Omega Tea Ltd. operates a Tea processing factory built on sixty acres of land in Kericho. The information relating to its assets and other staff off costs incurred since commencing operations on 20 January 2002 given below:

Year 2004:

1.

		Sh. 000
Planting tea:	Ploughing land and preparing gabions Purchase of tea seedlings Felling trees Cutting and clearing logs Purchase of water sprinklers Planting and weeding	5,000 1,000 2,000 500 600 2,500

The logs were processed into timber and sold for Shs. 4 million.

Constructed the processing plant building at a cost of Sh. 50 million and installed machinery worth Sh. 40 million.

Furniture for use in the plant was bought at Sh. 2 million while the office equipment cost Sh. 8 million.

Motor vehicle purchases:

Three lorries for transporting tea at a cost of Sh. 7 million each.

One saloon car at a cost of Sh. 1,400,000

One saloon car at Sh. 1,900,000

One saloon car worth Sh. 1,200,000 was donated to Omega tea Ltd. by Bazaar Motors for procuring all vehicles from them.

YEAR 2005:

Purchase of additional assets:

One forklift for Sh. 6 million

Two computers for Sh. 500,000

One printer for Sh. 50,000

Five office calculators for Sh. 40,000

The pick-up was involved in an accident on 2 February 2003. The insurers, Relief Assurance, paid Omega Tea Ltd. Sh. 1,400,000 compensation on 3 December 2003.

On 1 May 2003, a tree fell on one of the lorries damaging it in the process. The lorry was repaired at a cost of Sh. 350,000 and disposed off for Sh. 5 million on 1 July 2003.

Omega Tea Ltd. sold 5 acres of land to Kiptum for Sh. 500,000 on 10 November 2003 after clearing temporary structures on the land at a cost of Sh. 20,000.

The reported income for the two years ended 31 December 2002 and 2003 are shown below, after deducting depreciation and tax paid, but before adjusting for the items above:

	2002 Sh.	2003 Sh.
Reported income Depreciation charged Tax paid	21,200,000 9,000,000 1,000,000	63,000,000 8,500,000 2,000,000

Required:

(a) Capital allowances due to Omega Tea Ltd. for the year ended 31 December 2002 and 2003.

(12 marks)

(b) (i) Taxable income for the year ended 31 December 2002 and 2003. (4 marks)

(ii) Tax payable (if any) on the taxable income computed in (b) (i) above. (2 marks)

(iii) State the due dates for filing annual tax returns for the tax computed above and the consequences of non-compliance. (2 marks)