B4 AND C4 BY BIG CONSULTANT

EMPLOMENT ICNOME QUESTIONS

QUESTION 1

Where an employer provides residential housing to the employee whose salary is shs. 12,000,000/= for
year, for which market rental value is shs. 960,000/= per year and the employer claims a deduction of shs.
1,080,000/= per year the housing benefit is calculated as follows:

i) Market rental value: shs. 960,000/=

ii) ii) (a) 15% of the salary: shs. 1,800,000/=
(b) Deduction claimed: shs. 1,080,000/=

QUESTION 2
A company had one employee during the year of income and the following were the employee’s monthly
emoluments.

Basic salary - Shs.400

Transport allowance - Shs.250
Lunch allowance - Shs.150
Medical allowance - Shs. 50
Total taxable pay = Shs.850
(a) Assuming that an employee was housed by his employer freely. Suppose the market value of rental
at that area was shs.200,000/= per month and the expenditure claimed by the company for that
premises was 150,000/=

QUESTION 3
Beside the emoluments stated in Example 2, the employee received the following benefits:
(i) A new self-drive car for private use, which is 3000 cc. The company claims expenditure on the
car maintenance and ownership against their taxable income.
(ii) (ii) Loan advance of Shs.3,000,000 payable in 24 monthly instalments and free of interest.
(Assuming the statutory rate in relation to the calendar year was 12% p.a. charged on Total
loan).
(iii) (iii) Other benefit – electricity 50,000/= pm - Water 20,000/= pm

QUESTION 4
st
Ms Glory was employed for the first time by Fruto International Ltd, a private resident company since 1
January 2018. As a company’s Marketing Manager, Ms Glory was given a range of responsibilities.She has
been resident of the United Republic of Tanzania solely in the years 2017 and 2018. Her duties are well
balanced by a good package of remuneration which is made up of the following;

(i) Basic salary of Tshs. 800,000 per month and medical service insurance of Tshs. 30,000 per month
and medical service insurance of Tshs. 30,000 per month as per the company’s policy to its

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 employees.
(ii) Mobility allowances for use when on duty trips within her duty stations of Tshs. 100,000 per
month coupled with life insurance of Tshs. 50,000 each month paid directly by the company to
the Insurance Company. It is estimated that Ms Glory is spending only 50% of the mobility
allowance for the performance of her official duties.
(iii) It is the policy of the company to pay all of its employee’s lunch allowances of Tshs. 2,000 each
per day for 22 days each month.
(iv) Traveling allowances for home-office-home trips of Tshs. 100,000 per month.
(v) The company pays school fees and uniforms for its employees as its contribution as per the
National Education Policy. Ms Glory received Tshs. 500,000 which the employer ensured that
the sum is spent according to agreed terms.
(vi) A fully furnished residential quarter where the value of furniture itself amount to Tshs. 2,000,000.
The company normally recognizes Tshs. 120,000 per month as expense for the provision of the
house while the market rent of a house of the same status is Tshs. 150,000 per month. The cost of
the house to the company was Tshs. 10 million.
(vii) During 2018, Ms Glory traveled to her home country, Uganda, for an annual leave where she
provided consultancy for one month for the following remuneration: Consultancy fees amounting
to Tshs. 40,000 per day for 20 days; Upkeep allowance of Tshs. 200,000 for the period of
consultancy and free accommodation with market value of Tshs. 150,000.
(viii) During her trip to Uganda, the company paid Tshs. 450,000 for her return air ticket, since the
location of the company is Dar es Salaam.
(ix) Ms. Glory acquired a car at a cost of Tshs. 6,000,000 which was fully used in the employment
duties.
(x) Ms. Glory also received interest from her Banker on fixed deposit account, Tshs. 200,000.

(xi) Retirement contributions are made to the Social Security Fund where the employer contributes
10% and the employee 10% of the gross monthly salary

Required:
On the basis of the above information, compute Ms Glory’s taxable income for the year of income 2018
(assume today is 31st December 2018).

