditure:

Recurring, operational costs.
Wages, salaries, rent, utilities, routine maintenance.
Day‑to‑day business of earning income.

Examples in an exam scenario:

Buying a new delivery vehicle for R400 000 – capital; may qualify for a wear‑and‑tear allowance (section 11(e)).
Repairing the existing delivery vehicle (service, replacement of worn tyres) R8 000 – revenue, generally deductible under section 11(a).

When faced with borderline cases:

Focus on the long‑term benefit and nature of the expenditure.
Use case law logic (e.g. New State Areas Ltd v CIR, BP Southern Africa (Pty) Ltd v CIR) if required for theory questions.

3.4 Capital Allowances and Wear-and-Tear (Section 11(e))

Instead of deducting capital assets immediately, the Act allows depreciation allowances (capital allowances) over the useful life. For TAX2A, the key provision is section 11(e):

Wear‑and‑tear or depreciation allowance on movable assets (e.g. machinery, vehicles, computers).
SARS issues interpretation notes with write‑off periods, e.g.:
- Motor vehicles: often 5 years.
- Computers: often 3 years.

Exam procedure:

Determine the cost of the asset (excluding VAT if VAT registered and claiming input).
Choose the method:
- Straight line over SARS write‑off period, unless otherwise specified.
Pro‑rate for part of the year if the asset was acquired mid‑year.
Take into account private vs business use (e.g. company cars).

Worked example:

Asset: Computer purchased for R18 000 on 1 September 2024.
Year of assessment: 1 March 2024 – 28 February 2025.
SARS write‑off period: 3 years (36 months).
Annual allowance = R18 000 ÷ 3 = R6 000 per year.
For 6 months of the year of assessment (September–February):
Wear‑and‑tear = R6 000 × 6/12 = R3 000.

If there is private use, say 20%, then only 80% of the R3 000 = R2 400 is deductible.

3.5 Assessed Losses and Set-Off

If allowable deductions exceed income in a particular year, the result is an assessed loss:

For individuals carrying on a trade, this assessed loss can be carried forward and set off against future income from trade (subject to certain provisions and anti‑avoidance rules).
For companies, similar rules apply but with additional complexity in higher‑level tax modules.

In TAX2A:

You may be given multiple years and asked to track assessed losses.
Watch for ring‑fencing of losses from suspect trades (e.g. certain hobbies or secondary trades) – these may not be freely set off.

Example:

Year 1: Trade income R50 000; deductible expenses R70 000 ⇒ Assessed loss = R20 000.
Year 2: Trade income R100 000; deductible expenses R60 000 ⇒ Current year’s profit = R40 000.
Set off prior year assessed loss R20 000 ⇒ Taxable trade income = R20 000.

Always indicate:

Opening assessed loss.
Amount utilised in current year.
Closing assessed loss balance (if any).

3.6 Common Exam Issues in Deductions

Students often:

Treat all expenses as deductible, ignoring private/personal nature (e.g. clothing, groceries).
Forget to apportion mixed‑use expenses (e.g. cellphone used for work and personal calls).
Confuse capital allowances with revenue deductions.
Forget that some deductions are limited or subject to caps (e.g. retirement fund contributions).
Omit section references, losing easy marks in theory questions.

For UJ TAX2A exams, well‑structured deduction sections, with clear headings like “Allowable Deductions under s11(a)” and “Capital Allowances under s11(e)”, tend to score highly.

4. Capital Gains Tax (CGT) in TAX2A

4.1 Basic CGT Framework for Individuals

Capital Gains Tax (CGT) applies to the disposal of capital assets on or after 1 October 2001. For individuals:

CGT is not a separate tax; instead, a portion of the capital gain is included in taxable income via an inclusion rate.
For individuals, the inclusion rate is typically 40% (check your course notes for the applicable exam rate).
The tax on the capital gain therefore depends on the taxpayer’s marginal tax rate.

Basic steps:

Identify disposal of an asset.
Determine proceeds.
Determine base cost.
Calculate capital gain or loss: Proceeds – Base cost.
Apply annual exclusion.
Aggregate to determine aggregate capital gain or loss.
Apply inclusion rate to obtain taxable capital gain.
Add taxable capital gain to taxable income.

