Maxmin Ltd. is a company incorporated in Kenya and owns 80% of the ordinary share capital ofRed Ltd. which is also incorporated in Kenya. Both companies prepare their accounts to 30 September each year.

In its latest twelve-month accounting period ending 30 September 2017, Maxmin Ltd. reported the following results:

	Sh.	Sh.
Gross profit per accounts Less: Loan interest Travel expenses Legal expenses Patent royalties (paid to a south African Company) Telephone expenses Salaries and wages Electricity Depreciation Net profit Add: Patent royalties received Loan interest received Dividend received Total income	664,000 136,000 320,000 800,000 160,000 12,000,000 280,000 2,240,000 1,280,000 160,000 4,320,000	40,851,200 16,600,000 24,251,200 5,760,000 30,011,200

Notes

1.	The legal expenses include an amount of Sh.200,000 for the disposal of a factory (note 5), an amount of Sh.40,000 for debt collection and Sh.80,000 for successfully defending a court action against a company’s product.
2.	The loan interest paid is made up of the following: - Interest amounting to Sh.320,000 on a loan used to purchase plant and machinery for use in production. - Interest amounting to Sh.344,000 on another loan used to purchase the shares in Red Ltd.
3.	The loan interest received was the full amount due from a major shareholder on an amount borrowed to purchase his main residence.
4.	Royalties paid of Sh.160,000 were outstanding as at 30 September 2016. This fact had been overlooked by the accountant.
5.	The company disposed of a factory for Sh.11,694,400 in March 2017. This had cost Sh.3,200,000 in the year 2006.
6.	Capital allowances have been agreed with the Commissioner of Income Tax at sh.1,230,000 after making adjustments for the factory disposed of.
7.	Net rent of Sh.1,440,000 was received from one lease, a net loss of Sh.344,000 was made on another and a loss of sh.160,000 had been carried forward from 30 September 2016. This has not been shown in the accounts.
8.	Travel expenses include sh.350,000 paid for Mr. John smith, a new employee who was hired from Australia.
9.	Salaries and wages include directors’ fees amounting to Sh.4,250,000.
10.	Patent royalties received were from Red Ltd. while those paid were to a South African Company that has allowed Maxmin Ltd. to manufacture their products locally.

Required:

(a) Taxable income and tax chargeable thereon for Maxmin Ltd. for its accounting period ending 30 September 2017.

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a Taxable income and tax chargeable thereon for Maxmin Ltd for ... View the full answer