The following information relates to Mr. Kobe and his wife for the year ended 31
December 2017:
1. He was employed by Lipa Ltd as a sales manager on the following terms:
Basic pay per annum Sh. 900,000 (annual PAYE Sh. 250,000)
Annual bonus of Sh. 25,000
Monthly commission equal to 2% of monthly basic pay
Annual medical allowance (non-discriminatory scheme) of Sh. 180,000 paid on reimbursement basis. During the year, he was reimbursed Sh. 120,000 for medical cost incurred on self and family
Free lunch valued at Sh. 35,000 per annum
2. He obtained a loan from the employer amounting to Sh. 400,000 on 1st December 2017.
The interest on the loan was specified by the employer as 5% per annum. Assume a prescribed interest rate of 8% per annum for the month of December 2017
3. He paid life premium amounting to Sh. 72,000 during the year for policies on self and family
4. His wife is employed by Mauzo Ltd as a financial analyst at a basic salary Sh. 60,000 per month. Mr. T. Kombe owns 25% of the ordinary share capital of Mauzo Ltd.
5. The following additional income accrued to his wife during the year:
She earned a profit of Sh. 400,000 from a supermarket business registered by her name but managed by her daughter. This profit was after deducting Sh. 120,000 paid as salary to the daughter during the year. The daughter was below eighteen years of age as at 31
December 2017.
She owns residential houses inherited from her father. The rental income received for the year amounted to Sh. 480,000.
Required:
(i) The taxable incomes of Mr. Kobe and his wife for the year ended 31 December 2017 ( 8 Marks)
(ii) Briefly comment on the procedure for the filing of the wife’s income tax returns (2 Marks)
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