LEGAL OPINION FOR MICASA

Background

As per your instruction provided on 1st June 2021 we are hereby formulating a legal opinion.
According to the evidence and documents provided and the position of law, I render the opinion
as follows.

Laws and evidences relied upon

Legislations;

i. The Income Tax Act, Cap 332

ii. The Tax Administration Act

Cases referred to;

i. Calvert V Wainwright. [KB 1947, 27TC 475]

ii. Down V Compston. [KB 1937 21 TC 60]

Issues addressed

1. As to whether the amount of five million given to Micasa as the award of best worker
of the year and the two million as to participation in teaching certificate students are
taxable under the law.
2. Whether a non-business Tax Identity Number (TIN) attracts any tax.

The opinion

Issue 1, as to whether the amount of five million given to Micasa as an award of best worker of
the year and two million as to participation in teaching certificate students are taxable under the
law.

It is the requirement of the law that an income from employment shall be subjected to income
taxation. Income from employment can be referred to mean any individual’s gain or profit from
any employment. Furthermore, the law states that any payment of wages, salary, payment in lieu
of leave, fees, commissions, gratuity or any other subsistence travelling, entertainment or other
allowance received in respect of employment or service rendered shall be included in calculating
an income from employment.
The issue turns up on the question whether voluntary gifts and other tips received from other
person other than the employer are subjected to income taxation. This matter was addressed in
the case of Calvert V Wainwright1 whereas an employed taxi driver received tips from the
passenger. The court held to the effect that, tips received by a man as a reward for service
rendered, voluntary gifts made by people other than the employers, are assessable to tax as part
of the profit arising out of employment if given in ordinary way as a reward from services.

It can be noted that, any profit of the employee will be subjected to income tax only if arising
from the employment or services rendered. If it appears that the profit is not arising out of the
employment, then will not be assessable to tax. This was stipulated in the case of Down V
Compston2 in which the employee was assessed to tax on his private game winnings and the
court was of the view that the winnings did not arise from his profession or vocation therefore
was not taxable under income tax.

Therefore, since the amount of five million given to Micasa as an award of best worker of the
year and the two million as to participation in teaching certificate students are directly connected
to his employment then they be assessed to income tax as stipulated in the case Calvert V
Wainwright.3

Issue 2, Whether a non-business Tax Identity Number (TIN) attracts any tax. A non-business
Tax Identity Number (TIN) was created for the purpose of securing PAYE returns and not to
attract any new tax. This is in accordance with the directives given by the tax authorities
whereas;

On 18th August 2020, the Tanzania Revenue Authority issued a public notice informing all
employers to comply with online system for filing tax returns. Among other matters, the notice
directed that each employee must now have a TIN number for purposes of filing PAYE returns.

Therefore, a non-business Tax Identity Number (TIN) do not attract any tax rather it is used to
keep the records of the tax payer particularly in PAYE returns.

Disclaimer

1
[KB 1947, 27TC 475]
2
[KB 1937 21 TC 60]
3
[KB 1947, 27TC 475]
The opinion expressed herein are given to you solely for your own use in connection with the
facts in hand and may not be relied up on by you or any other person or entity for any purpose
whatsoever without our prior consent.

Conclusion

Basing on the evidences given above the amount given to Micassa will be assessed to income tax
and a non-business Tax Identity Number (TIN) attracts any tax wil only be used for recordings
and not to attract new tax.