THE INSTITUTE OF FINANCE MANAGEMENT

FACULTY OF ECONOMICS AND MANAGEMENT SCIENCES

DEPARTMENT OF ECONOMICS AND TAX MANAGEMENT

BACHELOR OF ACCOUNTANCY AND INFORMATION TECHNOLOGY

YEAR II

TMU 07412: BUSINESS TAXATION

MARKING SCHEME
ACADEMIC YEAR 2021/2022

DATE: May 10, 2022 TIME ALLOWED: 2 HOURS

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GENERAL INSTRUCTIONS:
i. There are TWO Questions. Attempt all Questions.
ii. Marks are allocated for each question, plan your time wisely.
iii. Your answer should be relevant and to the point and on the space provided.
iv. This question paper should not leave the examination room
v. You are reminded to adhere to ALL Institute’s Examination Regulations.

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 QUESTION ONE

a) Briefly differentiate between the following terms as applied in Taxation

i) Final withholding payments are withholding payment in which tax is deducted at the
source of such payment as the tax so deducted satisfy the tax liability of such payment or
income on the hands of the recipient. Tax so deducted is final and conclusive WHILE Non
final withholding payments are withholding payments in which tax is deducted at the
source and the withholding tax so deducted does not satisfy the tax liability of those
payments. The tax deducted is final and conclusive
ii) The total income of a person shall be the sum of the person's chargeable income for the year
of income from each employment, business and investment less any reduction allowed for
the year of income under section 61 relating to retirement contributions to approved
retirement funds WHILE the chargeable income of a person for a year of income from any
employment, business or investment shall be

(a) in the case of a resident person, the person's income from employment, business or
investment for the year of income irrespective of the source of the income
(b) in the case of a non-resident person, the person's income from employment, business or
investment for the year of income, but only to the extent that the income has a source in the
United Republic
(c) in the case of a resident corporation which has perpetual unrelieved losses, the turnover of
such corporation for a year of income

b) Employment income

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Name of the taxpayer: Mr. Skini protekta
Source of Income: Employment
Residential Status: Resident
Year of Income: 2020
TZS
Salary 12,000,000
Employer’s contribution to pension fund (15% x 12,000,000) 1,800,000
Car benefit (note 1) 250,000
Loan benefit (note 2) 1,800,000
Warden and security remuneration 200,000 x 9 months x ½ (private portion) 900,000
Utility 1,600,000 x 9/12 x ½ (reduced to period/portion she occupied the house) 600,000
Free lunch 10,000 x 30 300,000
Crates of beer 25,000 x 12 x 2 600,000
Overtime/per diem NIL
Alimony (taxable if not under judicial order/written agreement (100,000x 12) 1,200,000
SUB TOTAL 19,450,000
Less: Employee’s contribution to pension fund (5% x 12,000,000) (600,000)
Employer’s contribution (deductible) (18,000,000)
Total income from employment income without housing benefit 17,050,000
Add: Housing benefit (note 3) nil
Taxable income from employment 17,050,000
Notes:
Note 1: Car benefit
Brand new car is a car as aged less than 5 years. A taxable benefit in kind for a car of this age
and engine capacity 3000cc is 1,000,000. Therefore, car benefit = 1,000,000 x 25 per cent =
250,000
Note 2: Loan benefit
Taxable loan benefit year 2020 = 15,000,000 x (12% - 0%) 1,800,000
Note 3 Housing benefit
Housing benefit is excluded from taxable employment income if employer is not entitled to
claim deduction or relief in relation to ownership or maintenance of the house
QUESTION TWO

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a) Depreciable asset means an asset employed wholly and exclusively in the production of
income from a business, and which is likely to lose value because of wear and tear,
obsolescence or the passage of time but excludes goodwill, mineral or petroleum rights and
other interest in land, a membership interest in an entity and trading stock

b) The general principle of deduction states that for the purposes of calculating a person's
income for a year of income from any business or investment, there shall be deducted all
expenditure incurred during the year of income, by the person wholly and exclusively in the
production of income from the business or investment except for

 Expenditure of capital nature

 Consumption expenditure
 Excluded expenditure

CLASS I II III VI
RATE-A 37.5% 25% 12.5% 5%
TWDV 23,500,000 45,000,000
Computers and data hand 1,800,000
Three 25 seats minibuses 45,000,000
Two more 50 seats buse 80,000,000
2 bulldozers 20,000,000
Toyota Hilux pickup 5,000,000
New saloon car 30,000,000
Furniture and fittings 7,500,000
Two lawn mowers 900,000
CAT Comatus Caterpillar 40,000,000
5 Fuso 10 tons 60,000,000
Filing cabinets 6,000,000
Three heavy-duty Isuzu 180,000,000
trucks
Storage warehouse 5,000,000
Storage warehouse 2,000,000
One helicopter 40,000,000
Total 165,000,000 405,000,000 14,400,000 7,000,000
Less: Incomings
10 tons tractor caught by (12,000,000)
fire
Bulldozer (8,000,000)
Depreciation base 157,000,000 393,000,000 14,400,000 7,000,000
Annual allowance 58,875,000 98,250,000 1,800,000 350,000
TWDV 31st December 98,125,000 294,750,000 12,600,000 6,650,000
2021