COLLEGE OF BANKING AND FINANCIAL STUDIES
DEPARTMENT OF UNDERGRADUATE PROGRAMME
B.Sc. in Accounting, Auditing and Finance
Group Work
Taxation Accounting
:STUDENT NAME MALAK SAID AL WAHAIBI.1
FATEMA JUMA ADAM AL BALUSHI .2
Rayan Hamood Alzadjali.3
Malaak Albalushi .4
Aithar Mohammed Alwahaibi .5
ST ST09360,ST09381,ST09587,ST09285,ST09336
1
The tax is the monetary amount imposed by the state on individuals and
companies, the aim of which is to finance the expenses incurred by the
state in order to secure social services and also pay salaries to employees
in government departments and ministries in order to establish and
rehabilitate infrastructure as well as support basic commodities in order to
.secure them to the citizen at a lower price
A tax requires a percentage of the taxpayer’s earnings or money to be taken and
remitted to the government. Payment of taxes at rates levied by the government
is compulsory, and tax evasion—the deliberate failure to pay one's full tax
liabilities—is punishable by law. (On the other hand, tax avoidance—actions
taken to lessen your tax liability and maximize after-tax income—is perfectly
legal.)1 Most governments use an agency or department to collect taxes. In the
United States, this function is performed federally by the Internal Revenue
Service (IRS).
and there are three tax The two main functions are the financial,
,economic and social function
The function of finance is that it secures the financial revenues of the
.state treasury in order to cover the expenses incurred
As for the economic function, it refers to the role of the tax as a tool of
the state’s financial policy and is used to stimulate growth and reduce
inflation levels, and it means that it is during periods of high growth that
are associated with high levels of inflation, and that governments resort to
raising tax rates in order to absorb cash availability The main objective is
to avoid an increase in inflation rates more. As for periods of deflation,
tax rates are reduced and tax exemptions are resorted to for how long to
stimulate spending, and this leads to increased production and is followed
by an increase in investment and employment in the long run, and this
.leads to restoring balance in the markets
As for the social role, it leads to achieving social stability, meaning that
tax revenues are employed in order to secure social services at a lower
.cost, and this redistributes income among the classes of society
Classification of taxes is carried out according to the way they are
imposed on the taxpayer, and there is a tax that is not related to income,
that is, a tax is imposed on all categories without taking into account the
.value of the income or property on which the tax is imposed
2
Another type of tax is the progressive tax, which means that the tax rate is
.increased whenever the value of the property or income rises
There is a regressive tax, which means that it declines whenever the
.income or amount subject to tax increases
A distinction is made between two types of taxes, which are direct and
indirect. In relation to direct taxes, they are considered taxes paid by the
taxpayer directly to the tax authority. The direct tax is imposed on the
income of individuals, on commercial and industrial profits for
companies, on real estate assets and property. As for indirect taxes, they
are collected in favor of The government, through an intermediary, for
example, retail stores such as value-added tax and sales tax
The United Kingdom imposes a tax on individuals through two main
factors, namely the individual’s residence and his original home. The
individual’s residence and original home depend on certain circumstances
that are sometimes determined, as well as the place where your
permanent residence is located, which is considered long-term. The
federal government imposes taxes Corporate, Income and Payroll The
UK also levies sales, income, municipal and other local government taxes
.and also levies sales and property taxes
There are several very common types of taxes: Income tax - a percentage
of income generated that is assigned to the federal or state government
There are many types of taxes, including income tax, which is a
percentage of income that is ceded to the government. The United States
has a progressive income system through which a high percentage of
revenue, not taxes, is collected from individuals or companies that are
high-income and is compared to individual's Low-income people are also
taxed through random tax rates. There are many factors that influence the
