1. To ensure that there is equity in taxation, capital gains need to be taxed as persons earning capital gains will be favored if they are not taxed as compared to those earning wages, salaries and profits as their normal income.
2. Capital gains tend to occur during periods of rising prices and not during periods of falling prices, hence a tax on such gains will not only earn revenue to the government but may be helpful in curbing inflationary pressure and achieving economic stability.
3. Exclusion of capital gains from the scope of taxation may create a scope for tax avoidance, as the earning from companies may be ploughed back into business and later distributed as capital gains.
4. The increase in the pressure of population and income are said to be responsible for the rise in the values of houses, land and all other kinds of properties without any effort, and investment on the part of the owner and therefore if taxed, it will not adversely affect the initiative and incentive to invest on such properties.
5. Capital gains by their nature are fluctuating in character and hence, if they are taxed, the tax payers would not mind to pay the tax if they really benefited by such gains, in addition, such gains are unexpected, and therefore a tax on those gains will not increase the burden of taxation on the tax payers.
Wilfykil answered the question on February 15, 2019 at 05:29
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Outline four requirements for a valid memorandum of appeal
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Outline four requirements for a valid memorandum of appeal
Date posted:
February 15, 2019
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Answers (1)
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Summarize four details that are required to accompany the list submitted to the revenue authority on employees who have received lump sum payment from the...
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Summarize four details that are required to accompany the list submitted to the revenue authority on employees who have received lump sum payment from the employer.
Date posted:
February 15, 2019
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Answers (1)
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Explain the following terms in the 'context of customs and excise duty:
(i) Prohibited goods.
(ii) Restricted goods
(Solved)
Explain the following terms in the 'context of customs and excise duty:
(i) Prohibited goods.
(ii) Restricted goods
Date posted:
February 15, 2019
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Answers (1)
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Ujenzi Limited maintained the following assets in its fixed registers as at 31 December 2007
Determine Capital allowances due to Ujenzi limited for the year ended...
(Solved)
Ujenzi Limited maintained the following assets in its fixed registers as at 31 December 2007
Determine Capital allowances due to Ujenzi limited for the year ended 31 December 2007
Date posted:
February 14, 2019
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Answers (1)
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Limo Limited prepares its accounts to 31 December each year. The company‘s trading profit and loss account for the year ended 31 December 2007 is...
(Solved)
Limo Limited prepares its accounts to 31 December each year. The company‘s trading profit and loss account for the year ended 31 December 2007 is presented below
Determine:
i) Capital allowances due to Limo Limited for the year ended 31 December 2007
ii) Taxable profit (or loss) of Limo Limited for the year ended 31 December 2007
iii) Tax liability (if any) from the profit (or loss) computed in (ii) above
Date posted:
February 14, 2019
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Answers (1)
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Mosocho Agroforestry Ltd. has two operating divisions; Agriculture Division and Forestry Division. The following information relates to the capital expenditure incurred by the two divisions...
(Solved)
Mosocho Agroforestry Ltd. has two operating divisions; Agriculture Division and Forestry Division. The following information relates to the capital expenditure incurred by the two divisions for the year ended 31 December 2008
Determine for the year ended 31 December 2008:
(a) Capital deduction due to be company.
(b) Adjusted taxable profit for the company
Date posted:
February 14, 2019
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Answers (1)
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Wote Suppliers Ltd. commenced operations on 1 July 2008 after incurring the following expenditure
Determine Capital allowances due to the company for the years of income...
(Solved)
Wote Suppliers Ltd. commenced operations on 1 July 2008 after incurring the following expenditure
Determine Capital allowances due to the company for the years of income ended 31 December 2008 and 2009.
Date posted:
February 14, 2019
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Answers (1)
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The following information relates to Sawira Limited for the two years ended 31 December 2009 and 2010
Capital allowances due to Sawira Limited for each of...
(Solved)
The following information relates to Sawira Limited for the two years ended 31 December 2009 and 2010
Determine Capital allowances due to Sawira Limited for each of the two years ended 31 December 2009 and 2010.
Date posted:
February 14, 2019
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Answers (1)
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Citing three reasons, argue the case for capital gains tax in an economy.
(Solved)
Citing three reasons, argue the case for capital gains tax in an economy.
Date posted:
February 14, 2019
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Answers (1)
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Citing two reasons, argue the case against capital allowances in an economy
(Solved)
Citing two reasons, argue the case against capital allowances in an economy
Date posted:
February 14, 2019
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Answers (1)
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Faza Ltd. a large scale manufacturing company, has provided you with the following information for the year ended 31December 2010
Compute for Faza Ltd. for the...
(Solved)
Faza Ltd. a large scale manufacturing company, has provided you with the following information for the year ended 31December 2010
Compute for Faza Ltd. for the year ended 31 December 2010:
(i) Capital allowances.
(ii) Taxable profit
Date posted:
February 14, 2019
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Answers (1)
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Heshima Ltd. commenced operations on 1 January 2011 after incurring the following expenditure
Compute for Heshima Ltd. for the year ended 31 ended 2011
i) Capital allowances
ii)...
(Solved)
Heshima Ltd. commenced operations on 1 January 2011 after incurring the following expenditure
Compute for Heshima Ltd. for the year ended 31 ended 2011
i) Capital allowances
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Date posted:
February 14, 2019
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Answers (1)
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Turbo Mining Company Ltd started prospecting for minerals in Turkana in year 2008. Expenditure relating to research, testing and winning access to minerals amounted...
(Solved)
Turbo Mining Company Ltd started prospecting for minerals in Turkana in year 2008. Expenditure relating to research, testing and winning access to minerals amounted to Sh.48 million.
