QUESTION 1

a)
Thuto Fane chargeable income from employment BWP
Annual salary (P58,500 x 12 months) 702,000
Housing allowance (P2,000 x 12 months) 24,000
School fees - Thornhill Primary School 80,000
TIL contribution to medical aid 0
Thuto annual medical aid contribution 0
Contractual gratuity (P421,000 x 2/3) 280,667
1,086,66
7
Notes:
 The Botswana Tax Act exempts medical aid contributions from taxable
income
 1/3 of contractual gratuity is tax free and therefore 2/3 of contractual gratuity
is taxable

b)
Thuto's chargeable income from business
Mom's Bush Garden (MBG) taxable profits adjustment BWP
Net profit 532,479
Add back:
Donation to charity 10,000
Salary - Judy 400,000
Commercial royalty paid to non-resident 150,000
Purchase of plant 180,500
Purchase of shares 200,000
940,500
Less:
Dividend received 235,900
Capital allowances 146,332
382,232
Chargeable income from business 1,090,747

Thuto's share of chargeable income (P1,090,747 x 50%) 545,374

Notes:
 Donations are not deductible because they are not business expenses
 Salary to Judy is not an allowable deduction. Only salaries to employees are
allowable deductions
 The business did not deduct any withholding tax on commercial royalty paid to
non-resident. The commercial royalty will be deducted once the business has
submitted to the government the 15% withholding tax.
  The purchase of plant and shares are capital expenditures and are not
allowable.
 In Botswana the withholding tax deducted on dividends received is a final tax
and therefore theamount does not form part of chargeable income.
 Salary paid to Thuto’s son is allowable because he is employed as a manager
in the business.
 The holiday expenses are assumed to be employee benefits and not for the
owners and are therefore allowable deductions.

c)
Judy's share of partnership income
Share of business chargeable income (P1,090,747 x 50%) 543,574
Business salary 400,000
943,574

d)
Thuto's taxable income and tax liability
Chargeable income from employment 1,086,667
Share of business chargeable income 543,574
Taxable income 1,630,240

Tax calculation:
First P156,000 13,050
Next (P1,630,240 - P156,000) P1,474,240 x 25% 368,560
381,610
Less: P.A.Y.E 249,000
Tax liability 132,610

e)
The individual income tax return must be filed within three months of the end of the
tax year. Therefore Thuto was required to have filed his tax return by 30 September
2022.
f)
The final date for payment of individual tax liability is also 30 september 2022
QUESTION 2
a)
In Botswana withholding tax is payable within15 days after the end of the month
during which it was deductible
b)
Nonpayment of withholding tax the due date attracts interest at 1.5% for each month
or part of month the tax remains unpaid.

c)
Withholding tax calculation BWP
Administration expenses 0
Commission paid to a non-resident (P51,290 x 10%) 5,129
Consultancy fee paid to a resident 0
Royalties paid to a non-resident (P50,000 x 15%) 7,500
Interest charged by a non-resident (P62,202 x 15%) 9,330
Interest paid to local bank 0
Transport charges paid to a non-resident 0
Advertising fees to a resident 100,000 0
Salaries and wages 0

d)
Taxable income on withholding tax paid BWP
Commission (P5,129 / 0.10) 51,290
Royalties (P6,000 x 0.15) 40,000
Interest (P7,330 x 0.15) 48,867