Tax Tables

Use the following tax tables to answer your questions, where necessary.

Rates of tax from 2016/2017 tax years

Resident companies On taxable income

Standard rate 22%

Manufacturing company rate 15%

Non-resident companies

Standard rate 30%

Resident individuals

P0 P36,000 Nil

P36,001 P72,000 Nil + 5% of excess over 36 000

P72,001 P108,000 P1,800 + 125% of excess over 72 000

P108,001 P144,000 P6,300 + 1875% of excess over 108 000

Over P144,000 P13,050 + 25% of excess over 144 000

Non-resident individuals, trusts and estates

P0 P72,000 5% of every pula

P72,001 P108,000 P3,600 + 125% of excess over 72 000

P108,001 P144,000 P8,100 + 1875% of excess over 108 000

Over P144,000 P14,850 + 25% of excess over 144 000

Capital gains individuals

P0 P18,000 Nil

P18,001 P72,000 P0 + 5% of excess over 18 000

P72,000 P108,000 P2,700 + 12.5% of excess over 72 000

P108,000 P144,000 P7,200 + 18.75% of excess over 108 000

Over P144,000 P13,950 + 25% of excess over 120 000

Capital gains companies

Net aggregate gains are taxable at the company rates of tax.

Tax on Foreign dividend 15%

Basis of valuation of benefits

Individuals vehicle benefit

Vehicle cost		Employee benefit	Fuel cost adjustment
P1 - P50 000		P2 500	P1 000
P50 001 - P100 000		P5 000	P2 000
P100 001 - P150 000		P7 500	P3 000
P150 000 - P200 000		P10 000	P4 000

Benefit on the excess of P200 000 is 15% thereof with a maximum fuel cost adjustment of P5 000.

Individuals housing benefit:

If rated:

10% of the propertys rateable value prorated by occupation and reduced by any contribution made by the employee.

If not rated:

Gross floor area x P250 per sq metre x 8% for a standard building

The benefit is prorated by period of use and reduced by any contribution made by the employee.

Individuals furniture benefit

10% of furniture cost in excess of P15, 000 pro - rated by usage.

CAPITAL TRANSFER TAX RATES

Aggregate Taxable Value Rate of Tax per cent

1. Person (other company) First P100 000 2 per cent

Next P200 000 3 per cent

Next P200 000 4 per cent

Balance 5 per cent

2. Resident company 12.5 per cent

3. Non-resident company 12.5 per cent

Capital value of an annuity

Capital value = A x 1 (1/(1 + r) / r

Where - A is the annuity payable

r = rate of return

N = number of years over which the annuity is payable

Answer all the questions

Question One

You are an assistant in the tax department of TX Tax Advisory Services. Your supervisor has asked you to compute the taxable income relating to the business of Taffy and Teddy who are in partnership. Their partnership agreement state that they share profits and losses in the ratio of 2:1 for Taffy and Teddy respectively. They are also entitled to annual salaries of P90,000 for Tarry and P60,000 for Teddy.

You are provided with the following information for the year ended 31 August 2022

Adjusted trading profits before capital allowances for the year P1,200,000

Capital transactions for the year

Asset at cost	Balance on 31 August 2021	Additions	Disposals
Plant and machinery Tarrys car- 30% private use Teddys car Commercial vehicle Fixtures and fittings Computer equipment	2,250,000 100,000 80,000 275,000 150,000 -	150,000 125,000* - - - 25,000	200,000 100,000 - - 40,000 -

*Toms usage of the new car remained the same

Disposals

Plant and machinery was disposed for P105,000 and the Tax Written Down Value (TWDV) was P80,000.

Tarrys old car was disposed for P90,000

Furniture and fittings was disposed for P7,500 and capital allowances of P17,500 had been granted.

Teddy earned P105,000 from his other business investments.

Required

Compute the tax liability for each partner and state the due date for submission of the tax return by each of the partners. (20 marks)

Explain how partnership business losses can be relieved. (5 marks)

Question Two

Macrochip Limited specialises in offering computer and software business solutions. You are provided with the following transactions, inclusive of Value Added Tax (VAT) where applicable, for the month ended 31 March 2022.

P

REVENUE

Consulting fees 200,000

Credit notes for Goods returned 6,000

Cash discount 2,000

Disposal of an asset 33,000

Warehouse rent received 28,000

Insurance claim received 55,000

Brokerage received (Non-residents) 91,000

Brokerage received (Residents) 166,000

Rent received for staff houses 5,000

Proceeds from Sale of Plant 116,000

Interest received 115,000

EXPENDITURE

Staff salary 526,000

Acquisition of a plant 364,000

Miscellaneous 28,000

Good sent to a branch 45,000

Interest paid 65,000

Required:

In respect of Macrochip Limited

(a)Explain the following types of supplies and list the above transactions into the following categories

(i) Exempt supplies;

(Ii) zero-rated supplies;

(iii) Standard supplies. (11 marks)

(b) Calculate the VAT payable or refundable.

Note: You should indicate by the use of zero (0) any items referred to in the question where there is no VAT impact to carry marks. (10 marks)

(c) State the date by which the VAT return for March 2020 must be submitted. What is the penalty if the company fails to submit in time (2 marks)

(d) Distinguish between tax evasion and tax avoidance