continuity of the tax table

Answer all the questions

Question One

You are an assistant in the tax department of TX Tax Advisory Services. Your supervisor has asked you to compute the taxable income relating to the business of Taffy and Teddy who are in partnership. Their partnership agreement state that they share profits and losses in the ratio of 2:1 for Taffy and Teddy respectively. They are also entitled to annual salaries of P90,000 for Tarry and P60,000 for Teddy.

You are provided with the following information for the year ended 31 August 2022

Adjusted trading profits before capital allowances for the year P1,200,000

Capital transactions for the year

Asset at cost	Balance on 31 August 2021	Additions	Disposals
Plant and machinery Tarrys car- 30% private use Teddys car Commercial vehicle Fixtures and fittings Computer equipment	2,250,000 100,000 80,000 275,000 150,000 -	150,000 125,000* - - - 25,000	200,000 100,000 - - 40,000 -

*Toms usage of the new car remained the same

Disposals

Plant and machinery was disposed for P105,000 and the Tax Written Down Value (TWDV) was P80,000.

Tarrys old car was disposed for P90,000

Furniture and fittings was disposed for P7,500 and capital allowances of P17,500 had been granted.

Teddy earned P105,000 from his other business investments.

Required

Compute the tax liability for each partner and state the due date for submission of the tax return by each of the partners. (20 marks)

Explain how partnership business losses can be relieved. (5 marks)

Question Two

Macrochip Limited specialises in offering computer and software business solutions. You are provided with the following transactions, inclusive of Value Added Tax (VAT) where applicable, for the month ended 31 March 2022.

P

REVENUE

Consulting fees 200,000

Credit notes for Goods returned 6,000

Cash discount 2,000

Disposal of an asset 33,000

Warehouse rent received 28,000

Insurance claim received 55,000

Brokerage received (Non-residents) 91,000

Brokerage received (Residents) 166,000

Rent received for staff houses 5,000

Proceeds from Sale of Plant 116,000

Interest received 115,000

EXPENDITURE

Staff salary 526,000

Acquisition of a plant 364,000

Miscellaneous 28,000

Good sent to a branch 45,000

Interest paid 65,000

Required:

In respect of Macrochip Limited

(a)Explain the following types of supplies and list the above transactions into the following categories

(i) Exempt supplies;

(Ii) zero-rated supplies;

(iii) Standard supplies. (11 marks)

(b) Calculate the VAT payable or refundable.

Note: You should indicate by the use of zero (0) any items referred to in the question where there is no VAT impact to carry marks. (10 marks)

(c) State the date by which the VAT return for March 2020 must be submitted. What is the penalty if the company fails to submit in time (2 marks)

(d) Distinguish between tax evasion and tax avoidance (4 marks)

Total 25 marks