K and M commenced in business as partners on 1 January 2022. They agreed to share profits and losses in the ratio 3:1 respectively after allowing for partnership salaries of K280,000 per annum each. The partnership accounts are to be prepared annually to 31 December. K and M have heard that they will be required to each submit a return of provisional income tax and a self-assessment return in respect of the tax year 2022, but do not know what these returns are. On 1 April 2022, a new partner H was admitted to the partnership and with effect from that date, the partnership agreement was changed, Profits and losses and partners annual salaries were to be provided for as shown below: K M H Salaries per annum K360,000 K300,000 K240,000 Profit sharing ratio for balance of profits and losses 5: 2: 1 The partnerships statement of profit or loss for the year ended 31 December 2022 was as follows: Note K K Gross profit 3,923,900 Add other income: Discount received 1,500 3,925,400 Less expenses: Depreciation 87,600 Wages and salaries (1) 3,307,000 Legal and professional expenses (2) 67,100 Gifts and donations (3) 44,000 Miscellaneous expenses (4) 62,500 Motor car running expenses (5) 80,000 (3,648,200) 277,200 Notes (1) Wages and salaries Wages and salaries include employees' wages of K2,220,000, loans to employees of K250,000 written off, employees golf club subscriptions of K22,000 and partners salaries amounting to K815,000. (2) Legal and Professional expenses These include legal fees in connection with the renewal of lease on business premises of K15,000, legal fees in connection with making changes to the partnership agreement of K10,500, legal fees in connection with drafting employees service contracts K15,600 and fees of K26,000 for personal tax planning advice for the Partners. (3) Gifts and donations These comprises donations to political parties of K8,000, donations to approved public benefit organisation of K18,000, gifts of T-shirts to suppliers (costing K250 each and displaying the partnerships logo) totaling K6,000 and gifts of clocks to customer (costing K150 each and displaying partnerships name) totaling K12,000. (4) Miscellaneous expenses Fines for breach of labour laws amounting to K5,500, partners traffic fines incurred whilst conducting the partnership business of K3,700, advertising expenses of K27,000, general increase in provision of bad debts of K5,600, increase in specific provisions-of bad debts of K16,200 and loss on disposal of office equipment of K4,500, (5) Motor car running expenses K and M use their own private motor cars in the partnership business. 30% of the motor car running expenses shown in the statement of profit or loss above, relate to K's car, 20% relate to M's whilst the remaining 50% of the expenses relate to the delivery van used wholly and exclusively for business purposes. K owns a Ford Ranger van (double cab) which he acquired at a cost of K360,000 in January 2022. His private use of the ford ranger van is 60%. M owns a Nissan Navara Van (double cab) which he acquired at a cost of K340,000 in February 2022, His private use of the Nissan Navara van is 75%. (6) Implements, plant and machinery and other assets At 1 January 2022, the only other assets qualifying for capital allowances was office equipment with an Income Tax Value of K30,000 (and an original cost of K60,000) and a delivery van with an Income Tax Value of K35,000 (and original cost of K70,000). The office equipment was sold for K20,000 during the tax year resulting in the loss on disposal included within miscellaneous expenses in the statement of profit or loss. (7) Other information Before joining the partnership H had been employed as a Marketing Manager at a Zambian resident company for many years. He was declared redundant on 31 March 2022. In the tax year 2022, he was entitled to an annual basic salary of K380,000 and he was also entitled to a housing allowance of 15% of his basic salary. The company paid for electricity bills of K2,400 per month and property maintenance expenses of K1,400 per month relating to his living accommodation. In January 2022, the company provided him with a New Year shopping voucher valued at K6,000. In March 2022, the company reimbursed him K25,000 he incurred on the medical treatment of his sick daughter. On being declared redundant on 31 March 2022, he additionally received accrued leave pay amounting to K50,000, repatriation pay of K210,000, severance pay of K140,000 and pension of K250,000. Half of the pension was employee's pension refunds and the remaining half was employer's pension refunds. Pay As You Earn of K195,768 was deducted from her emoluments in the tax year 2022. Throughout his employment, his employer had always deducted NAPSA contributions of 5% of his basic salary as employee's contributions and the company had always contributed 5% of his basic salary as employer's NAPSA contributions on his behalf. In January 2022, he paid his annual professional subscriptions to the Institute of Marketing of K1,850. (8) K and M did not have any other income in the tax year 2022. REQUIRED: (a) Explain the differences between the return of provisional income tax and the self-assessment return and state the dates when K and M will be required to submit each of these returns in respect of the tax year 2022. (4 marks) (b) Calculate the partnerships tax adjusted business profit for the year ended 31 December 2022, before division between the partners. (11 marks) (c) Calculate the amount of business profits on which each partner will be assessed for the year ended 31 December 2022. (11 marks) (d) Compute the final Income Tax payable by K, M and H for the tax year 2022.