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The employment income is taxable in the year it was earned and became due for payment. The time the income is paid is immaterial.
Wilfykil answered the question on February 13, 2019 at 12:03
- Comment on the treatment of the following items for tax purposes
i) Education fees paid by an educational institution for income employees‘ dependents attending the institution
ii)...(Solved)
Comment on the treatment of the following items for tax purposes
i) Education fees paid by an educational institution for income employees‘ dependents attending the institution
ii) Income received for disabled persons
iii) Non-cash benefits
iv) Medical benefits provided to non-whole time service director
v) Registered employee share ownership plans
Date posted: February 13, 2019. Answers (1)
- Ms Sharon Olembo is a citizen of Kenya while Mr Pierre Antoine is a citizen of Cameroon. Both individuals earn various investment income from Kenya....(Solved)
Ms Sharon Olembo is a citizen of Kenya while Mr Pierre Antoine is a citizen of Cameroon. Both individuals earn various investment income from Kenya. For the past three year period ended 31 December 2010, MsOlembo has been in Kenya for an average of 230 days per year, while Mr Antoine has been In Kenya for an average of 59 days per year.
Required:
i) Withholding tax payable in Kenya by Mr Olembo and Mr Antoine for the year 31 December 2010.
ii) Summarize three challenges of administering withholding tax in your country
Date posted: February 13, 2019. Answers (1)
- Ojwang, Awino and Ochieng are partners trading as Okode Enterprises. Ojwang and Awino are active partners while Ochieng is a sleeping partner. The partnership agreement...(Solved)
Ojwang, Awino and Ochieng are partners trading as Okode Enterprises. Ojwang and Awino are active partners while Ochieng is a sleeping partner. The partnership agreement was silent on the profit and loss sharing ratio.
The partners have presented the following statement of comprehensive income for the year ended
Required:
(i) The adjusted partnership profit or loss for the year ended 31 December 2011
(ii) Distribution schedule of the profit or loss calculated in (i) above
Date posted: February 13, 2019. Answers (1)
- Abiud Kageni is an employee of Tala Ltd. He has provided the following details relating to his employment income and other benefits for the year...(Solved)
Abiud Kageni is an employee of Tala Ltd. He has provided the following details relating to his employment income and other benefits for the year ended 31 December 2011.
1. Monthly salary Sh 124,000 (PAYE tax Sh34,100)
2. School fees for his daughter amounting to Sh.64,000 was paid by the employer and deducted as an expense
3. His monthly salary was increased on 1 December 2011, by Sh.20,000 and backdated to 1 September 2011.
4. The company provided him with airtime worth Sh.5,000 per month. It was estimated that 50% of his calls were non-business related.
5. Passages to facilitate his family to move from South Africa to Kenya amounted to Sh.150,000
6. A fully furnished house whose cost of furniture was Sh.240,000.
7. A life insurance cover whose annual Insurance premium amounted to Sh.72,000.
8. A motor vehicle (2000 cc) whose cost was Sh.600,000 at the time of purchase on 1 January 2008.
9. AbiudKageni controls 15% of the share capital of the company. The company gave the wife free gifts valued at Sh.25,000 during the end of year party.
10. He is a member of the company's registered pension scheme where he contributes 20% of his basic salary. The employer contributes an equal amount.
11. The company gave AbiudKageni a loan of Sh.5,000,000 at an interest rate of 4% per annum. The market interest rate is 9% per annum.
12. The company paid medical bills amounting to Sh.1,200,000 following hospitalization of his son.
13. AbiudKageni's other incomes included: Farming loss Sh.194,000
Rental income Sh.240,000
Compute the following for the year ended 31 December 20 I I:
(i) Taxable income for Abiud Kageni.
(ii) Tax liability (if any) on the income in (i) above.
(iii) Fringe benefit tax.
