Bacc 406

Assignment 2

P1493090N

QUESTION 1

DETAILS $ $
Salary 80 000
Less pension contribution (3500)
Professional subscriptions (450) (3950)

Taxable income 76050

Tax on accumulated income note 1 23820
Projected income(12/8)*76050 114075
Tax projected income ( annual tax tables) 35730 (a)
Add bonus(6000-1000) 6000
Cash in lieu 10 000
Total annual income 130075
Tax on annual income ( tax tables) 42634 (b)
Tax on bonus and cash in lieu (a-b) 6904
Total tax due to date 30 724
Less medical aid(1200*0.5) (600)
30 124
Aids levy( 3%*42034) 904
Less accumulated tax 31 028
PAYE payable in august 21 050
9978

Comments $

Taxable income accumulated to August 76 050

Average monthly income (76050/8) 9506.25

Monthly tax (monthly tax tables) 2977.5

Tax for six months (2977.5*8) 23820

 Question 2

a)

Livestock reconciliation statement as at 31 December 2018

Details Tollies Heifers Bulls Calves Cows Oxen totals

Opening stock 10 20 40 100 200 320
Births - - 16 - - 16
Livestock theft (2) - (3) - - - (5)
Sales (40) 40
Promotions inwards 15 8 23
Promotions outwards (8) (15) (23)
Totals 13 2 17 41 108 160 331
FSV 250 300 500 80 350 450
Closing stock value 3250 600 8500 3280 37800 72000 125 430

Mr. Dawson

Computation of minimum tax liability for the year ended 31 December 2016.

Details Amount
Sale of soya beans 400 000
Closing stock livestock 125 430
Tobacco sales 60 000
Recoupment on irrigation 1 7500
Taxable income on livestock sales 2 4833
Subsidy on building a dam ( capital allowances) -
Less allowable deductions
Opening stock of livestocks (210 000)
Salaries and wages (38500)
Dipping chemicals (4000)
Livestock feed (8000)
Sinking of borehole (7th schedule paragraph 2) (5000)
Other tax deductibles farm expenses (4200)
Capital allowances 3 (8750)
Cost of building dam (46700)
Taxable income 272 613
tax@25% 68153.25
3% aids levy 2044.60
Total tax liability 70197.85

Notes

1. Recoupment
Sale proceeds (14000+4000) 18 000
Less ITV (10500)
Recoupment 7500

2. Sales proceeds 40 000

Less cost of animals 40/200*120 000 (24000)
Less livestock direct expenses: (1350)
Dipping chemicals 4000
Livestock feed 8000
Taxable income 14 650

Direct expenses=no of enforced sales/average stock *total direct expenses

40/(370+341/2)*12000=1350

Farmer makes an election taxable income will be spread over three years-1/3*14650=4883

3. SIA-Permanent road construction (0.25*20 000)=5000

Combine harvester (0.25*15 000)-3750
8750

References

T.Chitate, Betty S. Katiyo, Solomon T.Magumise & C.Muza-tax law and practice Zou Module
2012.

Sabelo Nare-tax law and practice in Zimbabwe 3rd edition 2012