(a) What does the term employer include for PAYE purposes?
( 4 marks)
(b) J. Selina is an accountant with K Enterprises Ltd. Details of employment
income for the year ended 31 December 2005 are as follows:
Salary per month – Sh.250,000 (PAYE of Sh.84,600 per month).
She contributes 5% of her monthly salary to the company’s pension scheme which is
registered with the Commissioner of Income Tax.
She is provided with a company house.
The financial controller has informed you that Enterprises Ltd. has leased the
house which J. Selina is occupying at the monthly rent of Sh.50,000
Required:
(i) Compute chargeable income for J. Selina in 2005.
( 6 marks)
(ii) Compute J. Selina’s 2005 tax liability. ( 6 marks)
(iii) Would the chargeable income and the tax liability in (i) and (ii) above change
if the house that J. Selina occupies was rented from her? Explain.
Calculations are not required). ( 4 marks)