4.2 Key Definitions in CGT Context

Asset: Wide definition – includes property, shares, rights, etc.
Disposal: Includes sale, donation, exchange, loss, destruction, and certain deemed disposals (e.g. when ceasing to be a resident, emigration).
Proceeds: Amount received or accrued from disposal, including cash and non‑cash consideration (market value if not at arm’s length).
Base cost: Generally, the acquisition cost plus certain incidental costs (transfer fees, commissions, etc.), improvement costs, costs of defending title.

4.3 Annual Exclusion and Primary Residence Exclusion

For individuals:

There is an annual exclusion (e.g. around R40 000 in many recent years) – this is deducted from total capital gains for the year.
In the year of death, the exclusion is higher.

Primary residence exclusion:

On the disposal of a primary residence, the first R2 million of the capital gain is excluded from CGT, provided:
- The property is used mainly for residential purposes,
- Owned and ordinarily resided in by the taxpayer,
- Not primarily for trade (e.g. not mainly an Airbnb or office).

If the primary residence is used partly for business (e.g. rooms rented out):

CGT relief is apportioned; only the part relating to the residential use qualifies.

Example (simplified):

Proceeds from sale: R3 000 000.
Base cost: R1 000 000.
Capital gain: R2 000 000.
Since the primary residence exclusion is R2 000 000, the capital gain may be fully excluded (before annual exclusion).

Exam caution:

Lecturers often set tricky facts (e.g. partial use or time periods not occupied).
Always carefully read which part of the property was used as a primary residence.

4.4 CGT Calculation Example for an Individual (Exam-Style)

Assume Naledi, a resident individual in the 2025 year of assessment, has the following disposals:

Sale of listed shares:
- Proceeds: R80 000
- Base cost: R50 000
Sale of personal motor vehicle:
- Proceeds: R70 000
- Base cost: R120 000
Sale of a holiday home (not primary residence):
- Proceeds: R1 500 000
- Base cost: R900 000

Assume annual exclusion is R40 000 and inclusion rate for individuals is 40%.

Step 1: Calculate Individual Capital Gains/Losses

Shares:
Capital gain = R80 000 – R50 000 = R30 000.
Personal motor vehicle:
Personal‑use asset; CGT usually disregards gains and losses on personal‑use movable property (e.g. personal car).
⇒ Ignore in CGT.
Holiday home:
Capital gain = R1 500 000 – R900 000 = R600 000.

Total capital gains = R30 000 + R600 000 = R630 000.

Step 2: Apply Annual Exclusion

Aggregate capital gain: R630 000
Less: Annual exclusion: R40 000
Net capital gain: R590 000.

Step 3: Apply Inclusion Rate

Taxable capital gain = R590 000 × 40% = R236 000.

Step 4: Add to Taxable Income

This R236 000 is added to Naledi’s other taxable income (e.g. salary, business income) to calculate total taxable income.

4.5 Common CGT Exam Issues

Confusing gross income and CGT:
Students sometimes include capital proceeds in gross income. Remember, they belong in the CGT section.
Ignoring personal‑use asset rules:
Most personal‑use movable assets (e.g. furniture, personal car) – capital gains or losses are disregarded.
Forgetting the annual exclusion:
Many marks are lost by not applying the annual exclusion before the inclusion rate.
Mixing up inclusion rate with tax rate:
The inclusion rate is not the tax rate; it determines how much of the capital gain goes into taxable income.
Not tracking base cost adjustments, e.g. improvements, transaction costs.

For TAX2A at UJ, exam questions usually expect a full CGT schedule in clear, step‑by‑step format, with separate columns for proceeds, base cost, gain/loss, exclusions, and taxable capital gain.

5. Comprehensive Individual Tax Computation and Exam Technique (UJ TAX2A)

5.1 Layout of a Full Normal Tax Calculation

This section integrates all concepts into a typical TAX2A individual assessment question, as often seen at UJ or comparable institutions like UNISA or CUT. Many institutes set similar styles, so the structure is broadly applicable.

A typical required format:

Gross income
Less: Exempt income
Income
Plus: Special inclusions (if applicable)
Total income
Less: Deductions (general & specific)
Taxable income before taxable capital gain
Plus: Taxable capital gain
Taxable income
Normal tax on taxable income (using tax tables)
Less: Rebates
Normal tax payable
Less: Tax credits (e.g. medical, foreign tax) and PAYE
Net tax payable / (refund).

