Describe three tax planning opportunities for an individual tax payer and the limits (6 Marks)

The following transactions relate to a hardware store based in Laikipia for the month of September 2020.

Purchase of goods at standard rate	626,400
Exported goods to Congo	380,000
Sales at standard rate	1,113,600
Audit fees	37,120
Purchase of fuel and oil for delivery van	29,000
Telephone bills	17,400
Exempt sales	400,000
Exported goods to Malawi	220,000
Catering services	41,760
Purchase of stationery	20,880
Cost of assigning a debt for consideration	100,000
Car park services provided by country authority	50,000
Treatment and supply of natural water	40,000
Purchase of first aid boxes and kits	30,000

Additional Information

1. The company issued debit notes and credit notes of sh.24,3690 and sh.34,800 respectively in respect to taxable supplies at the standard rate.
2. The company returned goods invoiced at sh.29,000 to suppliers because they were of the wrong type. A credit note was received immediately
3. The company imported goods valued at sh.320,000 (CIF). The goods were not included in the purchases figure. The import duty was at the rate of 20%
4. The company transferred a branch as a going concern to another registered company at a cost of sh.450,000 at the end of April 2017
5. The company could not identify purchases at the standard rate that were sold as exempt and therefore restricted deductible input tax
6. Transactions are inclusive of VAT at the rate of 14% where applicable.

Required

Determine the VAT payable by (or refundable to) the company for the month of September 2020 (14 Marks)

Answer rating: 100% (QA)

Answer VAT is calculated backward 14 on transactions involving VAT Taxable Vale VAT14 Total Value Sa... View the full answer