Question attached Deadline friday 04 nov

pls provide deatailed answer to the question ,where possible explanation

tax jurisdtion in your country does not matter ,i can edit to suite my jurisdiction

TAXATION ASSIGNMENT 1 Instructions: Answer BOTH QUESTIONS. Show all workings and state all assumptions used to support your answers RATES OF TAX (Including wife's employment, self-employment and professional income rates of tax). Year of income 2015. Monthly taxable pay Annual taxable pay Rates of tax (Shillings) (Shillings) % in each shilling 1 Capital- allowances: 10164 1 121968 10% rates of motor vehicles provided by Prescribed benefit 10165 19740 121969 236880 15% employer (i) Wear and tear allowances: 19741 29316 236881 351792 20% 29317Class - I 38892 351793 466704 25% 37.5% Monthly Annual Excess over 38892 Excess over 466704 30% rates Rates Class I 30% Class I 25% Kshs. Kshs. Personal relief Kshs. 1162 per month (Kshs.13,944 per annum) Class I 12.5% (i) Saloons, Hatch Backs & Estates (ii) Industrial building allowances: Industrial buildings Hotels 10% 10% (iii) Farm work allowances (iv) Shipping investment deduction 100 % 40% (v) Shipping investment deduction 40% (vi) Mining allowance: Year 1 Year 2-7 - 40% 10% Up to 1201150117512001Over 1200 cc 1500 cc 1750 cc 2000 cc 3000 cc 3000 cc 3600 4200 5800 7200 8600 14400 43200 50400 69600 86400 103200 172800 3,600 43,200 (iv) Pick-ups, Panel Vans (Unconverted) Up to 1750 cc Over 1750 cc 4,200 50,400 7200 86400 (vii) Land Rovers/ Cruisers OR 2% of the initial capital cost of the vehicle for each month. Commissioner's prescribed benefit rates Monthly rates Kshs. 1500 500 Services (i) Electricity (common or from generator) Annual rates Kshs. 18000 6000 (ii) Water (Communal or from a borehole) (iii) Provision of furniture (1% of cost to employer) If hired, the cost of hire should be brought to charge (iv) Telephone (Landline and mobile phones) 30% of bills Agricultural employees (i) Water 200 2,400 (ii) Electricity 900 10800 1 QUESTION ONE Matrix Company Ltd. has been in the manufacturing business since 2010. The following summary relates to the company's assets as at 31 December 2013. Asset Plant building Boilers and processors Other machinery (auxiliary) Graders and Tractors Computers (includes printers Kshs. 15,000) Pick-up (20% of time is for private use) Prado for manager Plant building extension Nissan sunny Furniture and fixtures Scanners and printers Sports Hall Staff Dispensary Cost Kshs. 10,200,000 6,800,00 3,200,000 3,000,000 600,000 3,000,000 3,800,000 2,400,000 900,000 800,000 500,000 2,400,000 1,600,000 Year of First Use 5 January 2010 12 August 2010 1 July 2011 1 February 2011 25 May 2011 30 June 2012 6 July 2012 1 September 2012 24 October, 2012 17 November 2012 2 December 2012 1 July 2013 3 October 2013 Additional Information 1. On 1 January 2014, a sewerage system was constructed at a cost of Kshs. 1,420,000. A standby generator was also purchased on the same date for Kshs. 900, 000. 2. The following additions assets were purchased or disposed of in the year 2014. Date 1 March 2014 4 May 2014 24 July 2014 10 September 2014 15 October 2014 Date Asset Purchased Computers 2 Saloon cars Trailer Lorry (7 tonnes) Curtains Asset Disposed off 2 July 2014 Boilers 30 September 2014 Prado car 30 November 2014 Tractor Cost (Kshs.) 500,000 2,500,000 (each) 2,200,000 5,200,000 50,000 Original Cost (Kshs.) 2,700,000 3,800,000 2,200,000 Sales Proceeds Net book (Kshs.) value (Kshs.) 1,600,000 800,000 1,800,000 2,200,000 1,500,000 1,300,000 3. On 1 January 2015, the company incurred the following capital expenditure: Kshs. 2 Extension to factory plant building (includes go-down Kshs. 1,500,000) Imported processing machinery (includes design machinery Kshs. 1,000,000) Packaging machines (includes weighing machines Kshs. 340,000) Borehole (includes water pump Kshs. 375,000) Staff pavilion (includes drive-way Kshs. 200,000) Staff quarters (includes road and parking Kshs. 1,500,000) 4,500,00 0 5,500,00 0 940,000 875,000 3,200,00 0 8,700,00 0 The cost of the imported processing machinery includes an import duty waiver of Kshs. 500,000 granted by the tax authorities. Required: Compute the capital allowances due to the company for the two years ended 31 December 2014 and 2015. (20 Marks) QUESTION TWO (a) (i) State the key provisions of Section 19 of the Income Tax Act (Cap.470) relating to the taxation of savings and credit co-operative societies (Saccos). (4 Marks) (ii) Makazi Savings and Credit Cooperative Society (Sacco) Ltd. reported the following incomes and expenditure for the year ended 31 December 2015. Income Interest of loans to members Interest on savings accounts Interest on fixed deposit accounts Other investment income Rental income Total income Kshs. 1,500,000 30,000 100,000 12,000 600,000 2,242,000 Expenditure Administration expenses Surplus 300,000 1,942,000 Required: The taxable profit of Makazi Sacco Ltd for the year ended 31 December 2015. (6 Marks) (b) Malipo Chap Insurance Company Limited provided the following information for the year ended 31 December 2015. 3 Gross premium received Claims paid Commission ceded Commission accepted Claims recovered on reinsurance Foreign exchange gains Dividends from life assurance fund Rental income (includes advance rent of Kshs. 300,000) Bad debts provision (general Kshs. 300,000; specific Kshs. 200,000) Investment income (interest Kshs. 800,000; dividends Kshs. 400,000) Reserve for unexpired risk (1 January 2015) Reserve for unexpired risk (31 December 2015) Legal expenses relating to claims Agency fees (includes commission to insurance agents Kshs. 100,000) Management fees (includes fee for manager's son Kshs. 30,000) Repairs of rented properties Entertainment expenses Purchase of furniture (includes VAT of Kshs. 8,276) Purchase of computers (incudes printers Kshs. 50,000) Saloon car purchased (includes alarm system fitted Kshs. 100,000) Staff van (includes comprehensive insurance Kshs. 200,000) Reinsurance premiums paid Returned premiums Additional information: Kshs. \"000\" 30,000 4,000 800 20 3,000 3,500 2,000 1,600 500 1,200 1,000 2,000 400 400 120 200 400 600 300 2,200 3,000 4,000 5,000 1. Claims outstanding on 1 January 2015 and 31 December 2015 were Kshs. 600,000 and Kshs. 900,000 respectively. 2. Premiums outstanding on 1 January 2015 and 31 December 2015 were Kshs. 6,000,000 and Kshs. 12,000,000 respectively. 3. Agency fees included Kshs. 200,000 relating to the life assurance business. 4. Legal fees included Kshs. 100,000 relating to settlement of a tax dispute. 5. Investment income comprised: Kshs. \"000\" Interest from bank 850,000 (net) Interest from treasury bonds 350,000 (gross) Required: Taxable profit or loss of Malipo Chap Insurance Company Limited from general insurance business for the year ended 31 December 2015. (10 Marks) 4