Marks are awarded for both the numbers and the correct labels, so clearly structure your answer.

5.2 Worked Comprehensive Example

Assume the following exam‑style scenario for the 2025 year of assessment:

Taxpayer:

Name: Sipho
Age: 35 (younger than 65)
Resident in South Africa for the full year.
Employed as an engineer, earning salary, receiving fringe benefits, having some investments and one asset disposal.

Given information for 1 March 2024 – 28 February 2025:

Salary from employer: R480 000 (PAYE of R110 000 withheld).
Bonus: R40 000.
Employer-provided motor vehicle:
- Cost to employer: R300 000 (including VAT).
- Motor vehicle made available for full year.
- No consideration paid by Sipho for private use.
- Employer covers all operating costs.
- Private use estimated at 60%.
Employer contribution to pension fund on Sipho’s behalf: R36 000 (7.5% of salary).
Employee contribution to pension fund: R24 000.
Medical aid contributions:
- Paid by Sipho to approved medical scheme: R3 000 per month for himself, spouse, and one child (3 beneficiaries total).
  Total annual contribution: R36 000.
- Qualifying out‑of‑pocket medical expenses: R8 000.
Interest from South African bank account: R20 000.
Dividends from JSE‑listed local companies: R12 000.
Rental income from a flat in Pretoria:
- Gross rental: R96 000.
- Deductible expenses:
  - Interest on mortgage bond: R40 000.
  - Rates and taxes: R8 000.
  - Repairs (ordinary, not improvements): R7 000.
CGT event:
- Sale of listed shares (held as investment):
  - Proceeds: R100 000.
  - Base cost: R60 000.
No other income or deductions.

Assume:

Individual tax brackets are standard SA progressive rates (you will be given a tax table in the exam).
CGT inclusion rate for individuals: 40%.
Annual CGT exclusion: R40 000.
Medical scheme fees credit (MTC) and additional medical expenses credit (AMTC) to be calculated per exam guidelines (assume standard values as in prescribed text).
Primary rebate only (Sipho is under 65).

5.2.1 Step 1: Gross Income

List all amounts received/accrued of a revenue nature:

Salary: R480 000
Bonus: R40 000
Fringe benefit – company car (taxable value):
For company car fringe benefits, the taxable value is often 3.5% of cost per month, or a rate stipulated in tax notes, adjusted for maintenance and business vs private use, but in many exam settings at TAX2A, lecturers will specify a method or provide the monthly fringe benefit amount. For example, assume:
- Taxable fringe benefit (per exam instructions): R10 500 per month (3.5% of R300 000).
- Annual amount: R10 500 × 12 = R126 000.
- If business use is proven and substantial, reduction applies. Assume no logbook and no reduction allowed for simplicity (UJ lecturers often specify).
  ⇒ Fringe benefit to include: R126 000.
Rental income: Gross R96 000 (deductions later).
Interest: R20 000.
Dividends: R12 000 (but exempt).
Capital gain on shares is not part of gross income – handled separately in CGT.

So Gross income (before exempt items):

Salary: R480 000
Bonus: R40 000
Fringe benefit (company car): R126 000
Rental (gross): R96 000
Interest: R20 000
Dividends: R12 000
Total: R774 000

5.2.2 Step 2: Exempt Income

Dividends from South African listed companies: R12 000 – exempt under section 10(1)(k).
Interest exemption (Sipho under 65):
Interest received: R20 000.
Assume exemption threshold in exam: R23 800 (typical).
Therefore, full R20 000 may be exempt, but some lecturers still prefer to show it as:
- Gross interest: R20 000
- Less: Exempt portion: R20 000
- Taxable interest: R0

For demonstration:

Exempt interest (section 10(1)(i)): R20 000.
Exempt dividends: R12 000.

Total exempt income: R32 000.

Income = Gross income – Exempt income
= R774 000 – R32 000
= R742 000.

No additional special inclusions are given, so Total income remains R742 000.

5.2.3 Step 3: Deductions

(a) Rental property expenses (linked to rental income)

Deductible expenses:

Interest on bond: R40 000
Rates and taxes: R8 000
Repairs: R7 000

Total rental deductions: R55 000.