QUESTION 5
Mr. Hamnazo is a resident employee of Tatua Company Ltd from 1 January 2019. The following
information relates to his affairs:

(i) His monthly receipts include basic salary, transport, lunch and medical allowances to the
tune of TAS 500,000, TAS 425,000, TAS 175,000 and TAS 50,000 respectively.
(ii) Transport allowance of TAS 425,000 for nine people totaled TAS 3,825,000; and has
been given to Mr Hamnazo including each child and his spouse because he lives more
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 than 45 km from the place of employment.
(iii) Self-driven car of above 3000 cc was given to him for private use. Expenditure on the
car is claimed against taxable income of Tatua Company Ltd.
(iv) Mr. Hamnazo was given an interest free loan of TAS 4,000,000 payable in two calendar
years on monthly instalments (assume statutory interest rate of 15% per year).
(v) Other per month benefits enjoyed by Mr. Hamnazo includes electricity and water
amounting to TAS 300,000 and TAS 240,000 respectively.
Required:

Establish the monthly taxable income for Mr. Hamnazo for the first month of 2019.

QUESTION 6
Mr. Jaffer had secured a five years employment contract with Kahama Mining Corporation Ltd. His
monthly salary was Tshs960,000 per month gross with effect from 1st January, 2016. Mr. Jaffer was also
provided with free residential house accommodation by the employer who did not claim ownership
allowance. After serving the employer for 2½ years his contract was terminated (by the employer) on
30th June, 2018 because he was suspected of being involved in illegal gold smuggling. He was paid a
lump sum compensation of Tshs18,560,000 on termination of his contract of employment. His contract
provided for payment of compensation on termination of employment.
Required:
Establish the taxable income of Mr. Jaffer for the year of income 2018.

QUESTION 7
Peter is employed by The Consultancy Ltd as a fashion designer. The following information is available
for the tax year 2019.
(1) During the tax year 2019 Peter was paid a gross annual salary of Tshs. 12,000,000 by
The Consultancy Ltd.
(2) In addition to his salary, Peter received two bonus payments from The Consultancy Ltd
during the tax year 2019. The first bonus of Tshs. 444,300 was paid on 30 April, 2019
and was in respect of the year ended 31 December, 2008. Peter became entitled to this
first bonus on 10 April, 2019. The second bonus of Tshs 333,600 was paid on 31 March
2019 and was in respect of the year ended 31 December, 2019. Peter became entitled to
this second bonus on 25 March, 2019.
(3) Throughout the tax year 2019 The Consultancy Ltd provided Peter with a diesel powered
motor car which has a list price of Tshs 22,500,000/=. The motor car cost The
Consultancy Ltd Tshs 21,200,000, and it has 1500cc and was first registered in Tanzania
on 2 March, 2017. The Consultancy also provided Peter with fuel for private journeys
and does not claim capital allowance for this vehicle.
(4) The Consultancy Ltd has provided Peter with living accommodation since 1 January,
2017. The company had purchased the property in 2016 for Tshs 16,000,000, and it was
valued at Tshs 18,000,000 on 1 January, 2018. Improvements costing Tshs 2,013,000

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 were made to the property during June 2019. The annual value of the rental in that area is
Tshs 3,600,000, and the company claim Tshs 1,000,000 as capital and maintenance
toward the house.
(5) Throughout the tax year 2019 The Consultancy Ltd provided Peter with two mobile
telephones. The telephones had each cost Tshs 250,000 when purchased by the company
in January 2019 and 20% of telephone uses were private. It is the company’s policy to
provide mobile telephones to all employees.
(6) On 5 January 2019 The Consultancy Ltd paid medical insurance of Tshs 510,000 for the
benefit of Peter and all employees of the company were covered by the same programme.
(7) During February 2019 Peter spent five nights overseas on company business. The
Consultancy Ltd paid Peter a daily allowance/per diem of Tshs 100,000 to cover the cost
of personal expenses such as telephone calls to his family.
(8) The company contributes 15% of basic salary to PPF on behalf of Peter and does not
include in taxable employment income.
(9) Peter received a loan of Tshs 1,000,000 during the year 2019 and is payable over three
years. The company charges 2% pa on gross loan while the current statutory rate was
17% pa.

Required:
Calculate the Employment income of Peter for the year 2019.

QUESTION 8
Mr. Torres is a Marketing Manager of Food Processors Company Ltd in Tanga Municipal town since July
2019 .

(i) His monthly salary was Tshs.600,000 with effect from 1/7/2019.
(ii) He received a bonus of Tshs.650,000 in September 2019.
(iii) He received Tshs.250,000 entertainment allowance for the year. Of this amount, he
spent Tshs.170,000 entertaining potential customers.
(iv) He was provided with fully furnished residential quarters at a nominal rent of
Tshs.20,000 per month payable to the employer The cost of furniture to the employer
was Tshs.350,000.The market rental value is Tshs 100,000 p.m
(v) He was also provided with subsidized lunches on all working days at leading hotel in
the town. He personally paid Tshs.5,000 only for each executive lunch of
Tshs.20,000/=. During the year of income 2019, he took a total of 100 of such
lunches. This benefit is available to all employees.
(vi) The company provided him with a gardener in order to keep the extensive lawns of
his house in a first class condition and a night security guard. They were both paid
directly by the company Tshs. 50,000 each per month.
(vii) The company settled Mr. Torres’s domestic electricity and water bills of Tshs.

