Eric April retired at the age of sixty-seven after twenty years service at OK Bazaars Ltd. His
Question:
Eric April retired at the age of sixty-seven after twenty years’ service at OK Bazaars Ltd. His earnings and expenses for the year ended 28 February 2020 were as follows:
Salary to the date of his retirement on 31 August 2019 (his 63rd birthday) 246 000
Contributions to the OK Bazaars Pension Fund 24 600
Medical contributions to the OK Bazaars Medical Aid 12 000
Current contributions to a retirement annuity-fund –
From which he will retire in two years 24 000
Dividends:
OK Bazaars Ltd - preference shares 25 000
Namibia Breweries - ordinary shares 16 000
Namibia Building Society - subscription shares 5 000
Swabou Building Society - special tax free indefinite period shares 4 000
Interest:
Namibia Building Society - fixed deposit 2 500
Treasury Bills 3 600
First National Bank - current account 5 000
Paribas et Cie, Paris, France - taxed there
(On a loan made while in exile in 1990) 6 000
Lump sum gratuity from OK Bazaars Ltd on his retirement 350 000
Payment from OK Bazaars in lieu of leave not taken 40 000
Monthly Pension 15 000
(Five years of his career at OK in France and the rest in Windhoek) 180 000
Eric spent three months at home repairing things, after which his wife forced him to find something to keep him busy and out from under her feet. OK Bazaars asked him to act as consultant from 1 December for specific projects that they want to undertake for which he received fees of N$12 600.
He was also appointed as director for which he received N$6 000. He had to buy stationary for N$1 300 on his own account and work from home on a computer and printer that he purchased for N$18 000 on 28 November.
The Receiver will allow him to deduct 15% of his expenses for a home office in respect of his monthly municipal bills (N$2 000) and cell phone accounts (N$600) from the date he was appointed as well as 20% of his bond interest of N$5 000 per month.
He was also required to entertain the company’s corporate clients for which he received an allowance of N$ 1 000 per month, half of which he spent.
REQUIRED:
Calculate the taxable income in respect of the 2019 year of assessment.
Contemporary Business Mathematics with Canadian Applications
ISBN: 978-0134141084
11th edition
Authors: S. A. Hummelbrunner, Kelly Halliday, Ali R. Hassanlou, K. Suzanne Coombs