Date posted: February 13, 2019. Answers (1)
- The management of Ndimu Ltd. has presented the following statement of comprehensive income for the year ended 31 December 2011
Required:
(i) Adjusted taxable profit or loss...(Solved)
The management of Ndimu Ltd. has presented the following statement of comprehensive income for the year ended 31 December 2011
Required:
(i) Adjusted taxable profit or loss for Ndimu Ltd. for the year ended 31 December
(ii) The tax thereon (if any).
Date posted: February 13, 2019. Answers (1)
- Outline four conditions which must be fulfilled for passage to be excluded from taxation of an employee's income.(Solved)
Outline four conditions which must be fulfilled for passage to be excluded from taxation of an employee's income.
Date posted: February 13, 2019. Answers (1)
- Limuru Enterprises Ltd. operates a hotel complex in Nairobi. The hotel presented the following set of data from the accounting records for the year ended...(Solved)
Limuru Enterprises Ltd. operates a hotel complex in Nairobi. The hotel presented the following set of data from the accounting records for the year ended 31 December 2011:
Prepare A statement of adjusted taxable profit or loss for Limuru Enterprises Ltd for the year ended 31 December 2011.
Date posted: February 13, 2019. Answers (1)
- Highlight three circumstances under which:
i) The income of a taxable person is assessed on another person.
ii) A married woman might be called upon to bear...(Solved)
Highlight three circumstances under which:
i) The income of a taxable person is assessed on another person.
ii) A married woman might be called upon to bear a tax burden.
Date posted: February 13, 2019. Answers (1)
- Briefly explain what is meant by a cascade tax.(Solved)
Briefly explain what is meant by a cascade tax.
Date posted: February 13, 2019. Answers (1)
- Pearson Morry is a non-citizen, who was recruited in 2010 by a company incorporated in your country.
He reported on duty on 1 January 2011. During...(Solved)
Pearson Morry is a non-citizen, who was recruited in 2010 by a company incorporated in your country.
He reported on duty on 1 January 2011. During the year of income 2011, he provided the following details to assist him file his individual income tax return for the year of income 2011.
Required:
i) Total taxable income for Pearson Morry for the year ended 31 December 201 I.
ii) Tax payable by Pearson Morry for the year ended 31 December 2011.
Date posted: February 13, 2019. Answers (1)
- Discuss two benefits of withholding tax.(Solved)
Discuss two benefits of withholding tax.
Date posted: February 13, 2019. Answers (1)
- Jessica and Mercy have been operating a cosmetics retail business and sharing profits and losses equally. They have not maintained proper books of account. They...(Solved)
Jessica and Mercy have been operating a cosmetics retail business and sharing profits and losses equally. They have not maintained proper books of account. They have engaged you as a qualified accountant at an agreed fee of Sh.210, 000 to prepare their books and annual tax returns.
The following information was presented to you relating to the business operations for the year ended 31 December 2011
Required:
i) Taxable income for the year ended 31December 2011 in respect of each partner.
ii) Using the taxable income computed in (b) (i) above, compute the tax payable by each partner.
Date posted: February 13, 2019. Answers (1)
- Dennis Obiero was employed under a five year contract with a provision of payment of Sh. 600,000 as compensation in case of termination of contract...(Solved)
Dennis Obiero was employed under a five year contract with a provision of payment of Sh. 600,000 as compensation in case of termination of contract before five years. The contract was terminated after three years on 31 December 2011. He was paid on the same date the amount agreed as compensation.
On 1 April 2012, he purchased six houses through a mortgage. He rented out the six houses for Sh. 45,000 each per month from 1 April 2012. Goodwill received for each house was Sh.
250,000 covering a five year period.
The following expenses were also incurred in year 2012 in connection with the houses:
- Land and ground rates Sh. 1,200,000 per annum.
- Watchman's wages Sh. 56,000 per annum.
- Plumbering services and repairs Sh. 40,000 paid in-August 2012.
- Construction of five extra toilets at Sh. 50,000 each in October 2012,
- Insurance premium for each house Sh. 10,000 per annum.
- Mortgage interest at Sh. 250,000 per annum.