Net rental income = R96 000 – R55 000 = R41 000.

In layout, either:

Show rental as net amount in gross income section, or
Show rental gross and then deduct expenses in the deductions section.
Both formats can work, but clearly label them.

(b) Retirement fund contributions – section 11F

Total contributions:

Employer contribution to pension fund: R36 000.
Employee contribution: R24 000.
Total: R60 000.

For the sake of TAX2A simplicity, suppose the exam question instructs that the entire R60 000 qualifies within the 27.5% limit and under the cap, so the full R60 000 is deductible (or you can calculate the limit if required).

(c) Other possible deductions

Job‑related expenses, if any, but none listed.
Medical scheme contributions and expenses are not deductions but lead to tax credits at the end.

So, Total deductions considered under taxable income:

Rental expenses (if shown here): R55 000 (or treat them as net rental).
Retirement contributions: R60 000.

To keep the structure consistent:

Start from total income R742 000.
Split out rental as net (R41 000) and treat salary/bonus/fringe separately.

However, for completeness:

Total income (R742 000) already included the rental gross of R96 000.
Deduct rental expenses: R55 000.
Deduct pension contributions: R60 000.

Total deductions = R55 000 + R60 000 = R115 000.

Taxable income before CGT = R742 000 – R115 000 = R627 000.

5.2.4 Step 4: Capital Gains Tax Calculation

Shares disposal:

Proceeds: R100 000
Base cost: R60 000
Capital gain: R40 000.

Total capital gains: R40 000.
Annual exclusion: R40 000.
Net capital gain: R0.

Taxable capital gain = R0 × 40% = R0.

Therefore, in this scenario, no taxable capital gain is added to taxable income.

Taxable income remains R627 000.

5.2.5 Step 5: Normal Tax Before Rebates

Use the individual tax tables for the 2025 year (actual brackets will be provided in exam). For illustration (fictional progressive rates):

Assume the tax tables (not actual) are:

Taxable income bracket (R)	Calculation of tax (R)
0 – 237 100	18% of taxable income
237 101 – 370 500	42 678 + 26% of amount above 237 100
370 501 – 512 800	77 362 + 31% of amount above 370 500
512 801 – 673 000	121 475 + 36% of amount above 512 800

Sipho’s taxable income: R627 000 – falls into the 512 801 – 673 000 bracket.

Tax = 121 475 + 36% × (627 000 – 512 800)
= 121 475 + 36% × 114 200
= 121 475 + 41 112
= R162 587 (rounded).

Normal tax before rebates: R162 587.

5.2.6 Step 6: Rebates

Sipho is younger than 65, so he qualifies for the primary rebate only.

Assume primary rebate (for exam year) is R17 235 (example figure; check your prescribed material).

Normal tax after rebate:

= R162 587 – R17 235
= R145 352.

5.2.7 Step 7: Medical Tax Credits

Medical scheme fees tax credit – section 6A (MTC):

Assume (per exam guidelines):

Monthly credit per first two beneficiaries: R364 each.
Monthly credit per additional beneficiary: R246.
(Values for illustration – always use those given in your exam.)

Sipho has 3 beneficiaries (himself, spouse, and one child).

Monthly MTC:

First two beneficiaries: 2 × R364 = R728.
Third beneficiary: 1 × R246 = R246.
Total per month = R974.

Annual MTC = R974 × 12 = R11 688.

Additional medical expenses tax credit – section 6B (AMTC):

Since Sipho is under 65 and presumably not disabled, the formula often is:

AMTC = 25% × (Qualifying medical expenses + Excess contributions – 7.5% of taxable income),
subject to specific exam guidelines.

Excess contributions over 4 times the MTC may also enter. However, to keep this example within typical TAX2A complexity, many exams either:

Ignore AMTC, or
Provide simplified assumptions.

Assume exam instructions: “Calculate only the medical scheme fees tax credit and ignore additional medical expenses tax credit.”

Therefore:

Tax liability after medical scheme fees tax credit:

= R145 352 – R11 688
= R133 664.

5.2.8 Step 8: PAYE and Net Tax Payable

PAYE withheld by employer: R110 000.

Net tax payable / (refund) calculation:

Normal tax after MTC: R133 664
Less: PAYE: R110 000
= R23 664 still payable to SARS.

