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Tax Chargeable (200 000-5 000) 20%

Mr. Amuli received various sources of income in 2020 totaling ZWL$1,040,000. This included dividends, interest income, rental income, and royalties. After exemptions and deductions, his taxable income was ZWL$782,000. His tax liability for the year was calculated to be ZWL$206,863.71 after taking into account tax credits, AIDS levy, and double taxation relief on foreign taxes paid.

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Danisa Ndhlovu
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78 views2 pages

Tax Chargeable (200 000-5 000) 20%

Mr. Amuli received various sources of income in 2020 totaling ZWL$1,040,000. This included dividends, interest income, rental income, and royalties. After exemptions and deductions, his taxable income was ZWL$782,000. His tax liability for the year was calculated to be ZWL$206,863.71 after taking into account tax credits, AIDS levy, and double taxation relief on foreign taxes paid.

Uploaded by

Danisa Ndhlovu
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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QUESTION 1:

Mr. Amuli is an ordinary resident of Zimbabwe who is 60 years old. During the year ended
31 December 2020, he received the following income.
ZWL$
Dividend received from Econet Zimbabwe Ltd; a company listed on the
115,000
Zimbabwe Stock Exchange
Interest on debentures in Zano Ltd, a Zimbabwean public limited company 272,000
Interest earned on fixed deposit a/c with Barclays Bank Zimbabwe 123,000
Rent Received from a Commercial Building in Botswana 450,000
Royalties from a book published in South Africa but written in Zimbabwe 180,000
Dividends from Bakari Incorporated, a Nigerian firm headquartered in
Lagos (Non-resident Tax amounting to $10,000 was paid in Nigeria, and
200,000
$5,000 was paid to an agent who assisted in the repatriation of the dividend
to Zimbabwe)
Interest received from ABSA Bank Tanzania. Non-Resident Tax paid on the
interest in Tanzania amounted to $15,000. Bank Charges amounting to 150,000
$10,000 were incurred in Tanzania.
Required:
Calculate Mr Amuli’s tax liability for the year ended 31 December 2020. Assume that he was
granted all relevant reliefs and elections to minimise tax liability. [Total: 20 marks]

SOLUTION
Computation of Mr Amuli’s tax liability for the year ended 31 December 2020
Naration ZWL$ ZWL$
Dividend Received from Econet 115 000
Interest on debenture with Zano ltd 272 000
Interest on fixed deposit with Barclays Bank Zimbabwe 123 000
Interest received from a commercial building in Botswana -
Royalties 180 000
Dividend from Bakari Incorporated 200 000
Interest from ABSA Bank in Tanzania 150 000
Gross Income 1 040 000

Less Exemptions
Dividends from Econet
115 000
Zimbabwe
Interest earned on fixed deposit
123 000 (238 000)
with Barclays Zimbabwe
802 000
Less Allowable deductions
Agent fees -
Bank charges 10 000 (10 000)
Taxable income 782 000
Tax Chargeable
Tax on Dividends
(200 000-5 000)*20% 39 000

Tax @ 24.72% 193 310.40


232 310.40
Less Tax Credit-Elderly (7 200)
225110.4
Add 3% AIDS Levy 6753.31
231 863.71
Less Double taxation relief (25 000)
Tax liability 206863.71

Workings

W1 Calculation of double taxation relief


Foreign
Details Zim tax Relief
tax
Dividend (200 000-5 000)*20%=$39 000 $10 000 $10 000
Interest (150 000-10 000)*24.72%=$34 608 $15 000 $15 000
$25000

Note that on double taxation relief we take the lesser of the two

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