- Cost of furnishing the houses Sh. 600,000 paid in November 2012.
- Cost of rent collection 5% of gross rent paid to the agent during the year.
- Cost of "partitioning some of the houses Sh. 80,000 paid in August 2012.
Additional information:
1. On 2 January 2012, Dennis Obiero, was employed by Huduma Safi Hospital. He reported the following details of his employment income for the year ended 3 1 December 2012:
- Basic salary Sh. 2,500,000 per annum (PAYE Sh. 730,000 per annum).
- Company car (2000 cc) whose initial cost was Sh. 1,500,000. Three quarters of the car usage was for official duties.
- House allowance Sh. 30,000 per month which was paid until 30 June 2012. On 1 July 2012, he was provided with a fully furnished house by the company. The cost of the furniture to the employer was Sh. 450,000. The market rental value of the house is Sh. 45,000 and 5% of his basic salary was deducted towards the rent.
2. During the month of September 2012, he was sent on official duty and provided with a daily allowance of Sh. 8,000 for twenty five days to cover the cost of accommodation and food.
3. He is a member of a home ownership savings plan where he contributes Sh.25,000 per month and the company contributes Sh. 10,000 per month for him
4. During, the year, his wife was treated at Huduma Safi Hospital at a cost of Sh. 80,000. Half of the cost was covered by the company. This cover is only available to senior management and their families.
Required:
i) Taxable rental income for the year ended 3 1 December 2012.
ii) Total taxable income of Dennis Obiero for the year ended 3 1 December 2012.
iii) Tax liability for the year ended 3 1 December 2012.
Date posted: February 13, 2019. Answers (1)
- KK, a sole trader listed the following assets and liabilities as at 1 January 2012 and 31 December 2012:
Required:
i) The taxable income for KK for...(Solved)
KK, a sole trader listed the following assets and liabilities as at 1 January 2012 and 31 December 2012:
Required:
i) The taxable income for KK for the year ended 31 December 2012.
ii) Tax payable by KK, if any.
Date posted: February 13, 2019. Answers (1)
- Discuss the relevance of the concept of ?residence? in the determination of tax liabilities for both an individual and a body corporate(Solved)
Discuss the relevance of the concept of ―residence‖ in the determination of tax liabilities for both an individual and a body corporate
Date posted: February 13, 2019. Answers (1)
- Umeshi Osodo was employed by Metal Max Ltd. as a human resource manager with effect from 1 January 2012. He reported the following incomes for...(Solved)
Umeshi Osodo was employed by Metal Max Ltd. as a human resource manager with effect from 1 January 2012. He reported the following incomes for the year ended 31 December 2012
1. Basic salary Sh. 80,000 per month (PAYE Sh. 12,000 per month).
2. The employer paid his annual life insurance premiums at an amount equivalent to 5% of his annual basic salary.
3. He earned a net interest income of Sh. 150,000 during the year from his investments in housing development bonds.
4. The employer provided him with a house whose market rental value was Sh. 50,000 per month.
The employer deducted 5% of his basic salary per month as nominal rent.
5. Education fees for his two children amounting to Sh. 180,000 were paid by the employer during the year.
This amount was charged in the employer's income statement.
6. The employer reimbursed him for all out of pocket expenses incurred on the official use of his personal car.
In the year 2012, the amount reimbursed amounted to Sh. 180,000. He had purchased the car in the year 2010 at a cost of Sh. 900,000. The car had an engine capacity of 1600 cc.
7. He contributed Sh. 28,000 per month to a registered pension scheme. The employer contributed Sh. 18,000 per month for him to the same scheme.
8. He received entertainment allowance amounting to Sh. 40,000. He utilized the amount in celebrating his birthday together with his family.
9. He received a year-end bonus payable to executive staff of Sh. 80,000
10. The employer provided him with electricity, water, telephone and a cook at a cost of Sh. 15.000, Sh. 9,000, Sh.60,000 and Sh. 18,000 per month respectively.