.random tax rate a taxpayer will pay
Payroll Taxes Payroll taxes are withheld from an employee's paycheck by
the employer, which remits the amount to the federal government to fund
Medicare and Social Security programs. Also, payroll taxes and income
3
taxes differ, although both are deducted from the employee’s salary and
transferred to the government, and payroll taxes are specifically to
finance social security and medical care programs, and the self-employed
individual must pay the equivalent of both the employee and the
employer from payroll taxes, through self-employment taxes, and also
.finances Social Security and Medicare
Corporate taxes, which is that corporate taxes are paid on the taxable
income of the company, and the steps for calculating the taxable income
of the company, which are sales revenue and the cost of goods sold
.Gross profit, operating expenses, and US corporate tax rate
Sales taxes are levied at the point of sale, i.e. when a customer makes a
payment for a service or a good, and companies collect a different sales
tax. The United States, municipalities, and counties also levy their own
.sales taxes
property taxes are the most common in the United States, which is the
real estate tax by value. Also, a millennial rate is used to calculate real
estate taxes. The specific value of the property is determined by the
property assessor appointed by the local government. Revaluations are
also carried out and are conducted every year to five years. Property tax
rates also vary by jurisdiction and property taxes are assessed on personal
.property, for example, motor vehicles
Tariffs are a tax imposed by the state on services and goods that are
imported from one country to another. The aim is to encourage local
purchases by increasing the prices of services and goods imported from
second countries. There are also two types of tariffs, namely that fixed fee
tariffs are imposed as a cost Fixed depending on the type of element.
Also, ad valorem definitions are evaluated as a percentage of the
element's value. For example, real estate tax in the latter section, and also
.definitions that cause political division
4
Real estate taxes Real estate taxes are levied only on real estate that
exceeds the exclusion limit determined by law, and surviving spouses are
exempted from real estate taxes. Also, the real estate tax due is the
.)KAGAN, 2021( taxable property minus the exclusion limit
Capital tax, which is a capital tax that is collected as a unit rather than
.repeated
5
Question 2:
a)
INCOME TAX COMPUTATION 2020/21
Non-
Saving Dividend
saving Total
income income
income
Rental Income 50,000 50,000
Employment income 120,000 120,000
Interest from Government Bond 12000 12,000
Interest on National Savings Certificate (Exempt) 0 0
Dividend income 0 0
TOTAL INCOME 170,000 12,000 0 182,000
Less: Eligible Interest – Int payment -1,200 -1,200
NET INCOME 168,800 12,000 0 180,800
Less: Personal Allowance>100000 0 0
Taxable Income 168,800 12,000 0 180,800
Compute the tax liability for the tax year 2020/21
Tax on Non-savingincome
37500*20% 7500
(150000-37500)=112500*40% 45000
(168800-37500-112500)=18800*45% 8460
Tax on Saving income
12000*45% 5400
Tax on Dividend Income
2000*0% 0
Tax Liability 66360
Due Data for payment of tax :31/1/2021,31/7/2021,31/1/2022
6
b)
Non- Saving Saving Dividend Total
Taxable income as per (a) 168,800 12000 0 180800
Expand Basic Rate Band:
37500+(6000/80*100)+(8000/80*100) 55000
Expand higher rate band:
150000+(6000/80*100)+(8000/80*100) 167500
Calculation of tax:
Tax on Non-savingincome
55000*20% 11000
(167500-55000)=112500*40% 45000
(168800-55000-112500)=1300*45% 585
Tax on Saving income
12000*45% 5400
Tax on Dividend Income
2000*0% 0
Tax Liability 61985
Tax saving:
Tax as per (a) 66360
Less: Tax as per (c) -61985
Tax saving 4375
Advice: advisable to give donation and contribute to personal pension. overall saving in tax
=4375
From the effects of charitable donations and contributions to the pension, Sona pays
80% of the donation and receives an interest of 100%. Also, in the personal pension
system, Sona contributes by 80%. Contributions to pensions can be a valuable tool for
an individual's tax planning, reducing taxes and personal allowances, tax relief on
bonds, and managing income levels. For example, donations are taken when
determining the net income for tax. The amount you provided to the organization is
taken and added to the tax exemption, and then the total amount is deducted from the
taxable income, in order to reduce the payment of tax.
