Country - Zambia

QUESTION ONE

(a) Mr Lungu has lodged disposal documents with the ZRA of his property in Kabulonga (High Cost Area); ZRA is suspicious with the selling price he indicated of k550, 000 as it is a prime area. After an evaluation of the value of properties in the same area, it was found out that the prices in Kabulonga area range from K1,200,000 to K2,500,000.

Required:

1. Calculate the PTT assessable on Mr Lungu.
2. How do you explain the realisable value on property on disposal of property regarding assessibility to Property Transfer Tax (5 MARKS)

(b) Mr Tembo has shares in XYZ Limited, a company not listed on LuSE. He bought 500,000 shares in 2010 for K2,000,000. He has disposed off 300,000 shares for K3,000,000.

Required:

1. Calculate the PTT assessable on Mr Tembo.
2. How do you explain the realisable value of Shares on disposal regarding assessibility to Property Transfer Tax

(5 MARKS)

(c) Jeff is starting up a graphic and painting company in Mansa. He has bought the following equipment from Germany which will come through Sesheke border.

1. Reprographics machine Euros 6,800 (FOB)

2. Printer Euros 1,200 (FOB)

3. Electric cutter Euros 400 (FOB)

The Germany Company estimates the following cost for:

1. Shipment to Walvis Bay $ 700
2. Insurance (Marine) $ 200

Jeff will have to incur cost of buying the equipment by road up to Katima Mulilo. The costs are estimated at K5,000.

Required:

1. Customs Duty
2. Excise Duty
3. Import VAT
4. Total Cost of the equipment. (10 MARKS)

QUESTION TWO

Mr Muuka was in employment in ABC Limited whilst renting out furnished apartments. His last payment, in December 2020, he received the following payment (excluding gratuity).

Salary K120,000

Bonus K112,000

Allowances K101,000

ABC Limited paid PAYE amounting to K35,000 and NAPSA K280.

Mr Muuka received income from his Investment in property amounting to K225,000 (net). He had occupied the apartment in January 2020 before being accommodated by the company.

The following were expenses incurred in 2020:

K

Cleaning 12,000

Debt Collection costs 17,500

Advertising 10,000

Repairs and Maintenance 12,500

Water and electricity 6,000

Interest on Mortgage to purchase the property 3,500

Accountancy fees 15,000

Insurance (Note 1) 48,000

NOTE 1, The Insurance of K48, 000 was paid on 1 June 2020. The insurance paid on 1 June, 2019 was K36,000

Required:

Calculate the tax payable by Mr Muuka for the tax year 2020. (20 MARKS)

(TOTAL: 20 MARKS)