Question
Mamee Ltd is a construction firm. George, the finance manager, used the standard option to calculate provisional tax of $120,000 for the 2018 tax year.
Mamee Ltd is a construction firm. George, the finance manager, used the standard option to calculate provisional tax of $120,000 for the 2018 tax year. The company paid all instalments on time. When George filed the company’s 2018 tax return on 7 July 2018, he calculated RIT of $192,000. George paid the final payment including interest on 9 September 2018. IRD calculated the interest at a rate of 9.21% to 7 May 2018 and then 8.27% after this.
Required:
i. Calculate the interest charged by IRD for the use by Mamee Ltd of the difference between the provisional tax and the RIT for the 2018 income year.
ii. Calculate the total payment made to IRD on 9 September 2018
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