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Firstpek ( Pty ) Ltd ( ' Firstpek ' ) is a Namibian resident company. The Accountant of Firstpek was unable to resolve certain issues
Firstpek Pty Ltd Firstpek is a Namibian resident company. The Accountant of Firstpek was unable to resolve certain issues relating to income tax. He has sent the following transactions for the tax year ended January for you to advise on Legal expenses:These fees were paid to attorneys Jumo & Mash. N$ of the fee was for collection of debts from the company's customers. N$ related to the drawing up of a restraint of trade agreement for an employee, Lydia Groeses, who had resigned on December marks b Restraint of trade payment Lydia Groeses, who resigned on December was paid N$ million on the same day. The agreement stipulated that Lydia was unable to work for any competitor of Firstpek. The agreement is effective from December and for a period of two years thereafter. The N$ million is included in her gross income. marks c Repairs and maintenance costs Firstpek pays a maintenance contractor to maintain the four fish ponds on its premises. The maintenance contractor is paid on an annual basis. On November Firstpek paid the maintenance contractor N$ to maintain the fish ponds from November to October This is the only prepaid expense incurred by Firstpek for its year of assessment. Firstpek paid N$ to Oriveri Goses for repairing an electrical point that was damaged in a heavy storm. marks d Salaries Salaries paid to employees amounted to N$ million. In addition, the company's contributions to the provident fund and medical scheme fund on behalf of its employees was N$ million and N$ million respectively. marks e Annuities paid Firstpek paid the following annuities to former employees during its year of N$ per month for the next years to two dependents of an exemployee who died in a motor vehicle accident when delivering trading stock to a client. marks assessment: N$ per month to an exemployee who retired due to old age Required: Discuss, supported by calculations, the normal income tax implications of the above transactions for Firstpek Pty Ltd for its year of assessment. marks
Firstpek Pty Ltd Firstpek is a Namibian resident company. The Accountant of Firstpek was unable to resolve certain issues relating to income tax. He has sent the following transactions for the tax year ended January for you to advise on
Legal expenses:These fees were paid to attorneys Jumo & Mash. N$ of the fee was for collection of debts from the company's customers. N$ related to the drawing up of a restraint of trade agreement for an employee, Lydia Groeses, who had resigned on December marks
b Restraint of trade payment Lydia Groeses, who resigned on December was paid N$ million on the same day. The agreement stipulated that Lydia was unable to work for any competitor of Firstpek. The agreement is effective from December and for a period of two years thereafter. The N$ million is included in her gross income. marks
c Repairs and maintenance costs Firstpek pays a maintenance contractor to maintain the four fish ponds on its premises. The maintenance contractor is paid on an annual basis. On November Firstpek paid the maintenance contractor N$ to maintain the fish ponds from November to October This is the only prepaid expense incurred by Firstpek for its year of assessment. Firstpek paid N$ to Oriveri Goses for repairing an electrical point that was damaged in a heavy storm. marks
d Salaries Salaries paid to employees amounted to N$ million. In addition, the company's contributions to the provident fund and medical scheme fund on behalf of its employees was N$ million and N$ million respectively. marks
e Annuities paid Firstpek paid the following annuities to former employees during its year of N$ per month for the next years to two dependents of an exemployee who died in a motor vehicle accident when delivering trading stock to a client. marks assessment: N$ per month to an exemployee who retired due to old age
Required:
Discuss, supported by calculations, the normal income tax implications of the above transactions for Firstpek Pty Ltd for its year of assessment. marks
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