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

Question 1

The following information is given to you relating to Mary who operates a sole trader manufacturing business.

Income statement for the year ended 30 June 2022. P

Gross profit-P400,000, General expenses-P(45,000), Bad and doubtful debts-P(3,000), expenses-P(4,000) Wages and salaries-P(32,500), Donations-P(25,000), Depreciation-P(40,000)

Net profit 250,500

Additional information:

1. General expenses include:

• Cost of installing new machinery-P7,500
• Approved citizen training-P10,000
• Traffic fines-P1,000

1. Bad and doubtful debts are made up of:

• Trade debts written-off-P2,000
• Increase in general provision for doubtful debts-P1,500
• Trade debts recovered-(P500
• Total-P3,000

1. Of the motor vehicle expenses, 40% relate to private travel by Norah.
2. Donations comprise of the following:

• Charitable-P5,000
• Gifts to customer- calendars with business logo-P2,500
• Pensions to former employee who retired on ill-health-P17,500

Total-P25,000

1. Capital allowances for the year were calculated as P12,500
2. Assessed loss brought forward from previous year amounted to P2,500

Required

Compute Marrys taxable income and tax liability for the year ended 31 December 2022.