Banda Plc is a company engaged in manufacturing. The company was incorporated, and commenced

its operations in 2005. In January 2019, the directors estimated the provisional taxable profit

for the company for the tax year 2019 to be K15, 600,000. However the Directors revised the

provisional taxable profit to K10, 200,000 in February 2019 following the loss of a major

customer to one of the company's major competitors.

The company made a profit before tax, as per accounts, of K14, 288,200 for the year ended

31December 2019. The profit figure of K14, 288,200 was arrived at after taking into account

the following items:

(1) Investment income which included rental income of K136,000 (gross), Treasury bill interest

of K34,000 (net), dividends K62,000 (net), and copyright royalties of K36,000 (gross).

Withholding tax in each case was paid on the appropriate due dates.

(2) Profit on sale of office equipment of K32, 500. The office equipment had a net book value

of K57, 500 and an income tax value of K40, 000. It was sold for K90, 000.

(3) Wages and salaries of K24, 605,000. Included in this figure is an annual salary for the Chief

Executive Officer (CEO) of K680, 000, employee's pension benefits of K1, 340,000 and

employee's funeral grants of K340, 000. The company has accommodated the CEO in a

company owned house which currently has a market value of K1, 200,000.

(4) Entertainment expenses which included K34, 500 incurred in entertaining major customers,

K16, 500 incurred on entertaining employees at the end of year party and K9, 500 incurred on

a special dinner for the company's major suppliers.

(5) Professional and legal fees which included the following:

Legal fees in connection with an issue of K1 preference shares

Legal fees for trade debt collection

Legal fees for recovery of loans from former employees 23,500

26,400

16,500Legal fees in connection with an action brought against a supplier for breach of contract 32,000Fees in connection with acquisition of new lease of business premises

Accountancy, audit and taxation fees 16,800

420,000535,200(6) Bad debts expenses which included trade debts written off K280, 000, decrease in specific

provision K46, 000, increase in general provision K18, 500, loans to former employees written

off K88, 000 and trade debts previously written off now recovered K75, 000

7) Miscellaneous expenses which included:

Distribution expenses

Depreciation of tangible non-current assets

Amortisation of intangible assets of

Advertising

Gifts to employees (Food hampers costing K200 each)

Gifts to customers (Banda Plc branded coffee mugs costing K30 each) K 709,400

K 287,600

K 54,000

K 26,600

K 8,000

K 6,000

K 1,091,600Additional information:

(i) Buildings

At 1 January 2019, the company held buildings which were constructed and brought into use

in the previous tax year (i.e. the tax year 2018) at a total cost of K2, 500,000. This comprised

land with a cost of K500,000, general offices of K180,000, staff canteen with a cost of

K120,000 and factory building with a cost of K1,700,000.

(ii) Implements, plant and machinery

On 1 January 2019, the Income Tax Values of implements, plant and machinery were as

follows:

Mitsubishi Canter Van (Original cost K120, 000)

Pool car (original cost K80, 000)

Office equipment (original cost K80, 000) K 90,000

K 16,000

K 40,000During the year ended 31 December 2019, the following purchases and disposals of assets took

place:

4 March 2019 Purchased Toyota Hilux van (single cab) K 150,000

14 June 2019 Purchased Jeep Grand Cherokee motor car K 280,000

16 July 2019 Purchased Toyota Fortuner motor car K 270,000

18 August 2019 purchased new manufacturing equipment K 650,000

12 October 2019 Sold office equipment (K 90,000)

20 December 2019 Sold pool car (K 25,000)

The pool car was used in the operations of the marketing department but it had private use of

25% by the company's Marketing Manager and had a cylinder capacity of 1,800 cc. The Jeep

Grand Cherokee motor car is the Managing Director's personal to holder motor car and it has

a cylinder capacity of 3,000 cc. The Toyota Fortuner motor car is the Finance Director's

personal to holder motor car and it has a cylinder capacity of 2,600 cc.

Required:

(a) State the date when Banda Plc was required to submit the return of provisional income tax

in respect of the tax year 2019 and explain the consequences of submitting the return late.

(3marks)

(b) Compute the amount of the provisional income tax paid by the company during the tax year

2019, stating the due date for each instalment. (2 marks)

(c) Calculate the following values for Banda Plc for the tax year 2019:

(i) The capital allowances on buildings (2 marks)

(ii) The capital allowances on implements, plant and machinery (3 marks)

(d) Compute the final taxable business profit after capital allowances for Ncwala Plc for the

Tax year 2019. (5 marks)

(e) Compute the Income tax payable by the company for the charge year 2019. (3 marks)