TAXATION TUTORIAL QUESTIONS
TAX PAYMENT PROCEDURES (Returns, Assessment, Interests and Penalties)
QUESTION ONE.
a) Briefly explain the following terms in relation to Income tax
i. Returns of income
ii. Final returns(FR)
iii. Statement of estimated tax payable(SOETP)
b) Explain the contents of the statement of estimated tax payable and Final returns of income
c) State the due dates for submission of the statement of estimated tax payable(SOETP) and Final Returns (FR)
d) Explain the differences between the Statement of estimated tax payable(SOETP) and the Final return of income (ROI)
QUESTION TWO.
a) Explain the person not required to file the returns of income(ROI)
b) Explain disciplinary measures for failure to pay income tax on due dates
c) Briefly explain the following terms in relation to income tax
i. Self assessment system
ii. Jeopardy assessment
iii. Best judgement assessment
iv. Amended assessment
d) The Commissioner General may extend the due date for submission of Returns of income. Explain the conditions for such extension
QUESTION THREE.
KANYABUHURA CO. LTD (KCL) is a manufacturer of juice. KCL also has a fixed deposit Account with the NBC (T) Limited, which earns the company interest income of TShs. 1,600,000 during the year. The company’s estimate of its income for the YOI 2012 is 9,500,000. The accounting period of KCL is the calendar year, the company received its first payment of instalments of interest on the 20th of May 2012 of Tshs. 500,000 and withholding tax payment was Tshs. 50,000. Required:
Determine
a) Tax instalment payable on the 31th March 2012
b) Tax payable on the second instalments
c) Due date for submitting the final returns
QUESTION FOUR.
ABC Ltd’s YOI run from 1st January to 31st December each year.ABC Ltd submitted a SOETP on 6th may 2013, which showed an estimated total income for the YOI 2013 of Tshs 10,000,000. However, the company paid the first tax instalment of Tshs 750,000/= on 28th march 2013 Required:
Determined the penalty for failure to file the SOETP on due date by ABC Ltd according to TAA, 2015
QUESTION FIVE.
The IFMSOO Co. Ltd (ICL) of Dare s salaam filed a SOETP of Tshs. 4,040,000/= on the 15th April 2011 for YOI 2011 after having failed to furnish such a statement as required under s.89 of ITA 2004. The ICL’s 12 months accounting period normally runs from 1st September of each year. The ICL paid on 15th June 2011, the full taxes shown on the SOETP for the YOI 2011. However it furnished the ROI for the year on the 20th may 2012, which declared an income attracting a tax of Tshs. 4,800,000. On 30th July 2012 the commissioner made an adjusted assessment on the company for the year 2011 of tshs.10, 616,000 and on the same date served the company with notice of assessment under s.40 of TAA, 2015, which required the company to pay the tax within 30 days from the date of the adjusted assessment. On 15th September 2012 ACL paid all the tax payable on assessment. Assume statutory rate is 12% p.a. Required: calculate (if any) the following taxes per the Tax Administration Act (TAA) 2015 a. Penalty for failure to file statement of estimates and return of income under s.78(1), b. Interest for understating estimated tax payable by instalment under s.75, c. Interest for failure to pay tax on or before the due date under s.76 and d. Total tax payable on assessment
QUESTION SIX
ABC Ltd is involved in manufacturing business in dare s salaam. During the year 200x the company submitted estimates of its total income for the year on which the estimated tax payable under s.89 of ITA 2004 was 20,000,000/=. The statement of estimates accompanied by the first instalment was submitted within the due date. The remaining instalments were paid within the due date. The company submitted the return of income on 31/12/200y despite several notices from the CIT requiring the company to submit its return of income within the due date. This return declared an income on which total tax payable was 30,000,000/=. Assume: 1. Final tax was paid on the due date of submission of return of income and assessment made on the same day. 2. Y1=200x & Y2 =200y 3. Statutory rate =15% p.a Required: Calculate the following with respect to Tax administration Act 2015
a) Penalty for late submission of estimates or return or income if any.
b) Interest for underestimation if any u/s 75.
c) Interest for late payment of tax u/s 76 if any.
d) Calculate the tax paid on the date when the ROI was submitted to the Commissioner General.
