Required.

a. Compute Mr. Asaba Peters annual taxable income. (8 Marks)

b. Compute Mr. Asaba Peters tax liability, assuming; i). he is a resident (3 Marks)

ii). He is a non-resident (3 Marks)

:

Mr. Asaba Peter is employed as Assistant Manager with ABC Ltd.

He is paid a basic monthly salary of Shs. 1,200,000/=. He also uses a Company Pajero valued at Shs. 30,000,000/= for his official duties. At the beginning of the year, Mr. Asaba Peter obtained a loan of Shs. 10,000,000/= from the Company at an interest rate of 5% p.a. The Company provides 30% of the meals for Mr. Asaba Peters domestic use. He forfeited his leave during the year and was paid 50% of monthly basic salary as compensation.

He also stays in a Company house which could fetch rent worth Shs. 2,500,000/= p.a. Mr. Asaba Peter uses a car twice a week for his private purposes and pays a monthly token of Shs. 50,000/= for the benefit. The discount rate for the period is 10%.

Mr. Asaba Peter is also entitled to the following benefits Medical allowance 2,400,000/= annually Overtime 1,200,000/= Annually Company contributes to NSSF 150,000/= Monthly Electricity & water bills 200,000/= Monthly Additional Information.

- Mr. Asaba Peter is entitled to monthly refund of Shs. 400,000/= for expenses incurred while on official duties.

- The Company pledged to pay tuition fees for Mr. Asaba Peters son who is doing a Bachelor of Business Administration at Cavendish University Uganda and accordingly refunded him Shs. 1,000,000/= which he had earlier paid.

- Mr. Asaba Peter employs a house helper who he pays Shs. 300,000/= per month. of this 50% is paid by the Company.

- Monthly top-up allowance to Mr. Asaba Peter is Shs. 100,000/= - Included in medical allowance is 40% refund for medical expenses.

- Balance of the meals is provided in the Company canteen and is open to all workers.

- The office sold two computers to Mr. Asaba Peter for Shs. 350,000/=. Each computer is worth Shs. 200,000/=.

- The Company offered Mr. Asaba Peter an old office desk worth Shs. 9,800/= for free.

- Due to his hard work, the Company paid Mr. Asaba Peter a bonus of Shs. 500,000/= at the end of the year.

- Mr. Asaba Peter contributes Shs. 50,000/= per month towards electricity