11. During the year UmeshiOsodo was declared the best employee and the employer paid him a reward of Sh. 100,000.
12. He received medical benefits amounting to Sh. 420,000 from the employer. The company has a medical scheme for all staff members.
Compute the following for the year ended 31 December 2012:
i) Taxable income for Umeshi Osodo.
ii) Tax liability (if any) on the income in (i) above.
Date posted: February 13, 2019. Answers (1)
- The management of Light Traders Ltd. has engaged you to ascertain the company's tax position as they have not been maintaining proper books of account....(Solved)
The management of Light Traders Ltd. has engaged you to ascertain the company's tax position as they have not been maintaining proper books of account. The following information has been availed to you for the year ended 31 December 2012:
1. Stock balances as at 1 January 20i2 and 31 December 2012 were Sh. 250,000 and Sh. 400,000 respectively.
2. The balance sheet extract as at 1 January 2012 revealed the following balances:
Required:
i) Adjusted taxable profit or loss for Light Traders Ltd. for the year ended 31 December 2012.
ii) Tax liability, if any.
Date posted: February 13, 2019. Answers (1)
- Explain the tax position in relation to irregularly paid employees(Solved)
Explain the tax position in relation to irregularly paid employees
Date posted: February 13, 2019. Answers (1)
- Mutua and Koech are in partnership trading as Mukoe Enterprises. They share profits and losses in the ratio of 2:3 for Mutua and Koech respectively....(Solved)
Mutua and Koech are in partnership trading as Mukoe Enterprises. They share profits and losses in the ratio of 2:3 for Mutua and Koech respectively. The partners presented the following income statement of the partnership for the year ended 31 December 2012:
Required:
i) The adjusted partnership profit or loss for the year ended 31 December 2012
ii) Distribution schedule of the profit or loss calculated in (b)(i) above
Date posted: February 13, 2019. Answers (1)
- Mr Burny Odipo has provided the following information on his employment and other incomes for the year ended 31 December 2013:
Required:
i. Total taxable income...(Solved)
Mr Burny Odipo has provided the following information on his employment and other incomes for the year ended 31 December 2013:
1. He received a basic salary of Sh.120, 000 per month. (PAYE Sh.30, 000 per month).
2. From I January 2013 to 30 April 2013, he was provided with a company motor vehicle of 2,000 cc which the company had purchased in August 2010 at a cost of Sh.1,500,000. The motor vehicle was disposed of on 1 May 2013. From 1 May 2013, the company hired another motor vehicle for use by Mr BurnyOdipo at a monthly hire charge of Sh.60, 000. The initial cost of the motor vehicle to the hiring company was Sh.2, 400,000.
3. He lived in a company house until 30 September 2013 and paid a nominal rent of Sh.10,000 per month for the house. The market rental value of houses in the estate was Sh.50, 000 per month.
4. He purchased a house and moved in on I October 2013. He financed the house through a mortgage loan of Sh.1 0,000,000 at an interest rate of 12% per annum.
5. He is a member of a house ownership savings plan (HOSP). He contributed Sh.10, 000 per month up to the time he acquired the mortgage loan.
6. He has a life insurance policy where the company paid Sh.20, 000 per month for him. He also paid an equal amount for the policy.
7. He received dividends from Hekima Co-operative Society Ltd. of Sh.68, 000 (net) and interest on a 20 year Government Infrastructure Bond of Sh.72, 000 (gross) during the year.
8. He received an entertainment allowance of Sh.100, 000 during the year. Half of this amount was spent on entertaining his family.
9. His wife has invested in the shares of a quoted company. She received a dividend of Sh.24, 000 (net) from the investment in the year 2013.
10. During the year ended 31 December 2013, he reported a net rental income of Sh.700, 000. This was after deducting the following expenditure:
Required:
i. Total taxable income of Mr BurnyOdipo for the year ended 31 December 2013.
ii. The tax due on the taxable income calculated in (i) above.
Date posted: February 13, 2019. Answers (1)