Question

The following information was provided to your relating the farming operations of Wame. She has opted to be registered as a farmer to allow her to utilize all the relevant loss relief available to farmers.

Results for the year ended $31$ December

$2017($P$)2018($P$)2019($P$)2020($P$)$

Taxable farming income$($loss$)$

Chargeable gains

Allowable loss

Bank interest

Employment income $960,000$

$93,000$

$75,000$

$185,000(2,250,000)$

$330,000$

$84,000$

$190,000570,000$

$(270,000)$

$84,000$

$200,0001\mathrm{.}500,000$

$180,000$

$105,000$

$210,000$

Required

a$)$ Calculate Wame$$s tax liabilities $($tax payable$)$ for each of the four years after claiming maximum loss relief at the earliest possible times.

i$)$ Assume that Wame has decided to apply Section $46.[6$ marks$]$

ii$)$ Assume that Wame has decided to apply Section $42$ in $2019[6$ marks$]$

iii$)$ Assume that Wame has decided to apply Section $42$ in $2020[6$ marks$]$

iv$)$ Identify the option which minimizes Wame$$s tax payable. $[2$ marks$]$

b$)$ Explain the different ways in which farming losses may be relieved by an individual and by a company. $[4$ marks$]$