Illustration 01

Calculation of Maximum allowable deductions

35 Hectare plot -
Clearing the land 2,500,000
Temporary farm road 1,000,000
Water reservior 7,000,000
Drainage system SIA (25%*1200000) 300,000
Abertoir (25%*11300000) 2,825,000
Staff housing units -SIA ( -
Farm School -SIA (25%*800000) 200,000
Teachers house (25%*1200000) 300,000
Total deductions 14,125,000

Illustration 02

Livestock Reconciliation statement

Bulls Cows Oxen Calves
Bal b/d 4 10 14 13
Purchases 10
Births 13
Promotions inwards
Subtotal 4 20 14 26
Deaths -3
Sales -5
Promotions outwards -7
Closing ba 4 15 11 19

Illustration 03

Class No FSV Value

Heifers 42 13000 546,000
Ox 20 11000 220,000
Bulls 4 17000 68,000
834,000

Illustration 04

Enforced sales tax

Sales 4,000,000
Deductions
Cows (10*15000 150,000
 Ox (25*13000 325,000
DLE 67,021 542,021
Taxable Income 3,457,979

Annual taxable income 1,152,660

Direct Livestock Expenses

DLE = 35/235*450000 67,021.28

Illustration 05

1 If ACCL is not exceeded

Restocking Allowance = Cost of restocking /2

2 If ACCL is exceeded

Restocking allowance = A/2*B/C

93000/2*200/400
$ 23,250.00

Illustration 06

Calculation of recoupment

Asset Selling Price ITV@31/12/2021P/Recoupment Cap All

Land 42,000,000 N/A N/A N/A
Farm hous 32,500,000 N/A N/A N/A
School 522,449 400,000 122,449 400,000
Tractors 4,750,000 2,500,000 2,250,000 2,500,000
Dam 51,000,000 N/A N/A N/A
Fence 6,900,000 N/A N/A N/A
Isuzu 365,714 400,000 (34,286) -

Deemed SP =DC/AC*ASP
School 800000/4900000*3200000 522,449
Isuzu 800000/7000000*3200000 365,714

1 Assets which do not rank for capitla allowances will not have any recoupment
 2 For assets which qualified for capital allowances under deemed cost , deemed selling prices must be used
3 Expenses which qualified to be deducted under the 7th schedule allowances , do not result in recoupment

Illustration 08

Mutsai's minimum taxable income for the year ended 31/12/2021

Sales of maize 10,500,000
Pigs 9,000,000
Dividends -
Interest from POSB -
Donations of maize 700,000
Tractor -SIA (25%*4400000) (1,100,000)
WATER Tank -25%*900000 (225,000)
Borehole (1,000,000)
Farm wokers compun(25%*15000) (3,750,000)
Farm House -
Fencing (2,800,000)
Fowl runs(25%*78000) (19,500)
School (25%*800000) -
Mazda Altezza 0.25*800000 (200,000)
Ford Range(20%*800000*70%) (112,000)
Electricity (80%*1000000) (800,000)
Stumping & Clearing of land (1,500,000)
Contour ridges (1,000,000)
Taxable income 7,693,500
Tollies Heifers Total
9 0 50
7 17
13
4 3 7
13 10 87
-3
-5
-7
13 10 72

A farmer who sells livestock under enforced sales , may elect to

have the income taxed over three years in equal instalments
If the farmer does not make an election, the whole amount will be taxed

Actual Recoup
N/A
N/A Asset Cost Op ITV Cap All Cl ITV
122,449 School 800,000 600,000 (200,000) 400,000
2,500,000 Tractors 5,000,000 3,750,000 (1,250,000) 2,500,000
N/A Isuzu 800,000 600,000 (200,000) 400,000
N/A
(34,286)
d selling prices must be used in computing recpupment
, do not result in recoupment
Regisrtered Operator
Sales Charge output tax
This is a tax that an operator is collecting from
This tax must be paid to ZIMRA

Purchase goods / Incur expenses

Your supplier or service provider will also cha
This is called input tax
This is a tax that is claimable from ZIMRA

Output tax (tax on sales )

Input tax (tax on purchases )
Tax payable to or refundable from ZIMRA

Illustration 01

Computation of VAT liability by each entity

A B C F/Customer
Output tax (14.5%*50 725 2,900 4,350 -
Less: Input tax ( - 725 2,900 4,350
VAT payable 725 2,175 1,450 -

Zero rated Exempt Standard

Charge VAT @ 0% No VAT is charged Charge VAT at 14.5%
Entity can claim input VAT Entity cannot claim inoput VAT Entity can claim input VAT

Illustration 02

Computation of VAT payable

Output VAT
$ rate VAT
Sales 8,000,000 14.50% 1,160,000
Sales returns (800,000) 14.50% (116,000)
Total Output VAT 1,044,000
Input VAT 14.50% -
Standard rated supplies (2,000,000) 14.50% (290,000)
Zero rated supplies (600,000) 0.00% -
Rent (1,350,000) 14.50% (195,750)
Communication Expenses (650,000) 14.50% (94,250)
Printing & Stationery (300,000) 14.50% (43,500)
Staff costs (Exempted) - 14.50% -
Repairs & Maint (650,000) 14.50% (94,250)
Transport Expenses (350,000) 14.50% (50,750)
Depreciation - 14.50% -
Marketing expenses (200,000) 14.50% (29,000)
VAT liability 246,500