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 20,000 and Tshs.10, 000 respectively per month directly. The bills were in the name
of the company.
(viii) The company issued shares to all interested employees at an issue price of
Tshs.600/= per share its market sells at Tshs.750 per share. Mr. Torres purchased
1,000 shares.
(ix) Taking into account the number of official trips made by Mr. Torres, the employer
insured his life and paid an annual premium of Tshs.38,000
(x) Mr. Torres purchased a saloon car on 5/10/2019 at Tshs.4,500,000. The employer
incurred Tshs. 1,800,000 running expenses. Mr. Torres uses the car to the proportion
of two-thirds performance of duties and one-third private.
(xi) Mr. Torres makes retirement contributions to NSSF, 10% of the basic salary by the
employer and 10 % his contribution.
(xii) Since he is provided with a residential house by his employer, he offered his own
house for rent to NSA Ltd , a company registered in Tanzania, where he receives
Tshs. 80,000 a month from July 2019.
(xiii) The employer has employees’ non-interest loan scheme. Mr Torres borrowed Tshs. 4
million to finance finishing of his house in August 2019 repayable in twenty monthly
installments from 30th September 2019
Required On the basis of the above information, compute Mr. Torres’s taxable
income assuming he worked for the end of the year of income 2019 and the Bank of
Tanzania discount rate at 1st January 2019 was 15 percent.

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QUESTION 9

Mrs. Kinabo is a resident employee of NAFAKA Ltd, a resident corporation since 1st January 2012
working at a position of senior accountant. The information relating to her employment remuneration and
other benefits during the year of income 2014 is as follows:
(i) Gross annual salary TZS.11,826,617. During the year, she contributed 5 per cent
of this salary to an approved pension fund. The employer contributed 15 per cent
of the gross salary to the same fund.
(ii) During February, she was provided with a brand-new car, whose engine capacity
was 3000cc. The car was used for both, private and employment purposes and the
private use was estimated at 25 per cent of the total mileage. Annual claimable
deduction in relation to maintenance and operation of the car was TZS.5,675,800.
The employer claimed this deduction during the year 2014.

(iii) During April, she was provided with fully furnished four rooms house. These
rooms were self-contained. One room was solely used as a library established by
the employer for the purpose of updating her profession. Another room was used
for official purpose while at home. Rent payable for similar house to this in the
nearby area is TZS.200,000 per month. She was required to contribute a nominal
rent of TZS.20,000 per month to the employer. Claimable annual deduction
during the year in relation to the maintenance of this house was TZS.3,600,000.
The company’s entitlement to this claim for the year 2014 was, however, not
allowed by the Commissioner.
(iv) Employees of NAFAKA Ltd are entitled to interest free loans of TZS.15,000,000
since 2012. Mrs. Kinabo secured the loan on 1st January 2014 and agreed to
discharge the liability in 60 monthly installments based on average methods with
effect from February 2014. By the time this loan was advanced, her basic salary
was fixed at TZS.500,000 per month and the annual statutory borrowing/lending
rate announced by the Bank of Tanzania was 12 per cent.
(v) The employer paid on her behalf, the remunerations for the warden and security
services offered to the house. In aggregate, this amounted to TZS.200,000 per
month. Also on 31st December 2014 employer settled the utility bill of
TZS.1,600,000 for the house. This was an outstanding bill for the whole year
2014.
(vi) During July 2014, the company also paid TZS.1,000,000 for her scholarship’s

Mr. VICTOR NICHOLAUS (BIG) 0712 311 100 Page 6

 fees. This was paid to the Open University of Tanganyika where she enrolled for
Mastes degree on a part time basis.
(vii) She was receiving monthly alimony allowance from her ex-husband worth
TZS.100,000 to support the children. The alimony allowance received by Mrs.
Kinabo was not under any judicial order nor written agreement, rather it was an informal
agreement between the two ex-spouses.
Required:
Determine the taxable income from employment for Mrs. Kinabo during the year 2014. Show all your workings
clearly.

