i) Education fee: Where the employer has treated the expense as an allowable expense,the employee shall be taxed but if it treated as a non-allowable expense the employee shall not be taxed.
ii) Income received for the disabled persons: the 1st Ksh150,000p.a will be tax exempt
iii) Non cash benefits: These are employment benefits enjoyed in kind by the employee. They are tax exempt if they don‘t exceed Sh36,000p.a or Sh 3,000.
iv) Medical benefits provided to a non-whole time service director: It is taxable benefit and the non-taxable amount is up-to a limit of Ksh1,000,000 p.a
v) Registered employee: The amount deductible is the lesser of employees contribution and the commissioners maximum amount of Sh4,000per month or Sh48,000p.a
Wilfykil answered the question on February 13, 2019 at 12:02
-
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)
-
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)
-
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)
-
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)
-
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)