Fundamentals Level – Skills Module Paper F6 (ZWE)

1 Fundamentals Level Skills ModuleTime allowed: 3 hours 15 minutesThis question Paper is divided into two sections:Section A ALL 15 questions are compulsory and MUST be attemptedSection B ALL SIX questions are compulsory and MUST be attemptedTax rates and allowances are on pages 2 NOT open this question Paper until instructed by the NOT record any of your answers on the question question Paper must not be removed from the examination F6 (ZWE)Taxation(Zimbabwe)Thursday 8 June 2017 The Association ofChartered CertifiedAccountantsSUPPLEMENTARY INSTRUCTIONS1.

2 Calculations and workings need only be made to the nearest US$1, unless directed All apportionments should be made to the nearest All workings should be shown in Section rates AND ALLOWANCESThe following tax rates and allowances are to be used when answering the rates Individuals employment incomeYear ended 31 December 2016 Taxable RateAmountCumulative incomeincome bandof taxwithin bandtax liabilityUS$%US$US$Up to 3 60003 60003 601 to 18 0002014 4002 88018 001 to 36 0002518 0007 38036 001 to 60 0003024 00014 58060 001 to 120 0003560 00035 580120 001 to 180 0004060 00059 580180 001 to 240

3 0004560 00086 580240 001 and over50NB. The AIDS levy of 3% is chargeable on income tax payable, after deducting deductions year ended 31 December 2016 Pension fund contribution ceilingsUS$(a) In relation to employers: in respect of each member5 400(b) In relation to employees: by each member of a pension fund 5 400(c)In relation to each contributor to a retirement annuity fund or funds 2 700(d) National Social Security contributions (on a maximum monthly grosssalary of US$700)3 5% of gross salaryAggregate maximum deductible contributions to all the above per employee per yearUS$5 400 Credits year ended 31 December 2016US$Disabled/blind person900*Elderly person (55 years and over)

4 900*Medical aid society contributions50%Medical expenses50%* The amount is reduced proportionately if the period of assessment is less than a full tax benefits year ended 31 December 2016 Motor vehiclesEngine capacity:US$Up to 1500cc3 6001501 to 2000cc4 8002001 to 3000cc7 2003001cc and above9 6002 LoansThe deemed benefit per annum is calculated at a rate of LIBOR +5% of the loan added tax (VAT)Standard rate 15%Capital allowances%Special initial allowance (SIA)25 Accelerated wear and tear25 Wear and tear:Industrial buildings5 Farm buildings5 Commercial buildings2 5 Motor vehicles20 Movable assets in general10 Tax rates Other than employment incomeYear ended 31 December 2016 Companies%Income tax:Basic rate25 AIDS levy3 Individuals%Income tax.

5 Income from trade or investment25 AIDS levy33[ gains taxImmovable property and unlisted marketable securities acquired after 1 February 200920% of gainImmovable property and unlisted marketable securities acquired prior to 1 February 20095% of gross proceedsDisposal of listed marketable securities 1% of gross proceedsOn principal private residence where the seller is over 55 years0%Inflation allowance2 5%Capital gains withholding tax on sale proceeds%Immovable property15 Marketable securities (listed) 1 Marketable securities (unlisted)5 Note: Other than the withholding tax on listed marketable securities, the withholdingtax is not final on the seller.]

6 Actual liability is assessed in terms of the Capital GainsTax taxes%On dividends distributed by a Zimbabwean resident company to resident shareholdersother than companies and to non-resident shareholders:By a company listed on the Zimbabwe Stock Exchange10By any other company 15 Informal traders10 Foreign dividends20 Non-executive director s fees20 Contracts (ITF 263)10 Non-residents tax%On interestnilOn certain fees and remittances15On royalties15 Residents tax on interest%From building societies15 From other financial institutions (including discounted securities)15 Elderly taxpayers(55 years and over)

7 Exemptions from income tax year ended 31 December 2016US$Rental income3 000 Interest on deposits with a financial institution3 000 Interest on discounted instruments3 000 Income from the sale or disposal of marketable securities1 800 PensionNo limitIncome from the sale or disposal of a principal private residence is derived from the acquisition of a passenger motor vehicle from an employer is B ALL SIX questions are compulsory and MUST be attemptedPlease write your answers to all parts of these questions on the lined pages within the Candidate Answer (Private) Limited (Blue) is a category A value added tax (VAT) operator.

8 An extract of Blue s trading activities andtransactions for the six-month period ended 30 November 2016 is shown below:JuneJulyAugust September October NovemberUS$US$US$US$US$US$VAT inclusive amounts:Supply of goods20 00025 00030 00028 00022 00018 000 Supply of services10 00012 0000015 00013 000 Debit notes(3 000)(2 000)0000 Purchases(14 000) (11 000)(8 000) (10 000) (16 000) (10 000)Credit notes01 000004 0000 VAT exclusive amounts:Other payments/accruals:Stationery(7 500)(8 100)(7 900)(4 800)(4 500)(3 900)Office rent(1 200)(1 200)(1 200)(1 200)(1 200)(1 200)Fuel(1 500)(1 100)(1 800)(1 300)(2 100)(1 900)General repairs(2 300)00(2 800)(2 400)0 Bank charges(500)(500)(500)(500)(500)(500)Req uired:(a) State the value added tax (VAT) periods and VAT return submission dates for Blue (Private) Limited for thesix-month period ended 30 November 2016.

9 (2 marks)(b) Calculate the VAT payable by or refundable to Blue (Private) Limited for each VAT period in the six-monthperiod ended 30 November : You should list all of the items referred to in the question and indicate by the use of a zero (0) any itemwhich has no VAT effect.(8 marks)(10 marks)9[ is a sole trader and is registered for corporation tax. She has been specified by the Zimbabwe RevenueAuthority (ZIMRA) to be taxed under the self-assessment 10 August 2016, Maureen received an estimated assessment dated 31 July 2016 in respect of the year ended31 December 2015.]

10 The estimated assessment shows corporation tax payable of US$18 s accounting records show that her actual corporation tax payable for the year ended 31 December 2015 isUS$26 000, after taking into account provisional tax paid of US$12 000. Maureen believes that because theestimated assessment of tax payable is favourable, she is not obliged to submit an income tax return for the year ended31 December :(a) Outline the circumstances in which an estimated assessment can be issued by the Zimbabwe RevenueAuthority (ZIMRA). (3 marks)(b) Briefly comment on Maureen s view regarding the estimated assessment she has received for the year ended31 December 2015.