QUESTION 10
Mr. Torres is a Marketing Manager of Food Processors Company Ltd in Tanga Municipal town since July
2019 .
(i) His monthly salary was Tshs.600,000 with effect from 1/7/2019.
(ii) He received a bonus of Tshs.650,000 in September 2019.
(iii) He received Tshs.250,000 entertainment allowance for the year. Of this amount, he spent Tshs.170,000
entertaining potential customers.
(iv) He was provided with fully furnished residential quarters at a nominal rent of Tshs.20,000 per month
payable to the employer The cost of furniture to the employer was Tshs.350,000.The
market rental value is Tshs 100,000 p.m
(v) He was also provided with subsidized lunches on all working days at leading hotel in the town. He
personally paid Tshs.5,000 only for each executive lunch of Tshs.20,000/=. During the year of income
2019, he took a total of 100 of such lunches. This benefit is available to all employees.
(vi) The company provided him with a gardener in order to keep the extensive lawns of his house in a first
class condition and a night security guard. They were both paid directly by the company Tshs. 50,000 each
per month.
(vii) The company settled Mr. Torres’s domestic electricity and water bills of Tshs. 20,000 and Tshs.10,
000 respectively per month directly. The bills were in the name of the company.
(viii) The company issued shares to all interested employees at an issue price of Tshs.600/= per share its
market sells at Tshs.750 per share. Mr. Torres purchased 1,000 shares.
(ix) Taking into account the number of official trips made by Mr. Torres, the employer insured his life and
paid an annual premium of Tshs.38,000
(x) Mr. Torres purchased a saloon car on 5/10/2019 at Tshs.4,500,000. The employer incurred Tshs.
1,800,000 running expenses. Mr. Torres uses the car to the proportion of two-thirds performance of duties
and one-third private.

Mr. VICTOR NICHOLAUS (BIG) 0712 311 100 Page 7

(xi) Mr. Torres makes retirement contributions to NSSF, 10% of the basic salary by the employer and 10 %
his contribution.
(xii) Since he is provided with a residential house by his employer, he offered his own house for rent to
NSA Ltd , a company registered in Tanzania, where he receives Tshs. 80,000 a month from July 2019.
(xiii) The employer has employees’ non-interest loan scheme. Mr Torres borrowed Tshs. 4 million to
finance finishing of his house in August 2019 repayable in twenty monthly installments from 30th
September 2019
Required On the basis of the above information, compute Mr. Torres’s taxable income assuming he
worked for the end of the year of income 2019 and the Bank of Tanzania discount rate at 1st January 2019
was 15 percent.