7
c)
The zero-savings rate (SNR) range is
HMRC gives a tax deduction on rental income only if it meets the allowable limit. For
example, the savings rate is £100 * 0% if the total taxable income is Less than 37,500,
and if it is more than 37,500 but reaches 150,000 pounds sterling, then the zero
savings rate = 500. If the total taxable income is more than 150,000 pounds, then the
zero savings rate = 0. On the other hand, the savings rate is 0. Zero £500 if the payer's
taxable income is in a higher rate range, this shows that £500 is subject to 0% tax
savings, and £1,000 of 0% taxable income is available if the costly taxable income is
within the rate range the basic savings rate is 1,000.
The dividend rate range indicates that a taxpayer is entitled to a tax-exempt dividend
premium of £2000 per year, and may pay out of the dividend 2000*0% even if the
value is less than basic. For example, 7 5% for profits between 0-37500, which is the
basic value, while the ratio of 32.2% between 37501-150000 is the rate of the
additional value, and at a rate of 10.38 percent, the highest value is estimated at more
than 150,000. Sona can't claim the zero rate range because she doesn't have it and her
total tax income is 1808000 which is more than 150,000
8
d)
NS S D T
Taxable income as per (a) 168800 12000 0 180800
Reduce 2000 interest income and add to
dividend income -2000 2000 0
Revised taxable income 168800 10000 2000 180800
Calculation of tax:
Tax on Non-savingincome
37500*20% 7500
(150000-37500)=112500*40% 45000
(168800-37500-112500)=18800*45% 8460
Tax on Saving income
10000*45% 4500
Tax on Divedent income 2000*0%
0 0
Tax Liablity 65460
Tax saving:
66360 Tax as per (a)
Less: Tax as per
-65460 (b)
900 Tax saving
I advise Sona to withdraw the investment from the National Savings Certificate
because it is exempt from tax and the purchase of shares. Sona has tax saving = 900
Dividend income may be exempt from 2000, shares must be purchased, in order to
reduce interest 2000 pounds and increase 2000 pounds.
9
Question3:
Part A: Calculation of Adjusted Trading Profit of Mona
£ £ For the Year Ended 31 March, 2021
220,000 Gross Profit
Add: other Income:
8,000 Interest received on Debenture
2,000 Interest from Individual Savings Account
19,000 9,000 Dividend received
239,000
Less: Expenses:
25,000 Depreciation (22000+3000)
Administration Expenses (28000-4000-1000-
22,250 750)
3,000 Marketing and distribution expenses
3,200 Subscription and Donation (4000-300-500)
4,215 Entertainment and gift (5000-785)
4,500 Car expenses
5,500 Car lease rent
1,850 Miscellaneous expenses (2000-150)
(77,515) 8,000 Trading losses
161,485 Net Profit
Part B: Calculation of Class 2 and 4 NIC
Class 2 NIC = £ 3.05 per week = 3.05 x 52 = £ 158.6
Class 4 NIC = 2% on profit = £161,458 x 2% = £ 3,229
Part C: Maintenance of Records
Taxpayers are obliged to keep records of their tax affairs for a period of six years for
audit and inspection purposes. A registered person is obliged to keep records and
10
documents for a period of ten years after the end of the tax period to which they
pertain.
The records should be maintained for a period of 10 years after the end of the
accounting period to which the records relate. In case of non-compliance, a penalty of
RO 200 to 5000 Rials may be imposed.
11
References
1. KAGAN, J. (2021, May 25). investopedia. Retrieved August 3, 2021, from
investopedia.com: https://www.investopedia.com
2. Klue, S., 2012. SARS'requirements for storing electronic tax records: record
maintenance. Tax Breaks, 2012(322), p.3.
12