Final answer: Sipho must pay additional tax of R23 664.

5.3 Exam Technique Tips for UJ TAX2A

Plan your time:
- Reading (10–15% of time),
- Calculation (70%),
- Review (15–20%).
Start with a clear structure:
- Always state headings: “Gross income”, “Exempt income”, “Deductions”, “Taxable income”, etc.
- Even if final answer is slightly off, correct structure earns partial marks.
Write brief reasons:
- E.g. “Dividends (local) – exempt s10(1)(k)”.
Use pro‑formas:
- CGT workings in a small separate schedule.
- Rental income schedule, business income schedule, etc.
Show workings:
- Do not only write final numbers.
- If you make an arithmetic mistake but show a correct method, you gain method marks.
Check sign errors:
- Deductions must reduce income; ensure subtraction signs are applied correctly.
- Losses and assessed losses often confuse students.
Do not mix sections:
- Keep CGT separate from gross income and deductions until you add taxable capital gain.
Use the information given:
- If the question specifies a fringe benefit value, do not recompute an alternative unless asked.

5.4 Linking to Other South African University Modules

Although this guide is tailored to University of Johannesburg – BCom Accounting: TAX2A, many principles and question styles are similar to:

UNISA modules like TAX2601 and TAX2602.
Central University of Technology (CUT) modules in BAcc/BCom programmes, where students search for “TAX2A study notes CUT” or “TAX2601 UNISA exam notes”.

Key shared themes:

Residence and source principles.
Gross income and exemptions.
General deduction formula and specific deductions.
Capital allowances and CGT.

Familiarity with the UJ TAX2A approach prepares students to read materials or past papers from UNISA TAX2601/TAX2602 and CUT Taxation 2A, because the Income Tax Act is national and the conceptual framework remains consistent.

6. Final Revision Checklist for TAX2A (UJ BCom Accounting)

To consolidate for exams in TAX2A: Taxation 2A (University of Johannesburg, BCom Accounting), use the following checklist:

6.1 Definitions and Theory

Can you define gross income, resident, trade, year of assessment, and capital asset?
Do you understand ordinarily resident vs physical presence test?
Can you explain the difference between capital and revenue receipts and expenditures?
Can you summarise section 11(a) and section 23(g), and list their key elements?

6.2 Computations

Can you:
- Determine gross income from a scenario?
- Identify exempt income correctly (dividends, interest exemption, some foreign income)?
- Apply the interest exemption for individuals under/over 65?
- Apply retirement fund contribution limits (section 11F) in simple scenarios?
- Calculate rental income and related deductible expenses?
- Distinguish fringe benefits, such as company cars and employer‑paid benefits, and include them at the correct taxable values?
- Prepare a full CGT computation with:
  - Proceeds,
  - Base cost,
  - Gains/losses,
  - Annual exclusion,
  - Inclusion rate,
  - Taxable capital gain?

6.3 Layout and Presentation

Do you have a standard template for:
- Normal tax calculation for an individual, and
- CGT schedule?
Can you present your answer in a clean, logical order, with clear headings and sub‑totals?
Are you able to reference key sections (e.g. s10(1)(k), s11(a), s11(e), s11F) succinctly?

6.4 Common Traps to Avoid

Including capital receipts in gross income.
Forgetting to apply the interest exemption.
Not apportioning mixed‑use expenses.
Ignoring annual CGT exclusion.
Misapplying or forgetting medical scheme tax credits.
Over‑claiming home office or travel deductions without the required facts.

6.5 Exam Strategy Summary

Start with questions where you feel most confident – typically computation questions, as they carry many marks.
Use margins or a “scratch pad” area to list all items from the question and tick them off as you use them.
Underline key words in the question (e.g. “resident”, “non‑resident”, “held as trading stock”, “personal use”).
Where time is short, still quickly outline the major steps and calculate approximate figures to secure method marks.

This TAX2A: Taxation 2A Study Guide for University of Johannesburg (UJ) BCom Accounting provides a structured, exam‑oriented approach to individual income tax, deductions, and CGT. Combined with lecture notes, tutorials, and past exam papers from UJ, it forms a solid foundation for mastering the scope and style of TAX2A assessments within the broader South African university taxation curriculum.