END OF MODULE EXERCISES

1. Questions Requiring Short Answers

1. State the difference between ‘assessable income’ and ‘taxable

income’?
2. Indicate in each case whether or not the following items should be
considered as assessable income:

a. Tips received by waiters and taxi drivers

b. Proceeds from the sale of a house
c. A lump sum compensation payout given to an employee for
the loss of eyesight as result of an industrial accident.
d. Lump sum Nasfund payout of K10,000 to a contributor.
e. Workers compensation payments over ten fortnights to worker
while recovering from industrial accident.
f. Interest due annually on a fixed deposit with a PNG bank and
which is at the request of the tax payer added to the principal
outstanding.
g. Lump sum representing three months' salary in lieu of (instead
of) notice received by an employee who has been dismissed.
h. An amount received from an insurance company under a ‘loss
of profits’ policy.
i. Shares in company issued to an employee in recognition of
forty years’ service with the company.
j. Rental income received on Gold Coast property by a (i)
resident (ii) nonresident taxpayer.

3. In each case state whether or not the following expenses would be

treated as allowable deductions:

a. Customs duty paid on goods imported which will later be sold.

b. You are employed in Port Moresby but you pay K500 to fly to
Madang each weekend where your family and permanent
home is situated.
c. You spend K2,000 repairing the roof of a house which you are
renting out to tenants.
d. You pay for meters to be installed in a fleet of taxis which you
are operating for hire.

2. Questions Requiring Calculation and Analysis

1. Gross Income K15,000

Exempt Income K3,000
Allowable deductions K5,000

Calculate A. Assessable income

B. Taxable income
 2. Assessable Income K30,00
0
Dependents rebates K1,030
Allowable deductions K1,000

If the tax rate is 30%, calculate tax payable

3. Allowable deductions K1,500

Exempt income K1,000
Gross Income K12,000
Tax rebate K100
If the tax rate is 25%

Calculate A. Assessable income

B. Taxable income
C. Net tax payable

4. Allowable deductions K1,500

Exempt income K300
Gross Income K10,000
Tax rebate K400
If the tax rate is 30%

Calculate A. Taxable income

B. Net tax payable

5. Gross Wages K20,700

Interest on debts received K220
Dividends from shares K180
Poker winnings K800
Sale of a family home K70,000
Allowable deductions K4,000
Exempt income K300
Calculate assessable income.

6. Wages earned K3,500

Dividends received K200
Sale of family house K10,000
Sales revenue K12,000
Cost of trading stock K4,000
Purchase of machinery K5,500

Calculate A. Assessable income

B. Allowable deductions
C. Taxable income