Reference no: EM133033577
Question - Dr. K. Kamukama, a retired lecturer in the faculty of Business and management, Cavendish University Uganda took up employment with Hardcore Co .Limited, Mining Company in Tororo with effect from 1 February 2016. The following particulars relate to Dr K Kamukama Income for the year ending 30 October 2016:
Basic salary shs 765,000 per month.
The Company pays shs 150,000 life insurance premium per month on his behalf.
At the end of the year he received a salary bonus of shs 3 million.
Dr K Kamukama is covered by the company's medical insurance scheme where the company pays shs 470,000 p.a to the insurance company on his behalf.
He received a dividend of shs 50,000 net from a 2% holding of shares in a company in Uganda.
Housing; he is housed by the company in rented premises. The company deducts 18% of his basics salary to cover part of the rent. Similar premises are rented at shs. 850,000 per month.
The Company reimburses his private entertainment expenses not exceeding shs.20, 000 per month. Any excess is met by himself.
At his own initiation the company extended a loan not exceeding 10 million at an interest rate of 5% per annum. The loan was repayable in four years' time.
The Company contributes the equivalent of 10% of his salary towards NSSF.
Transport: drives a Prado (cost 27 million) for both private and official use. It is estimated that 124 days in year are for private use.
The school fees for his children are met by Soft rock High School, which is a sister company to hardcore Co Ltd. The amount involved is shs 4,900,000 p.a.
In May 2016, Dr. K. Kamukama was given 2 air tickets cost for himself and wife for a 5 days private holiday in South Africa. The air tickets cost the company shs 3,200,000 He also received leave pay of shs 1,330,000.
Under the company's employee share acquisition scheme, Dr. K Kamukama was given an option to acquire 1250 shares on 1st April 2016 when the price was shs 1,000 per share. He paid the shs 15,000 for the option but did not exercise the option until 30th July, 2016 when the value of the shares was shs1,300. He paid shs 1,250,000 for the 1250 shares offered to him.
He received a dividend of shs 50,000 net from a 2% holding of shares in a company in Uganda.
During the year, the company sent Dr. K kamukama upcountry for 10 days to supervise some company projects. He was given shs 2,000,000 estimated to cover the cost of travel, accommodation and meals.
Incomes from other sources include: gross rent shs 39,000,000.
Required -
(i) Compute Dr. K. Kamukama's Taxable income.
(ii) Compute the Total tax liability For the year ended 30th October 2016.
(iii) Show all the workings and the narration.