Mr. Mutua is an employee in an Audit Firm. The following information has been availed to you in relation to the income and benefits received by Mr. Mutua for the year ended 31* December 2020

1. Basic salary sh.450,000 per month (PAYE Sh 85,000 per month)

2. Free housing was provided with water, electricity and telephone with effect from September 2020. Prior to this, he was living in his own house. He paid a nominal rent of sh. 45,000 per month towards rent. Water consumed was Sh 14,400, telephone was Sh. 15,000 and electricity was Sh. 18.000 during the year. The market rental value for the house is estimated at Sh. 150,000 per month

3. He received a pension of sh. 40,000 from his previous employer

4. His annual grocery bills amounting to sh. 48,000 for the year were settled by the firm.

5. He contributed 5% of his basic pay to a registered pension scheme while the employer contributed an equal amount.

6. The employer paid his life insurance premium of Sh. 8000 per month.

7. He recieved Sh. 5000 per month from the employer as medical cover.

8. Company car of 2000 cc which cost Sh. 950,000 in 2014.

9.He owns rental premises. The following were the details of the income and expenses for the year of income 2020.

 

Required:

For each of the statements above, comment on the tax treatment citing the Income Tax Act Chapter 470 of the laws of Kenya.

Gross Rent 1,120,000 Painting (200,000) Repairs (60,000) Caretaker's Salary (300,000) Interest on Mortgage (240,000) Renovations after which rent was increased (400,000) Net Income 100.000