QUESTION TWO

Smart Phiri had been employed by Kumawa Limited as an Electrical Technician. He decided to resign from employment on $1$ August $2023.$

He was entitled to an annual salary of $K114,000$ which was paid at the end of each month. He was also entitled to the following allowances:

Housing allowance per month

Domestic servant allowance per month

Transport allowance per annum

Children education allowance per child per annum

$K$

$3,200$

$1,800$

$7,200$

$54,000$

Smart Phiri has three $(3)$ school going children. He additionally received a performance related bonus of $K4,500$ in March $2023.$ This was in recognition of his effort for the year ended $31$ December $2022.$

During the year ended $31$ December $2023,$ the following payments and deductions were made from his gross emoluments:

$\backslash$table$[[$National Pension Scheme Authority Contributions,K$],[$National health insurance Scheme $($NHIMA$)$ contributions,$665],[$Pay As You Earn,$12,900],[$Subscriptions to Engineers Institute of Zambia,$2,500],[$Children$\text{'}$s School fees,$58,900]]$

Other income

Other income received by Smart Phiri in the tax year $2023$ induded dividend of K$10,200($net$)$ from Luangwa Limited, a Zambian manufacturing Company, royalties of $K4,250($net$)$ and consultancy fees of $K8,500($net$).$ Withholding tax had been deducted at source in each case.

Required:

$($a$)$ Explain any six $(6)$ tests used to distinguish employees from self$-$employed persons.

$(12$ marks$)$

$($b$)$ Calculate the amount of income tax payable by Smart Phiri for the tax year $2023.$

$(13$ marks$)$

$[$Total: $25$ Marks$]$