QUESTION SIX Katondo Manufacturing Company (KMC) plc is a Zambian resident company engaged in manufacturing operations which is registered for Value Added Tax. The company listed its shares on the Lusaka Securities Exchange two (2) years ago when it offered 25% of the ordinary shares to indigenous Zambians. In March 2020, the company issued a further 20% of its ordinary shares to indigenous Zambians and as a result 45% of the shares of the company are now held by indigenous Zambians. KMC plc made a profit for the year, as per accounts, of K5,702,080 for the year ended 31 December 2020. This profit figure was arrived at after taking into account the following: (1) Investment income comprising rental income of K180,000, royalties amounting to K136,000, dividends from shares of non-mining companies listed on the LuSE amounting to K124,000, fixed deposit interest K23,800 and management and consultancy fees of K289,000. These were the actual amounts received in each case, withholding tax was deducted at source and paid on the appropriate due dates. (2) Staff costs which included an annual salary for the Marketing Director of K650,000 who is accommodated in a company owned house for which he does not pay rent, employee training costs of K160,000, employee relocation costs of K340,000, loans to employees written off amounting to K380,000, employees golf club subscriptions of K18,000, employees professional subscriptions of K60,000, wages for casual workers of K56,000, fines of K25,000 for breaching labour laws and other employee's salaries of K29,274,000. (3) Legal fees which included legal fees in connection with issue of ordinary shares to indigenous Zambians of K13,800, legal fees for trade debt collection of K14,400, legal fees for recovery of loans from former employees of K10,500, a premium paid to acquire the right of use of a popular brand name for a period of 20 years, amounting to K300,000 and legal fees incurred on the renewal of a lease of business premises of K18,500 (4) Bad debts expenses which included: K 12 The provisional income tax is the amount of provision income tax paid during the tax year 2020. Other Information Implements, plants and machinery On 1st January 2020 , company held the following implements, plant and machinery which were acquired at the following VAT inclusive costs and brought into use on the following dates: During the year ended 31 December 2020, the following purchases and disposals of assets took place: Date VAT Inclusive The Toyota Camry car is the Human Resources Manager's personal to holder motor car and the Toyota Fortuner motor car is the Marketing Director's personal to holder motor car. Buildings On 1 February 2020 the company completed the construction of a building at VAT exclusive cost of K5,000,000 which was brought into use immediately. The building comprised the following items: REQUIRED (a) Calculate the maximum capital allowances claimable by Katondo plc on the following assets held in the tax year 2020: (i) The capital allowances on implements, plant and machinery (12 marks) (ii) The capital allowances on buildings (6 marks) (b) Compute the final taxable business profit after capital allowances for Katondo plc for the tax year 2020 . (14 marks) (c) Compute the income tax payable by the company for the charge year 2020 . (8 marks) [Total: 40 Marks]