Tivest (Pty) Ltd (‘Tivest’)

Tivest is a South African resident holding company with investments in a number of resident subsidiaries. Tivest earns dividends and interest from its investments, and it also provides administrative and management support, for which it charges fees to its subsidiaries. The total income of the company comprises 40% dividend income, 25% interest income and 35% management fees. The company meets the ‘trade’ requirement for South African tax purposes.

Tivest’s employee costs are made up of salaries and wages, and a provision for leave pay in respect of its head-office employees.

For Tivest’s year ended 31 December 2024, the salaries and wages expense included an amount of R80 000, which was paid to the marketing director of Tivest on 1 April 2024 as a sign-on bonus to keep him tied to his service contract for 24 months. The managing director will be required to repay a proportionate share of the full sign-on bonus if he resigns before the end of the 24-month period.

Source: Adapted from Wits. 2001.

Runnersup (Pty) Limited

Email

From: Milan Dakovic, Financial Accountant of Runnersup (Pty) Limited

Good day,

I am trying to finalise our tax calculation for the year ended 29 February 2024 and there are some transactions that I am unsure about. I hope that you can assist me in understanding the tax effects of these transactions.

To give you some background: Runnersup (Pty) Limited operates a shopping and home delivery service in Sandton, Gauteng. We employ a number of shoppers, packers and drivers, as well as administration staff. As a socially conscious employer, Runnersup promotes a policy of maintaining happy and contented staff and promoting staff development. We do not conduct any trade of moneylending.

My query relates to the following transactions that Runnersup carried out during the year of assessment ended 31 December 2024:

1. On 30 April 2024, Runnersup paid R200 000 to Mr Alan Brede, a sales manager who resigned from his employment. The R200 000 was paid in return for an undertaking by Alan not to work for a competing organisation within 10 kilometres of Runnersup’s head office for 5 years. On the same day, Runnersup also paid Alan R82 000 in leave pay, representing leave days accrued but not taken. The payment of leave was a condition of Alan’s employment contract.

2.   Runnersup paid its attorneys R6 500 to draw up the agreement referred to above.

3.   Runnersup also paid its attorneys R3 800 to assist in recovering outstanding debtors.

4.  The Human Resources Director of Runnersup approved an award of R2 000 per month to Mrs Kipuka, the widow of an employee who was killed in a motor vehicle accident while making a delivery to a client on 14 April 2024. In terms of a court order, Runnersup was required to pay R2 000 per month to Mrs Kipuka, who was dependent upon the employee at the time of his death, from 20 April 2024 onwards. Runnersup paid legal costs of R5 000 for legal advice relating to this claim.

5. Runnersup concluded learnership agreements with two employees, both of whom hold NQF level 6 qualifications. The learnership agreements have been registered with the relevant SETA and have been allocated the necessary codes:

a.  Chika entered into a ten-month learnership agreement to learn how to become a cashier. She completed this learnership agreement on 31 October 2024.

b.  Aadan, who is a ‘person with a disability’ entered into an 18-month leadership agreement on 1 June 2023; he is learning to be a creditors clerk. His agreement was completed on the 30 November 2024.

6.   Runnersup paid an electrical contractor R1 400 to repair an electrical plug socket in its offices.

Source: Adapted from Mitchell & Mitchell, LexisNexis. 2021.

Rowen (Pty) Ltd.

Rowen (Pty) Ltd is a VAT-registered academic bookstore. The store had the below transaction in the period ended February 2025.

Local Sales – R 455 200

(All amounts include VAT unless otherwise stated)

Source: Chidi, L. 2025.

R

Consulting fees from South African clients

5 000 000

Consulting fees from clients in Mauritius and Namibia

2 000 000

Dividends from South African listed companies

30 000

Interest from Mauritian bank account

       2 800

Total receipts

7 032 800

R

Salaries paid to staff working in the South African head office

32 000 000

Contributions to the staff pension fund

2 600 000

Annuity paid to the widow of a deceased employee

60 000