MODULE: Mauritian Taxation

Mr Alvin Roy is employed by a company for many years. You are provided with the following information:

1. He receives a monthly salary of Rs90,000 and is entitled to an end of year bonus of one month salary payable in December.

2. Mr Roy is provided with a company car of a cylinder capacity of 2,500 cc. The car is used to attend duty and all the running expenses are met by his employer.

3. Under his term of contract, Mr Roy is also provided with a fully furnished house whiuch is owned by his company.

4. On 5th July 2012, Mr Roy took a twenty-year loan of Rs4,500,000 from a commercial bank to purchase a plot of land and build his house. He is paying an interest of Rs114,000 annually for the loan.

5. Mr Roy has some fixed deposits on which he received interest of Rs205,000 for the year ended 30 June 2018.

6. During the year ended 30 June 2018, Mr Roy bought shares from MCB Ltd, from which he received dividends of Rs12,000.

7. In February 2018, Mr Roy recived a refund of Rs55,000 for sick leave not taken.

8. Mr Roy is also a part-time lecturer and received a net income of Rs114,750 from parttime lecturing from another employer.

9. Mr Roy has two children. His son is following a full-time course at the University of Technology and a daughter who is attending the Greenwich University in UK.

10.Mr Roy also took a medical insurance policy for his family. The medical insurance premium for a year stood at Rs36,000.

11.The amount of tax deducted under the PAYE system was Rs 6,500 per month, except for the months of December 2017 and February 2018, where it was Rs7,000 and Rs7,600 respectively.

12.Mr Roy is also a partner in Roy & Tina Associates, a partneship formed some year back. For the year ended 30 June 2018, the partnership reported a tax-adjusted profit of Rs550,000. As per the profit sharing agreement, Mr Roy is entitled to 40% of the profit

13.Mr Roy incurred the following expenses during the year ended 30 June 2018:

He paid subscription expenses to a club amounting to Rs480,000.

He paid telephone bills on calls to clients of the company amounting to Rs12,000. Same has been reimbursed by his employer.

REQUIRED

a) Prepare an income tax computation showing clearly the tax liablilty of Mr Roy and the tax due and payable, if any, by Mr Roy for the year ended 30 June 2018. (20 marks)

b) Mr Roy is planning to start a business on his own. He wants to know the the main differences existing between the taxation of a self-employed and that of an employee before accepting the offer. Advise him accordinlgy? (10 marks)