Certificate in Accounting and Finance Stage Examination

November 18,2023
35 minutes – 19 marks
Additional Reading Time – 5 minutes

CAF 2 -TAX PRACTICES

Test-6
Instructions to examinee
(i) Answer All 3 Questions
(ii) Answer in Black pen only

Question-1
Comment (in short form) whether following business expenses are allowed as deduction?
1) Cess paid to the government on the profits of the company
2) Donation in kind to a relief fund run by the Government of Sindh
3) Payment to Monsoon Hotel for holding the annual get-together function for the employees of the
company and their families
4) Salaries paid, in cash, to temporary employees in rural areas. Tax was deducted as required under the
law. The monthly salary of each employee was Rs.47,000
5) Professional tax paid at Rs. 200,000 to the Government of Punjab. The tax is payable annually
irrespective of the income of the company.
6) A fine of Rs. 50,000 paid for violation of the regulations issued by the Securities and Exchange
Commission of Pakistan (SECP).
7) Paid Rs.45,000 for personal mobile phone bill.
8) 5% commission paid by Association of Persons to all its members.
9) Paid water charges Rs. 30,000 in cash. Total is Rs. 270,000 for the year.
10) Paid Rs. 2,500,000 for the purchase of Machinery (10)

Question-2
Discuss whether the following tax services can be provided to an audit client which is not a public interest entity:
(i) Preparation of tax returns
(ii) Tax calculation for the purpose of preparing accounting entries (05)

Question-3
Determine the canon which is being complied in the following independent scenarios:

1. In order to facilitate the taxpayers, Federal Board of Revenue has provided the option to pay taxes through
mobile banking application.
2. With the progress of e-commerce business in Pakistan, the government has imposed taxes on this business;
3. The government has decided to impose new taxes and abolish taxes with little compliance by taxpayers
4. The government has imposed additional tax on persons who are earning per annum income of more than
Rs. 100 million
(04)