1. Mr. M. borrowed $20 000 from His employer on 1st April 2011 at no interest.
Assuming that the LIBOR rate is 7%, calculate Mr. B's taxable income from this
transaction.
2. Using the facts above calculate the taxable benefit if Mr. M. was asked to pay an
interest rate of 4% by his employer.
3. Viola is a managing director of a local company that exports most of its products.
She is a single mother with a primary school going age child. Viola is highly self
motivated and as a result has worked so hard for the company such that the
company profits have been on the upward trend for the past five years. In
appreciation of Viola's efforts and in an attempt to retain this human asset, the
company increased her annual salary to $50 000 and decided also to give the
following incentives to Viola as from 1 January 2011.
Company car 3 000cc
Company house in Gunhill (market rentals) $6 000 per
month
Company furniture (cost) $80 000
School fees for child $46 000 (for 2011)
Entertainment allowance $10 000
Allowance expended on employer's business $8 200
From the information given, calculate Viola's taxable income
4. A taxpayer purchased an annuity from an insurance company for $50 000
payable for 10 years when he reaches 55 years. This amount was not allowed as a
deduction for tax purposes. During the year he turned 55 and received $1 000 per
month from 1 January 2011. How much is gross income during the year ended 31
December 2011.
RATES
Deemed MOTORING benefits per annum for 2011 are as follows:
Up to 1 500cc $1 800 ($150 per month)
1 501cc to 2 000cc $2 400 ($200 per month)
2 001cc to 3 000cc $3 600 ($300 per month)
Over 3 000cc $4 800 ($400 per month)
LOANS : deemed benefit arising at the rate of LIBOR +5%