QUESTION SEVEN
XYZ Ltd whose accounting period is normally coincides with the calendar year submitted its SOETP for the YOI 200x on 28th April 200x and paid the 1st instalment of estimated tax on that date. The remaining instalment was paid within the due dates. The SOETP had the following particulars.
i. Estimated income for the year 200,000,000/=
ii. Income tax paid on realization of business asset on 28th February 200x 150,000/=.
iii. Total tax withheld from income received by that person on 10th January from investments held by the company=250,000/= During the year the company distributed dividends to its shareholders amounting to 100,000,000/= for which the company did not withhold dividends and remit the same to the CIT. such distribution was made on 25th April 200x. After the end of the accounting period the CG issued a notice to the company requiring it to furnish the returns of income on or before 30th march 200y. However, the company did not respond promptly and hence this return were submitted on company paid the whole amount of taxes and penalties due as on that date on the same date. Assume: Withholding tax on dividends is 15% Statutory rate 12% p.a Required: by applying the provisions of the TAA 2015 and ITA 2004, calculate;
1) The amount paid on 28th April 200x
2) The amount paid on 2nd, 3rd & 4th instalments.
3) The amount paid on 2nd June 200y.
QUESTION EIGHT
Twashika fish processing Company Ltd of Maswa, Mwanza, and During the YOI 200 x the CG paid a physical visit to the company on 2nd February after discovering during his normal file audit and investigation that for the previous four past years the company’s books of accounts were not properly kept. After paying the visit on (2nd February 200x), the CG discovered that the company was not maintaining proper records and hence reminded the company to furnish the SOETP on or before 31/3/200x. However the company did not respond to this notice and hence the statement of estimated tax was submitted on 15/4/200x estimating the income whose total tax payable for the year was 150,000,000/= The company paid the 1st instalment on that date the remaining instalments were paid on due date. Assume the company furnished its ROI on 15/9/200y declaring an income of 600,000,000/= and paid the total tax due as on that date on the same date. Required: Assume: The statutory rate 12% p.a
a) Calculate the total penalties due to that person.
b) Calculate the amount paid on 1st, 2nd, 3rd and 4th instalments. c) Calculate the total tax paid when the ROI was submitted on 15/9/200y.
QUESTION NINE
Shabir Ltd is a resident company incorporated since 2001. During the YOI 200x the company, did not furnish the SOETP within the due date. The CIT sent a notice on 15th April 200x requiring the company to furnish the statement of estimated income within 15 days from the date of the notice. The Company responded to the Commissioners’ notice and submitted a statement estimating the income of 500,000,000/=. On 30th April, 200x and paid all the taxes due as on that date. On 17th august 200x the CG decided to pay a physical visit to the company’s premises and discovered that the company was not keeping was not keeping proper books of accounts and other records relating to tax matters. The company latter furnished the ROI on 18th august 200y declaring an income of 800,000,000/= and paid the remaining tax as on that date on the same date. Assume: Statutory rate of 13% p.a i. Calculate the tax paid on 30th April 200x ii. Calculate the total tax paid for the year.
CLASS ILLUSTRATION Z
Company Ltd furnished the Commissioner General (CG) its statement of estimated tax payable for the year of income 2008 on the 15th December 2007. The statement declared a total estimated taxable income of Tsh.160, 000,000 and Z paid the first installment on the same date it furnished the statement. Z's year of income normally runs from 1st August of each year. On 1st March 2008, Z paid the second installment before revising its estimates to a taxable income of Tsh.190, 000,000 from 1st April 2008. The rest of the installments were paid on their due dates but Z failed to file the return of income for the year of income 2008 as required under section 91 of the Income Tax Act, 2004. On 21st May 2009, the CG made a best judgment assessment of a total taxable income of Tsh. 280,000,000. Z paid the tax on assessment within the date specified by the CG in the notice of assessment. Assume statutory interest rate is 20% p.a.
Required:
a) State the due dates for submission of statement of estimated tax payable and final returns
b) State the due dates for payments of installment taxes and final tax
c) Calculate the amount of tax payable on the 2nd and 3rd installments.
d) Determine the tax payable on assessment as at 21st May 2009, taking in account all taxes payable as a result of any Z’s non-compliance. (All amounts to the nearest Tsh.)
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