SECTION B

There are FOUR $(4)$ questions in this section. Attempt any THREE $(3)$ questions.

OUESTION TWO

James Nkhata, has been employed as an electrical engineer at Lombe Plc for many years. On $1$ May $2022,$ he started running a business which deals in electrical appliances generating annual tumover which is above $K800,000.$ He prepared the first accounts to $31$ March $2023,$ and has decided to be preparing accounts annually thereafter. The final taxable profits for the first two periods of trading are as follows:

$\backslash$table$[[$Period ended $31$ March $2023,$K$],[$Year ended $31$ March $2024($forecast$),40,000],[,150,000]]$

On $31$ January $2023,$ Nkhata decided to take early retirement from employment. At the time of retirement, he was entitled to an annual basic salary of $K720,000$ payable on $25$ of each month, and he was also entitled to housing allowance of $25\%$ of the basic salary and a mileage allowance of $5\%$ of the basic salary.

On $16$ December $2022,$ Lombe Pic had dedared a performance bonus for all employees payable on $31$ December $2022.$ However, due to liquidity problems, the bonus was only paid on $31$ January $2023.$ On the same date, James Nkhata was also paid his early retirement package comprising a lumpsum pension of $K8$ million, repatriation pay of $K_{2}20,000$ and leave pay of $K75,000.$ PAYE deducted from his employment income was $K35,640.$

James Nikhata used his own personal motor car partly for employment purpose. He bought the car on $6$ July $2022$ at a cost of $K400,000.$ During the month of January $2023,$ he travelled a total of $1,500$ kilometres in the car out of which, $900$ Kilometres were for employment purposes. He incurred motor car running expenses totalling $13,000$ in the month of January $2023.$

Other Income

In the tax year $2023,$ NKhata generated the following additional income:

$\backslash$table$[[,$K$],[$Royalties$,35,190],[$GRZ bond interest,$24,000],[$Dividends from a LuSE listed company,$30,000],[$Consultancy fees,$34,000]]$

The above amounts represent the actual cast received. Withholding tax had been deducted and paid at source where appropriate.