Taxation of International Executives South Africa

Assignment Task

Blessing Mbambo, ordinarily resident in South Africa, aged 31, is married to Nolusindiso. They have two children, aged 4 and 6. Blessing is an of RAM (Pty) Ltd (‘RAM’). RAM is a manufacturer of computer equipment. Blessing is a senior consultant at the company where he sells and installs new and upgraded IT systems. In his spare time, he designs and maintains websites for a growing client base in the Gauteng area. He also lectures part-time at the university in Gauteng.

During the 2023 year of assessment, Blessing was sent to China to complete a course on systems security and at the same time to recruit top system developer to work for RAM. He did not return to South Africa until the end of the course on 31 January 2023.

During the year of assessment ended 28 February 2023, Blessing received a lump sum bonus of R10 000 for recruiting two system developers from China during his stay there Blessings also had billings to his own website clients amounting to R110 000. This does not include one billing of R15 000 whose payment was received on 27 February 2023 for a website project which will only be started on 1 March 2023. He received a total of R80 000 from his part-time lecturing position. The arrangement with the university is that Blessing pays his own travel and accommodation expenses.

On 1 March 2021, Blessing received a restraint of trade payment of R360 000 for agreeing not to compete against RAM should he resign from the company. The terms of the contract include a clause which stated that he would have to repay the amount to RAM together with damages if he breached the contract. The period of the restraint was for two years, ending 28 February 2023.

Blessing’s work commitments had taken a toll on his marriage resulting in a divorce from his wife, Nolusindiso. As per the divorce agreement Nolusindiso is ordered to pay Blessing R4 000 per month effective from 1 September 2022.

Other income received included:

• Gross dividends received of R7 000 in respect of SA-listed company shares.
• Foreign dividends of R6 000. These dividends were not subject to any foreign withholding taxes. Blessing does not own 10% or more of the shares in any foreign companies.
• Interest of R19 000 on local interest-bearing deposits.
• Foreign interest of R5 500.
• An annuity of R1 000 per month from his family trust from 1 March 2022 to 28 February 2023.
• An amount received of R25 000 of 30 June 2022 from the commutation of a purchased annuity. The annuity was originally purchased on 1 July 2019 for R35 000 and consisted of a monthly payment of R425 for 12 years, starting on the purchase date.

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