The company paid Sh. 124 million to the government to acquire the rights over the minerals and shs.180 million for purchase of land.
The following assets were constructed or purchased during the year 2009:
1. Labour quarters were constructed at a cost of Sh. 15 million.
2. Senior manager's house was constructed on the site at a cost of Sh.6 million.
3. The director's house was acquired at a nearby trading centre at a cost of Sh.9 million.
4. Specialised processing machineries for mining were acquired at a cost of Sh.860 million.
5. Computers were purchased at a cost of Sh.0.72 million.
6. A forklift was acquired at a cost of Sh.4.5 million.
7. A saloon car for the general manager was purchased at a cost of Sh.3 million.
8. Office furniture was acquired at a cost of Sh. 1.5 million.
9. An aircraft was acquired for Sh. 144 million.
10. A store was constructed at a cost of Sh.21 million.
Determine The capital allowances due to the company for the years ended 31 December 2009, 2010 and 2011.
Date posted:
February 14, 2019
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Answers (1)
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Mirichu Ltd. processes milk for sale in the local market.The company started its operations on 1 January 2012 after constructing two factory building at a...
(Solved)
Mirichu Ltd. processes milk for sale in the local market.The company started its operations on 1 January 2012 after constructing two factory building at a cost of Sh.9 million each. Other assets acquired by the company on commencement of its operations included
Determine:
a) The capital allowances due to Mirichu Ltd. for the year ended 31 December 2012.
b) The taxable profit or loss for Mirichu Ltd. for the year ended 31 December 2012.
c) The tax- payable, if any, for the year ended 31 December 2012.
Date posted:
February 14, 2019
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Answers (1)
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Jawabu Ltd. commenced its operations on 1 January 2011 after obtaining a licence to manufacture leather bags for export.
Determine Capital allowances due to Jawabu Ltd....
(Solved)
Jawabu Ltd. commenced its operations on 1 January 2011 after obtaining a licence to manufacture leather bags for export.
The following information relates to the company's operations for the financial years ended 31 December 2011 and 2012:
Determine Capital allowances due to Jawabu Ltd. for each of the two years ended 31 December 2011 and 2012.
Date posted:
February 14, 2019
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Answers (1)
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Poland Mining Company Ltd. started prospecting for titanium in Mombasa in year 2011. Expenditure relating to research, testing and winning access to titanium amounted to...
(Solved)
Poland Mining Company Ltd. started prospecting for titanium in Mombasa in year 2011. Expenditure relating to research, testing and winning access to titanium amounted to Sh.240 million. The company paid Sh.720 million to the government to acquire rights over the titanium and Sh.210 million for the purchase of land.
The following assets were constructed or purchased during the year 2012:
1. Two graders were purchased at a total cost of Sh.16, 000,000.
2. A forklift was acquired at a cost of Sh.6, 000,000.
3. A store was constructed at a cost of Sh.36, 000,000
4. Office furniture was acquired at a cost of Sh.2, 400,000.
5. Labor quarters were constructed at a cost of Sh.42, 000,000.
6. Ten Lorries (5 tonnes each) were acquired at a total cost of Sh.30, 000,000.
7. Specialized processing machines for mining were acquired at a cost of Sh.960, 000,000.
8. A staff clinic was constructed at a cost of Sh.12, 000,000 .
9. Computers were purchased at a cost of Sh.480, 000.
10. A ship (600 tonnes) was acquired at a cost of Sh.450, 000,000.
11. Three saloon cars for official use were acquired at a total cost of Sh.9, 000,000.
Determine Capital allowances due to Poland Mining Company Ltd. for the two years ended 31 December 2012 and 31 December 2013
Date posted:
February 14, 2019
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Answers (1)
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Dellite Ltd. is a manufacturing company which commenced business on 1st October 2013 after incurring the following capital expenditureDetermine Capital allowances due to Dellite Ltd. for...
(Solved)
Dellite Ltd. is a manufacturing company which commenced business on 1st October 2013 after incurring the following capital expenditure
Determine Capital allowances due to Dellite Ltd. for the year ended 30 September 2014
Date posted:
February 14, 2019
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Answers (1)
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Maina, Otieno and Korir are in a partnership trading as Moko enterprises and sharing profits and losses in the ratio of 2:2:1 respectively
Determine:
i. Adjusted taxable...
(Solved)
Maina, Otieno and Korir are in a partnership trading as Moko enterprises and sharing profits and losses in the ratio of 2:2:1 respectively
The following income statements was prepared by the partnership for the year ended 31 December 2007
Determine:
i. Adjusted taxable profit or loss of the partnership for the year ended 31 December 2007
ii. A schedule showing the taxable income of each partner for the year ended December 2007
Date posted:
February 14, 2019
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Answers (1)
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List four types of dividend income which are exempted from tax in your country
(Solved)
List four types of dividend income which are exempted from tax in your country
Date posted:
February 14, 2019
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Answers (1)
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Mr. Ayub Simuyu is a senior manager with Lipa Enterprises limited. He is based at the company‘s headquarters in Nairobi
Mr. Ayub Simuyu has provided the...
(Solved)
Mr. Ayub Simuyu is a senior manager with Lipa Enterprises limited. He is based at the company‘s headquarters in Nairobi
Mr. Ayub Simuyu has provided the following information on his employment and other income for the year ended 31 December 2007
Determine:
i. Taxable income of Mr. Mr. Ayub Simuyu for the year ended 31 December 2007
ii. Tax payable on the income computed in (i) above
Date posted:
February 14, 2019
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Answers (1)