A company has employed Mr. John for many years. He receives a basic monthly salary of Rs 70,000. He is as well entitled to an end of year bonus of one-month salary.
Mr. John is provided with a company car, which he uses to attend duty. It was established that his private mileage is 15% of the total mileage. The car of a cylinder capacity of 1,500 cc, cost Rs 600,000 inclusive of registration duties.
Beneath the term of his contract, Mr. John is as well provided with a fully furnished house that is owned by his company.
On 1st December 2008, Mr. John took a seven year loan of Rs 500,000 from his company. The loan was granted at an interest rate of 5% while the outside borrowing rate was 12%. The loan was used partly to buy a house located on a plot of land of 12 perches (that is, 506.5 sq meters). He paid municipal rates amounting to Rs 1,560 on 31st January 2009.
Mr. John has two children. He has a son who is giving a full-time course at the University of Technology, and a daughter at college.
Mr. John has some fixed deposits on which he received interest of Rs 212,500 net of tax for the year to 30th June 2009. Interests earned by his wife was Rs55,000 gross and his children earned Rs 22,000 gross. Throughout the year to 30th June 2009, Mr. John bought shares from a listed company, from which he received dividends of Rs 8,000.
Mr. John received a refund of Rs35,000 gross for sick leave not taken. He as well received a net income of Rs 63,750 from part-time lecturing in two equivalent installments from the other employer.
The amount of tax deducted under the PAYE system was Rs 6,300 per month, apart from the month of December 2008 when it was Rs12,700 and February 2009 when it was Rs11,000. He has not kept a record of the amount of PAYE deducted from his part-time lecturing.
Mr. John is a partner in Singha and Associates, that expects to make a tax adjusted profit of Rs 450,000 for the year to 30th June 2009. Mr. Singh is entitled to 30% of the profit.
Mr. John’s wife works as an administrative officer, earning Rs 20,000 per month.
a) Make an income tax computation exhibiting clearly the total income tax payable by Mr. John for the year ended 30 June 2009 and also the tax liability shown on his income tax return for that year and which was due for payment on 30 September 2009?
b) Compute the total income tax payable by Mr. John’s wife for the income year ended 30 June 2009.