Mr King is a bank manager of a commercial bank in Mauritius. He is married and has
Question:
Mr King is a bank manager of a commercial bank in Mauritius. He is married and has two sons. You are provided with the following information for the year ended 30 June 2020:
1. King receives annual emoluments of Rs 3,060,000 exclusive of the end of year bonus.
2. King resides in a house which is rented by his employer. The rental price is Rs 45,000 monthly.
3. He enjoys the benefit of a company car of 2000cc used by him and the entire car running expenses are met fully by the employer.
4. King also owns a building which he rents out to MCB Ltd. His rental income amounts to Rs 3,600,000 for the year, payable in 12 monthly instalments. Maintenance expenditure of the building amounts to Rs 850,000.
5. During the year ended 30 June 2020, he sold an immovable property (IP), which he inherited from his father, for Rs 2,400,000. The market value of the IP was Rs 1,800,000 at time of disposal.
6. King joined a club in March 2020. This club has the reputation of having as members very influential persons who would be potential customers to the firm where King works. He avers that he joined this club purposely in order to attract potential customers. Indeed, the firm noted an influx of customers after March 2020. Total Subscription expenses incurred by King to the club are Rs 288,000.
7. Very often, King has to attend meetings at the offices of the clients. In doing so, he has to be well dressed. He usually attended these meetings in suits. He claimed that the expenditure incurred to acquire these suits is Rs 42,000.
8. King contracted a loan to finance his ACCA exams. For the year ended 30 June 2020, interest paid on the loan amounted to Rs 39,000.
9. He also made a profit on disposal of his shares held at SBM Ltd amounting to Rs 48,000.
10. King’s wife, Mrs Dorothy, derives annual emoluments of Rs 988,000 inclusive of end of year bonus.
11. The two sons have been following full time undergraduate education since June 2016 at Charles Telfair Institute. The tuition fees, excluding administration and student union fees, are Rs 63,800 & Rs 72,400 for the year ended 30 June 2020.
12. King also has an insurance medical policy for the family and the premium payable is Rs 42,000 monthly.
13. The couple also contracted a housing loan for their first residence at Pereybere and interest paid for the year ended June 2020 was Rs 198,800.
14. Mrs Dorothy owns a house in UK and same is being rented yearly for Rs 500,000.
The tenant transfers the rental amount into the bank account of Dorothy in Gatehouse Bank PLC, in the UK.
King is requesting you to file his income tax returns as well as for his wife for the year ended 30 June 2020. At later date, he also realised that he forgot to give you the following information-In the months of August & September 2020, he was paid a performance bonus of Rs 200,000. King also provided you the following additional
information:
• Total taxes withheld under PAYE are Rs 527,850 and Rs 103,950 for himself and his wife respectively for the year ended 30 June 2020.
REQUIRED
In the most efficient way, compute
(a) King’s income tax liability and the tax due and payable or tax paid in excess, if any for the year ended June 2020.
(b) King’s wife income tax liability and the tax due and payable or tax paid in excess, if any for the year ended June 2020.
Accounting Principles
ISBN: 978-0470533475
9th Edition
Authors: Jerry J. Weygandt, Paul D. Kimmel, Donald E. Kieso