KOITALEEL SAMOEI UNIVERSITY COLLEGE

(A Constituent College of University of Nairobi)

SCHOOL OF BUSINESS

DAC 212 – PRINCIPLES OF TAXATION

ASSIGNMENT 1: DUE ON 4TH APRIL 2023

USE YEAR 2022 EMPLOYMENT TAX RATES

QUESTION ONE

Betty is employed as a Finance Director by ABC Ltd. She reported the following details on her income for
the year ended 31st December, 2022.

1. She was entitled to a basic salary of Sh. 2,400,000 per annum (PAYE Sh. 720,000 per annum)

2. The employer provided her with a motor vehicle (2600cc ) which was purchased in 2020 at a cost of
sh.2.4m

3. She contributed Sh.400,000 (including interest of sh. 180,000) towards mortgage repayment

4. She was entitled to annual bonus of Sh.120,000 per annum. The bonus for the year 2021 was
however not paid until February 2022.

5. The following deductions were made from her salary during the year:

Sh

- Subscription to Eldoret Golf Club 96,000

- Contributions to a registered pension scheme 120,000

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- Subscriptions to ICPAK 90,000

7. Her private telephone charges averaging Sh1,200 per month were also paid by the employer.

8. She lived in a company house and paid a nominal rent of sh.20,000 per month for the house. The market rental
value of houses in the estate was sh.60,000 per month.
7. She has a life insurance policy where she pays sh. 20,000 per month .
Required:

i) Taxable income of Betty for the year ended 31st December, 2022

ii) Tax due on the income computed in (i) above

QUESTION TWO
Kibet is an employee of ABC Construction Limited. ABC Construction Ltd. provided the following
emoluments to him for the year ended 31 December 2022:

1. Salary of Sh.150,000 per month (PAYE deducted and paid to the Commissioner Sh.62,000 per
month).

2. Housing – Free housing is provided, with water and electricity. He pays a nominal sh.10,000 per month.
Market rental value per month is 15,000.Water consumed was for Sh.4,800 and electricity consumed
was for Sh.18,000 during the year.

3. Company landrover leased at sh.1 m per year

4. Leave pay equal to one month’s salary.

5. The company provided him with Safaricom airtime worth sh.5,000 during the year.

6. The company paid his medical bills amounting to sh.1,200,000 following hospitalization of his
son.The company pays medical bills for all employees.

7. The company gave him a loan of sh.5m at an interest rate of 4% p.a.The KRA prescribed interest
rate at that time was 9% p.a.

8. He is a member of Eldoret Golf club where the employer contributes sh.5,000 per month for
him.He also contributes the same amount.

Required:
Compute the taxable income and tax thereof

QUESTION THREE
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Ms Chebet works as a sales manager with Kenya Bats Limited. The following are her employment details for the
month of January 2022.

The company pays her a salary of Sh.150,000 per month. He is a member of the company‟s pension scheme which
is registered with the Commissioner for Domestic Tax. She contributes five percent of his salary and company
contributes ten per cent. She has a co-operative loan which she repays at the rate of sh.9,967 per month. She
bought a car on loan and repays Sh.10,160 per month towards the loan. She paid mortgage interest (owner
occupier interest) of sh.24,000 on loan from KCB. She was paid 3 days per diem of sh.3,000 per day while on
official duty in Mombasa.

Ms Chebet lives in Eldoret and is married with two children. Her Payroll Number is FD0095/1.

Her statutory deductions are: NSSF Sh.200 per month, NHIF Sh.1,700 per month.

Required:
A well laid out statement in respect of the month of January 2021 showing the income tax and other deductions;
and net pay for Ms Chebet.

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