TAXATION TUTORIAL QUESTIONS

Question 2
Rutendo Kamukono aged 49 is employed as a sales and marketing executive with Chando
Kupisa Ice creams (Pvt) Ltd. Rutendo also sits on various corporate boards. She has
presented you with the following income and expenditure statement for the tax year ended
31 December 2015.

Income $
Salary 12 000
Bonus 6 000
Commission 8 000
Holiday allowance 800
Director` fees 2 000
Property rentals 10 900
Income from market gardening project 9 200
Annuity receipt 900
EXPENDITURE
Training expenses 4 500
Alimony to ex-husband 3 000
Subscriptions to marketing institute 200
Contributions to pension fund 600
NSSA contribution 200
RAF contribution 700
Personal consumption 8 600
Wages for market gardening employee 1 200
Market gardening inputs 700
Life insurance policies 680
Loan repayments 4 000
Donation to Marketing college 450

The following additional information is also provided:

(i) The annual annuity receipt derives from an annuity she purchased in 2009 for $3
500. The annuity is payable once a year over a 10 year period.
(ii) In March 2015, Rutendo spent $1200 in medical expenses for her 62 year old
husband Fatso. Fatso, who is partially disabled and unemployed.
(iii) In January 2015, she took advantage of Chando Kupisa ice creams` loan facility by
borrowing $12 000. During the course of the year she received free dairy
products from her employer amounting to $280.
(iv) The $4500 training expenses were incurred by Rutendo as tuition at a USA based
marketing seminar, which she attended to familiarise herself with the latest
developments in sales and branding techniques. Although the visit to USA was
 designed to enhance her sales skills, her employer did not pay for the visit, as it
was a private arrangement.
(v) In March 2015, Rutendo represented her employer at the Botswana Trade Fair.
Whilst at the Fair, she gave an opening speech for which she was paid an
honorarium in pula amounting to $900.
(vi) Rutendo enjoys the free use of a fully furnished house, in the Harare leave
suburb of Gunhill. The value of the furniture in the house is $8 000 and the open
market rental for the house is $1 200 per month.
(vii) Rutendo also enjoys the use of an Isuzu truck for both private and business
purposes. The vehicle has an engine capacity of 3400 cc, and costs the employer
$3 000 p.a to maintain.
(viii) In December 2015, Rutendo parted company with Chando Kupisa ice creams
(Pvt) Ltd. In return the company gave her a severance package of $10 800. This
amount includes the sum of $4 800, which was paid on the understanding
Rutendo would not take up employment with a rival company in the Greater
Harare area. In addition Rutendo Kamukono received her commuted pension
amounting to $30 000, on 31 December 2015.

REQUIRED:

(1) Calculate Rutendo` s income from all sources for the tax year ended 31 December
2015, together with the tax payable from employment. (16.5)
(2) Calculate tax payable from income from Trade and Investment. (3.5)
TAXRATES ANDALLOWANCES

Thefollowing taxratesandallowancesaretobeusedwhenansweringthequestions.

Taxrates–
Individualsemploymentincome

Yearended 31December
2015

Taxable Rate Amount Cumulativeinco

incomeband oftax withinband taxliability
US$ % US US$
Upto3600 0 3600 0
3601 to18 000 20 14 400 2880
18 001 to36 000 25 18 000 7380
36 001 to60 000 30 24 000 14 580
60 001 to120 000 35 60 000 35 580
120 001 to180 000 40 60 000 59 580
180 001 to240 000 45 60 000 86 580
240 001 andover 50

NB.TheAIDSlevyof3%ischargeable onincometaxpayable, afterdeducting credits.

Allowabledeductionsyearended31 December2015