QUESTION 2 TAXATION OF RESOURCE PROJECTS 15 Marks The following company involved in a Mining Resource project. (All figures in millions) Sales income: 70M Other assessable income: Interest Income (Net) 0.85M Dividend Income (Net) 1.7M Share of operating expenses of the projects: 22m Sole costs (overheads of the company): 5.2m Interest: 1.4m (Equity K 30M and Debt K 120M ) Exploration: Exploration: 7|P a g e Written down value of allowable exploration expenditure: 30m (life of the project 8 years) Written down value of common exploration pool: 7m Additions during the year: 3m Allowable capital expenditure Long life asset pool (start of year): 40m (historical cost) Additions during the year 2m Short life asset pool (start of year): 20m (written down value) Additions during the year: 2m Infrastructure Development Expenditure ( Sec219C)2.5 Million. Required to Calculate (a) Taxable Income and (b) Net Tax Payable