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In case of an individual resident he/she is taxable on a total employment income in Kenya from wherever earned. However for a non- resident person he/she is taxed on employment income earned from Kenya only.
In case of withholding taxes different rate and rules apply depending on residence status. For co-operate bodies the co-operation tax rate for resident companies is 30% whereas for a non- resident companies is at 37.5%.
Wilfykil answered the question on February 13, 2019 at 10:04
- 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)
- Outline four tax set-offs available to an individual tax payer(Solved)
Outline four tax set-offs available to an individual tax payer
Date posted: February 13, 2019. Answers (1)
- Halima and Cherono are partners trading as Hache Enterprises and sharing profits and losses in the ratio of 2: 1 respectively
Required:
i. Adjusted partnership taxable profit...(Solved)
Halima and Cherono are partners trading as Hache Enterprises and sharing profits and losses in the ratio of 2: 1 respectively
The partners presented the Following income statement for the year ended 31 December 2013:
Required:
i. Adjusted partnership taxable profit or loss for the year ended 31 December 2013.
ii. Allocation of the taxable partnership profit or loss computed in (i) above.
Date posted: February 13, 2019. Answers (1)
- Royal Property Management Company Ltd. manages rental properties on behalf of its clients. This service involves maintenance of the properties and collection of rent due.
The...(Solved)
Royal Property Management Company Ltd. manages rental properties on behalf of its clients. This service involves maintenance of the properties and collection of rent due.
The company also carries on the business of cleaning properties for owners at a fee. In addition, the company has invested in quoted shares and fixed deposit accounts with financial institutions
The following details were extracted from the records of the company for the year ended 31 December 2013:
Required:
i. Taxable profit or loss for Royal Property Management Company Ltd. for the year ended 31 December 2013.
ii. Tax liability (if any) from the profit or loss computed in (i) above.
Date posted: February 13, 2019. Answers (1)
- Mr. Herrad Makali is employed as a senior manager with Brook Enterprises Ltd. He holds 18% of the company's controlling interest.
Required:
(i) Total taxable income of...(Solved)
Mr. Herrad Makali is employed as a senior manager with Brook Enterprises Ltd. He holds 18% of the company's controlling interest.
The following details relate to Mr. Makali for the year ended 31 December 2013.
1. Basic salary Sh.82, 000 per month (PAYE Sh. 18,400 per month).
2. Benefits in kind for the year amounted to Sh.48, 000.
3. He was provided with a company car of 2000 cc whose cost was Sh.700, 000. The car was leased by the company at a monthly rent of Sh.24, 000. He also received a monthly fuel allowance of Sh.10, 000 for the car.
4. He was provided with a house by the employer. The house is rented from one of the company's directors at Sh40, 000 per month. The electricity is supplied from a generator installed by the company, the monthly expenses in relation to the generator amounted to Sh.30, 000.
5. On 1 May 2013, he moved to his own house which he had constructed through a 12% mortgage loan of Sh.2, 000,000. The loan had been obtained from National Housing Corporation on 1 October 2012.
6. He is a member of a registered pension scheme where he contributes Sh.18, 000 per month with the employer contributing an equal amount for him.
7. On 1October 2013, he secured an education insurance policy for his child at an annual premium of Sh.72, 000 payable by the company.
8. He reported a farming income of Sh. 98,000 after presumptive tax.
9. He was out of work station for 5 days for which he was paid per diem of Sh.4, 600 per day.
Required:
(i) Total taxable income of Mr Herrad Makali for the year ended 31 December 2013.
(ii) Tax due on the taxable income calculated in (i) above.
(iii) Comment on any information not used in your computations under (i) above.
Date posted: February 13, 2019. Answers (1)
- Outline four roles of an employer in relation to the operation of the pay as you earn (PAYE) system.(Solved)
Outline four roles of an employer in relation to the operation of the pay as you earn (PAYE) system.
Date posted: February 13, 2019. Answers (1)
- Explain the tax position of a resident individual with respect to the following:
(i) Royalty income.
(ii) Loan received from an employer at an interest rate below...(Solved)
Explain the tax position of a resident individual with respect to the following:
(i) Royalty income.
(ii) Loan received from an employer at an interest rate below the market interest rate.
Date posted: February 13, 2019. Answers (1)
- Kalimu and Shikah commenced trading in partnership as Kashi Enterprises on 1 January 2013. They share profits and losses in the ratio of 2:1 for...(Solved)
Kalimu and Shikah commenced trading in partnership as Kashi Enterprises on 1 January 2013. They share profits and losses in the ratio of 2:1 for Kalimu and Shikah respectively. The partners were to receive monthly salaries of Sh.18, 000 and Sh.22,000 for Kalimu and Shikah respectively. The partnership did not maintain a complete set of accounting records.
The following summary of the bank statements for the year ended 31 December 2013 has been presented to you.
Required:
(i) Adjusted partnership profit or loss for the year ended 31 December 2013.
(ii) Distribution schedule of the profit or loss calculated in (i) above.
Date posted: February 13, 2019. Answers (1)
- Explain four reasons why a country might prefer a multiple tax system over a single tax system(Solved)
Explain four reasons why a country might prefer a multiple tax system over a single tax system
Date posted: February 13, 2019. Answers (1)
- Write brief notes on the following
i. Tax amnesty
ii. Backward shifting of tax
iii. Tax treatment of standing timber(Solved)
Write brief notes on the following
i. Tax amnesty
ii. Backward shifting of tax
iii. Tax treatment of standing timber
Date posted: February 13, 2019. Answers (1)
- Explain the following:
(a) Role of the revenue authority in a country(Solved)
Explain the following:
(a) Role of the revenue authority in a country
Date posted: February 13, 2019. Answers (1)
- Discuss four arguments in favor of progressive taxes in a country.(Solved)
Discuss four arguments in favor of progressive taxes in a country.
Date posted: February 13, 2019. Answers (1)
- Briefly explain the meaning of the following terms:
(i) Tax planning.
(ii) Tax avoidance.
(iii) Tax evasion.(Solved)
Briefly explain the meaning of the following terms:
(i) Tax planning.
(ii) Tax avoidance.
(iii) Tax evasion.
Date posted: February 13, 2019. Answers (1)
- Distinguish between a "tax" and a "charge" as imposed by the government(Solved)
Distinguish between a "tax" and a "charge" as imposed by the government
Date posted: February 13, 2019. Answers (1)
- Briefly explain three factors that influence the extent of forward shifting of indirect taxes.(Solved)
Briefly explain three factors that influence the extent of forward shifting of indirect taxes.
Date posted: February 13, 2019. Answers (1)
- A number of revenue authorities in the region have embarked on various tax modernisationprogrammes.
Discuss three goals of such modernization programmes(Solved)
A number of revenue authorities in the region have embarked on various tax modernisationprogrammes.
Discuss three goals of such modernization programmes
Date posted: February 13, 2019. Answers (1)