Of the lease agreement loveness is required to

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of the lease agreement, Loveness is required to construct improvements to the value of $55 000. It took Loveness a period of 6 months to effect the improvements which were brought to use on the 1st day of June 2010 (immediately after completion). [Total marks 25]
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5 APPENDIX 1. Monthly Tax rates Individuals § Employment income - 1 January to 31 December 2010 Amount Rate of Amount of Cumulative within bands Tax Tax Tax $ $ $ % - to 160 160 0 - - 161 to 500 340 20 68 68 501 to 1 000 500 25 125 193 1 001 to 1 500 500 30 150 343 1 501 to over 35 - Taxable income bands § Income from trade or investment 25%. § The AIDS Levy of 3% applies on income tax chargeable after tax credits. Companies § Basic income tax rate - 25%. § Manufacturing company exporting at least 50% of output - 20%. § Mining companies 25%. § Special mining lease companies 15%. § The AIDS Levy of 3% applies on income tax chargeable to some companies. 2. Allowable pension deductions Maximum annual (12 months) deduction for contributions to approved pension funds in relation to a member of a pension or RAF - $3 600. 3. Bonus exemption - 10% of emoluments or $400 whichever is the lesser for each period that is subject to an assessment 4. The first $5 000 or one third of approved retrenchment package whichever greater, subject to a maximum exemption of $15 000. 5. Credits - Credit for taxpayers over 55 years of age $900* - Credit for blind or disabled persons $900* *The amounts relate to 12 months and should be reduced proportionately, if the period of assessment is less than 12 months.
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6 6. Deemed monthly motoring benefits Engine Capacity Benefit ($) 0 - 1 500 cc 150 1 501 - 2 000 cc 200 2 001 - 3 000 cc 300 3 001 - and above 400 7. Capital Allowances Deemed costs to be used for capital allowances/capital redemption purposes Asset Deemed Cost Passenger Motor Vehicle $10 000 Staff House (actual cost not to exceed $25 000) No limit School, clinic, hospital, nursing home No limit Rates of capital allowances Special Initial Allowance (SIA) - 25% Accelerated wear and tear - 25% Wear and tear on: Industrial buildings - 5% Farm buildings - 5% Commercial buildings - 2.5% Motor vehicles - 20% Movable assets (general rate) - 10% 8. Capital gains tax - On all listed marketable securities exempt. - On unlisted securities and acquired after 1/2/09 - 20%. - On other immovable property acquired after 1/2/09 - 20%. - On unlisted securities and acquired before 1/2/09 - 5%. - On other immovable property acquired before 1/2/09 - 5%. 9. Capital Gains Withholding Tax on sale proceeds - On immovable property acquired on or after 1/2/09 - 15%. - On immovable property acquired before 1/2/09 - 5%. - On all marketable securities (listed) - 1%. - On marketable securities acquired before 1/2/09(unlisted) - 5%. - On marketable securities acquired on or after 1/2/09(unlisted) no rate provided. 10. Loans The deemed benefits per annum is calculated at the rate of LIBOR plus 5% of the amount of the loan. The LIBOR rate for 2010 is assumed at 1%.
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