Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Mr. Kiplimo is finalizing his tax affairs for the year of income 2017. He and his wife had the following income and transactions for 2017:

Mr. Kiplimo is finalizing his tax affairs for the year of income 2017. He and his wife had the following income and transactions for 2017:

1. Mr. Kiplimos income:

He has paid Sh.52,000 Value Added Tax on all his purchases for the year

He was an employee of Bomet Tea Limited and was paid an annual salary of Sh.600,000 (P.A.Y.E deducted was Sh.142,500).

Pension contribution to a registered scheme were Sh.100,000 by his employer and Sh.50,000 from his pay.

Dividend received was Sh.40,000 gross. (Withholding tax was deducted as appropriate).

Gross interest received was sh.18,000 of which Sh.10,000 was from Post Office Savings Bank.

2. Mr. Kplimos expenses for the year:

Personal accident insurance premium of Sh.9,000 paid to American Life Insurance Company

Life insurance premium on self life of Sh.15,000 paid to world Life Union Insurance of the United Kingdom.

Alimony to his first wife of Sh.6,000 per month

Mortgage interest of Sh.62,000 on his house where he stays with his wife and children. The mortgage is from Savings and Loan Kenya Limited.

3. Mrs. Kiplimos income:

She was an employee of Macadamia Limited who paid her a salary of Sh.25,000 per month. P.A.Y.E of Sh.7,800 was deducted per month from her salary.

She made a profit of Sh.900,000 from the sale of a plot in Nairobi inherited from her father.

She used the money to start a private clinic. She is a registered clinical officer. In the year of income 2016, she made an assessed loss of Sh.240,000.

Required:

(a) What is a registered pension scheme and what are its implications?

(b) Compute the income chargeable to tax of Mr. Kiplimo for the year 2017.

(c) Calculate the tax payable (repayable) by him for 2017.

(d) Identify and comment on any information you have not used in calculations in

(b) and (c) above.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Simple Tools And Techniques For Enterprise Risk Management

Authors: Robert J. Chapman

1st Edition

1119989973, 978-1119989974

More Books

Students also viewed these Finance questions