You should assume that today$$s date is $25$ February $2025$

Janice is a farmer who has been in farming for many years. For the tax year $2024,$ she

had the following income:

K

Taxable farming profit $934,230$

Salary from part time employment $40,950$

Bank interest received $36,280$

Royalties received $106,250$

The amount of salary is the net amount after deducting income tax of K$24,050$ paid

under the Pay As You Earn $($PAYE$)$ system. The amounts of bank interest and

royalties received are the actual amounts received. Withholding tax had been

deducted at source where applicable.

Janice had provisional farming income of K$920,000$ for the tax year $2024$ and she

calculated and paid provisional income tax on $10$ April $2024,19$ August $2024,30$

November $2024$ and on $15$ February $2025.$

The Bank of Zambia discount rate is $19\mathrm{.}5\%.$

Required:

$($a$)$ Explain why the PAYE system is considered the best way for collecting income tax

from employees$$ emoluments. $(4$ marks$)$

$($b$)$ Calculate the amount of provisional income tax paid by Janice for the tax year $2024$

and prepare a schedule showing the due dates, the dates when Janice paid

provisional income tax and the amount paid on each date. $(4$ marks$)$

$($c$)$ Calculate the amounts of interest on overdue tax on any payments of provisional

income tax which were overdue. $(6$ marks$)$

$($d$)$ Calculate the penalties on overdue tax on any payments of provisional income tax

which were overdue. $(6$ marks$)$

$($e$)$ Calculate the balance of income tax payable by Janice for the tax year $2024$ and

state the due date when it must be paid. $(5$ marks$)$

$[$Total: $25$ Marks

TAXATION TABLE FOR THE TAX YEAR $2024$

Income Tax

Standard personal income tax rates

Income band Taxable amount Rate

K$1$ to K$61,200$ first K$61,2000\%$

K$61,201$ to K$85,200$ next K$24,00020\%$

K$85,201$ to K$110,400$ next K$25,20030\%$

Over K$110,40037\%$

Income from farming for individuals

K$1$ to K$61,200$ first K$61,2000\%$

Over K$61,20010\%$

Company Income Tax rates

On income from manufacturing and other $30\%$

On income from farming $10\%$

On income of Banks and other Financial Institutions $30\%$

On income from mineral processing $30\%$

On income from mining operations $30\%$

Mineral Royalty

Mineral Royalty on Copper

Range of Norm Price Taxable Amount Mineral Royalty

Rate

Less than US$$4,000$ Less than $$4,0004\mathrm{.}0\%$ of norm value

From US$$4,001$ to less than US$$5,000$ The Next $$1,0006\mathrm{.}5\%$ of norm value

From US$$5,001$ to less than US$$7,000$ The Next $$2,0008\mathrm{.}5\%$ of norm value

From US$$7,001$ and over $10\mathrm{.}0\%$ of norm value

Mineral Royalty on other minerals

Type of mineral Mineral Royalty

Rate

Cobalt and vanadium $8\%$ of norm value

Base Metals $($Other than Copper, cobalt and vanadium$)5\%$ on norm value

Energy and Industrial Minerals $5\%$ on gross value

Gemstones $6\%$ on gross value

Precious Metals $6\%$ on norm value

Capital Allowances

Implements, plant and machinery and commercial vehicles:

Wear and Tear Allowance $$ Plant used normally $25\%$

Plant used in Manufacturing and Leasing

Plant used in farming and agro$-$processing

Plant used in mining operations

$50\%$

$100\%$

$20\%$

Non$-$ commercial vehicles

Wear and Tear Allowance $20\%$

Industrial Buildings:

Wear and Tear Allowance $5\%$

Initial Allowance $10\%$

Investment Allowance $10\%$

Page $5$ of $8$

Low Cost Housing $($Cost up to K$100,000)$

Wear and Tear Allowance $10\%$

Initial Allowance $10\%$

Commercial Buildings

Wear and Tear Allowance $2\%$

Farming Allowances

Development Allowance $10\%$

Farm Works Allowance $100\%$

Farm Improvement Allowance $100\%$

Turnover Tax

On Business Turnover

Turnover range Taxable Amount Rate

K$1$ to K$12,000$ per annum First K$12,0000\%$

K$12,001$ to K$800,000$ per annum Next K$788,0004\%$

On Rental Income

Amount of Rent per annum Rate

Up to K$12,0000\%$

Excess over K$12,000$ but not exceeding K$800,0004\%$

Over K$800,00012\mathrm{.}5\%$

Presumptive Tax for Transporters

Seating capacity Tax per

annum

K

From $64$ passengers and over $12,960$

From $50$ to $63$ passengers $10,800$

From $36$ to $49$ passengers $8,640$

From $22$ to $35$ passengers $6,480$

From $18$ to $21$ passengers $4,320$

From $12$ to $17$ passengers $2,160$

Less than $12$ passengers and taxis $1,080$

Property Transfer Tax

Rate of Tax on Realised Value of Land, Land and Buildings and shares $5\%$

Rate of Tax on Realised Value of Intellectual Property $5\%$

Rate of Tax on Realised Value of a mining right for an exploration licence $5\%$

Rate of Tax on Realised Value of a mining right for a mining licence $10\%$

Rate of Tax on Realised Value of a mineral processing licence $10\%$

Value Added Tax

Annual Registration threshold K$800,000$

Standard Value Added Tax Rate $($on VAT exclusive turnover$)16\%$

Page $6$ of $8$

Customs and Excise duties on New Motor Vehicles

Duty rates on:

$1.$ Motor cars and other motor vehicles $($including station wagons$)$

principally designed for the transport of less than ten persons,

including the driver:

Customs Duty:

Percentage of Value for Duty Purposes $30\%$

Minimum Specific Customs Duty

Excise Duty:

Percentage of Value for Duty