Illustration 03

A trader should register for VAT if his sales reach $4800000 or $400000 per month
In case of Todd, since his sales exceed the threshold of $400 000 per month right from the first month,
he is expected to apply for registration from 1 January

Illustration 04

Registration threshold
When testing the registration threshold, the following items / supplies must be excluded
1. Income from the sale of plant and machinery and other items used in trade
2. Exempmt supplies
3. Sales arising from abnormal or non recurring circumstances

Kim Ltd
Standard rated sales 3,000,000
Sales of outdated machinery -
Exports to SA 1,500,000
Exempt supplies -
Total 4,500,000

Kim Ltd does not have an obligation to register for VAT

Illustration 05

VAT return for January & February Inclusive of tax 14.5/114.5

Output VAT Exclusive of tax 14.5/100

Invoices issued (14.5/114.5*3000000) 379,913
Cash sales (14.5/114.5*1500000) 189,956
 Sale of old computer (14.5/114.5*200000) 25,328
Total output VAT 595,197
Input VAT
Purchase of Wood ( 14.5/114.5*150000 (18,996)
Prchase of computers (14.5/114.5)*600000 (75,983)
Petrol Costs (Exempt) -
Van Repai(14.5/114.5*120000) (15,197)
VAT Payable 485,022

Illustration 06

Cessation of trade

a Tax obligations upon deregistration

Inform the CG of the intention to deregister within 21 days
Account for output VAT on stocks and assets on hand
VAT registration certificate should be surrendered

Output tax upon deregistration

Stocks (14.5/114.5*850000) 107,642
Cash -
Dryers (14.5/114.5*350000) 44,323
Mazda 323 ( -
Commercial Lorry (14.5/114.5*200000) 25,328
Output VAT 177,293
an operator is collecting from customers
paid to ZIMRA

service provider will also charge VAT

is claimable from ZIMRA

xxx
(xxx)
xxx

Charge VAT at 14.5%

Entity can claim input VAT
the first month,

14.5/114.5
Illustration 01

Invoice Basis
VAT is computed and paid when an entity receives an invoice from the supplier or when it issues
an invoice to a customer even if thogh cash has not been paid or received

Output VAT (500000*14.5/100) 72,500

Inpout Tax (300000*0.145) 43,500
VAT payable 29,000

Cash Basis
VAT is calculated and remitted to ZIMTA only when the entity pays the supplier
or when the entity receives cash from the customers

Output VAT (220000*.145) 31,900

Input Tax (200000*0.145) (29,000)
VAT payable to ZIMRA 2,900

Illustration 02 NPQ

When goods are goods are supplied to a related party, the time of supply is when goods are removed from
the premisesof the seller (date of delivery)
In this case , the generator was removed on 15 October , so 15 Octobee is the date of supply

Illustration 03 RSE

In a construction contract, the time of supply is the date on which each certification is given

So the trigger point of VAT in this case is 30 April 2014.

Output VAT (10%*5600000) 560000 14.5/114.5 70,917.03

Credit note = Sales returns

Debit note = Increasing invoice amount previously billed to a customer
Customer was undercharged

Illustration 04

The cost of a fiscal tax device is divided into 2 parts

50% of the cost is claimed as input tax , while 50% qualifies for capital allowances
Inout VAT 50%*200000 100,000

Capital Allowances
SIA 25%*100000 25,000

Illustration 05

Computation of input Tax for the year

Cost of Nissan D Cab (N/A) -
Canopy (14.5%*600000) 87,000
Fuel (Exempted) -
Repairs 14.5%*156000 22,620
Insurance & licenses (Exempted) -
109,620

Illustration 06

Computation of the input tax claimable

Input tax 14.5/114.5*22000 2,786.03

Illustration 07

Motoring benefit 144000

Out put tax (14.5/114.5*144000 18,235.81

A category C registered operator should pay tax on a monthly basis

Output tax monthly (xxx/12) 1,519.65

Illustration 08

Output Tax
Local sales (14.5/114.5*1300000 1,300,000 0.1266375545852 164,629
Export sales 800,000 0% -
Nissan Almera 72,000 9,118
Mercedes Benz 108,000 13,677
Ford Ranger 144,000 18,236
205,659
Input Tax
Raw materials (520,000) (65,852)
Utility costs (38,000) (4,812)
Motor Vehicle Expenses (20,000) (2,533)
Diesel for car - 0 -
Petrol for truck - -
Staff food Stuff - -
Salaries and wages - -
Consumables (40,600) (5,141)
Communication Expenses (40,300) (5,103)
VAT payable 122,218

-
-
-
-
0
0
are removed from