Reference no: EM133049555

Question - Aden is employed by Kenta Ltd. as a salesman. He provided the following information relating to his income for the year ended 31 December 2019:

1. His monthly basic salary is Sh. 60,000 (PAYE Sh. 15,000 per month).

2. He is also entitled to a commission based on 5% of all extra sales he makes above Sh. 200,000 per month. His sales for the months of March, June, August and October 2019 amounted to 250,000, Sh.300,000, Sh.220,000 and Sh.215,000 respectively.

3. He lives in a company house and pays a nominal rent of Sh. 8,000 per month. The market rental value of the house is Sh. 45,000 per month.

4. The company reimburses him for all out-of- pocket expenses incurred on the official use of his car. In the year 2019, the amount reimbursed was Sh. 90,000, he had purchased the car in the year 2016 at cost of Sh. 800,000. The car has an engine capacity of 1600cc at prescribed rate of sh69,600.

5. The education fees for his two children amounting to Sh. 200,000 was paid by the company during the year. This amount was charged to the company's income statement.

6. He earned a net interest income of Sh. 150,000 during the year from his investments in housing development bonds.

7. He is contemplating purchasing a house for his residence in the near future. In the year 2019, he invested Sh. 100,000 in a registered home ownership savings plan and earned an interest income of Sh. 10,000.

8. He has a life insurance policy for self and family for which he pays a total premium of Sh.45,000 per annum.

9. He has a farm which generated a surplus of Sh. 120,000 during the year.

10. He has invested in the shares of a quoted company and received a dividend of Sh. 12,000 (net) from the shares in the year 2019.

Required -

(i) Compute the total taxable income of Aden for the year ended 31 December 2019.

(ii) Determine his tax liability from the income computed in (i) above.