Northrise University

30029 Kitwe - Ndola Dual Carriage Highway. P.O Box 240271, Ndola, Zambia.

ASSIGNMENT COVER SHEET

Student ID: 1905504

Student Name: Patrick Chibabula

Course Code: ACC 206

Course Title: Taxation 1

Instructor Name: Mr. Elisha Sakutemba

Essay/Assignment Title: Assignment One

Due Date: 21st September, 2020

Declaration:
I acknowledge that submitting this document binds me to the following:
To the best of my knowledge, I assert that no part of this assignment has been copied from the work of anyone else, be it another stude
or any other author or from any source except where due credit is given in the text below, or has been written for me by someone else
except where the relevant instructors and authorities have explicitly permitted such collaboration .

SIGNATURE: P. Chibabula

Instructor’s Comments:

GRADE [ ]
Assignment One 2

Question 1

Calculate Chanda Ltd.’s corporation tax liability for the year ended 31 January 2018.Note:

Your computation should commence with the profit before taxation figure of K305, 500, and

should also list all of the items referred to in notes (1) to (5), indicating by the use of zero (0)

any items which do not require adjustment.

Solutions

 
 Details  K’000 K’000
 Profit before taxation   305.5
 Add;  
 Depreciation  14.7
 Gifts and donations  3.5
 Qualifying charitable donations  1.1
 Impairment loss  0
 Lease of motor cars (12.8 X 25%)  3.2
 Data protection fine  6.4
 Legal fees – renewal of a 15-year property lease  0
 Interest payable  0 28.9
Trading profit    334.4
 Less;  
 Qualifying charitable donations   (1.1)
 Taxable busines profits   333.3

Corporation Tax Liability

Corporation tax liability = Taxable business X Corporation tax rate

Corporation tax liability = K333,300 X 35%

Corporation tax liability = K116,655

Therefore, Chanda Ltd.’s Corporate tax liability = K116,655

Notes;
Assignment One 3

1. Gifts to customers are only an allowable deduction if they cost less than £50 per recipient

per year, are not of food, drink, tobacco or vouchers for exchangeable goods and carry a

conspicuous advertisement for the company making the gift.

2. A specific bad debt is deductible if it can be proved that it is bad or likely to become

bad. No deduction is allowed for impairment provisions/bad debt incurred by the

corporation for debts that are secured against capital expenditure.

3. The general rule is that input tax on the supply or importation of motor cars is non-

deductible. Thus, these are only allowed if the lease is used wholly and exclusively for

the purpose of the business

4. Fines are generally not allowed; they include fines for traffic light and fines for

breach of contracts

b) Expenses of renewal (not the original grant) of a lease for less than 50 years are

deductible when they relate directly to trading activities.

5. Interest payable on short term borrowings such as business accounts overdraft is

allowed on the accrual basis. No adjustments are required to the accounting profits in respect

of the interest. Interest overdue tax is not allowed.