QUESTION 11
Mrs. Kinabo is a resident employee of NAFAKA Ltd, a resident corporation since 1st January 2012
working at a position of senior accountant. The information relating to her employment remuneration and
other benefits during the year of income 2014 is as follows:
(i) Gross annual salary TZS.11,826,617. During the year, she contributed 5 per cent of this salary to an
approved pension fund. The employer contributed 15 per cent of the gross salary to the same fund.
(ii) During February, she was provided with a brand new car, whose engine capacity was 3000cc. The car
was used for both, private and employment purposes and the private use was estimated at 25 per cent of the
total mileage. Annual claimable deduction in relation to maintenance and operation of the car was
TZS.5,675,800. The employer claimed this deduction during the year 2014.
(iii) During April, she was provided with fully furnished four rooms house. These rooms were self-
contained. One room was solely used as a library established by the employer for the purpose of updating
her profession. Another room was used for official purpose while at home. Rent payable for similar house
to this in the nearby area is TZS.200,000 per month. She was required to contribute a nominal rent of
TZS.20,000 per month to the employer. Claimable annual deduction during the year in relation to the
maintenance of this house was TZS.3,600,000. The company’s entitlement to this claim for the year 2014
was, however, not allowed by the Commissioner.
(iv) Employees of NAFAKA Ltd are entitled to interest free loans of TZS.15,000,000 since 2012. Mrs.
Kinabo secured the loan on 1st January 2014 and agreed to discharge the liability in 60 monthly
installments based on average methods with effect from February 2014. By the time this loan was
advanced, her basic salary was fixed at TZS.500,000 per month and the annual statutory borrowing/lending
rate announced by the Bank of Tanzania was 12 per cent.
Mr. VICTOR NICHOLAUS (BIG) 0712 311 100 Page 8
(v) The employer paid on her behalf, the remunerations for the warden and security services offered to the
house. In aggregate, this amounted to TZS.200,000 per month. Also on 31st December 2014 employer
settled the utility bill of TZS.1,600,000 for the house. This was an outstanding bill for the whole year 2014.
(vi) During July 2014, the company also paid TZS.1,000,000 for her scholarship’s fees. This was paid to
the Open University of Tanganyika where she enrolled for Mastes degree on a part time basis.
(vii) She was receiving monthly alimony allowance from her ex-husband worth TZS.100,000 to support the
children. The alimony allowance received by Mrs. Kinabo was not under any judicial order nor written
agreement, rather it was an informal agreement between the two ex-spouses.
Required:
Determine the taxable income from employment for Mrs. Kinabo during the year 2014. Show all
your workings clearly.
QUESTION 12
Mr. James Musa was appointed Liaison Officer of the University of Dar es Salaam on a salary of
TZS.10,800,000 per annum with effect from 1st July, 2016 and posted to Mkwawa University College of
Education. He was paid a transfer grant of TZS.1,250,000 on 1st July 2016 His other entitlements included
the following:
(i) Responsibility allowance TZS.250,000 per month
(ii) Transport allowance TZS.350,000 per month
(iii) Inconvenience allowance TZS.250,000 per month
He contributed 5% of his salary to an approved Social Security Scheme. The University of Dar es Salaam
provided him with free accommodation, a car and a driver as detailed below:
(i) The university record TZS.200,000 each month as expenses relating to provision of residential house to
Mr. Musa while the market rental charge stood at TZS.300,000 per month throughout the year. The
University incurred TZS.45,000,000 to construct each on these houses though their current market value is
TZS.30,000,000 each.
(ii) In addition to housing benefit, he was also provided with brand new TOYOTA RAV4 worth
TZS.50 million. The car had 3000cc and was used for both official and private trips though it was estimated
that during the year official trips was three quarters of the whole trips. The University claims for both car
maintenance expenditure and Musa’s driver salary where during the year it paid TZS.1,080,000 as salary to
the Musa’s driver. The University contributed also TZS.2,550,000 per annum towards his children’s
education at the University of Dar es Salaam Engineering College. While at University of Dar es Salaam,
Mr. Musa took a life assurance policy with the University of Dar es Salaam Insurance (T) Ltd. He paid a
monthly premium of TZS.1,000,000 for a capital sum of TZS.6,000,000. Mr. Musa’s aged mother, wife and
two children live at his residence at Maswa in Simiyu Region. He is solely responsible for them. The guest

Mr. VICTOR NICHOLAUS (BIG) 0712 311 100 Page 9

house, a two-bedroom self-contained residential facility at his residence, has been rented to Mr. & Mrs.
Bagosha at TZS.250,000 per month for the year of assessment.
Required:
Compute Mr. Musa’s chargeable total income, if any, for the year of assessment 2016. State any
basic tax principles underlying your computation.
QUESTION 13
(a) Mr. Timoth is on five years teaching contract at a salary of TZS.554,000 per month with effect from 1st
January 2012. After serving for two years his contract was terminated, and a lump sum compensation of
TZS.9,930,000 was paid to him.
Required:
Determine the amount of compensation for tax purpose, and state the years in which they are taxable.
(b) Ms YUNIS is employed by International School of Mwanza from 1st August 2008 The following items,
conditions and particulars relate to her employment during the year of income 2015:
(i) Her salary per month is TZS.1,300,000
(ii) She is entitled gratuity equivalent to 25% of his basic salary for each successful completed year of
service.
(iii) The School provided her with the following benefits:
- Free use of school’s motor vehicle, bought six year ago (Toyota Corolla, 1000cc).
The Commissioner for Income Tax accepted three quarter of the use as representing free use of the car.
- One night security guard who is on the school’s payroll at monthly wage ofTZS.250,000.
- Electricity, gas, telephone and water bills amounting to TZS.300,000 per annum. All these benefits were
paid directly to the utility companies since they were addressed to the name of employer.
- A residential house for the whole year for which she paid a token rent amounting to TZS.10,000 per
month. It is estimated that the market rental value of this house is TZS.160,000 per month.
(iv) Other sums met by the employer during the year included:
- TZS.50,000 per month as entertainment allowance. However, she was not required to account for the
amount.
- Monthly duty allowance TZS.120,000.
- She was given TZS.30,000 per month to meet her travelling expenses. She was spending about 25% of
such for performing her official duties.
- Free medical services under the arrangement that required the employer to pay medical bills for Ms
AKISA, her husband and up to four children. For the year of income 2015, this bill amounted to
TZS.300,000.
- TZS.130,000 per month to an insurance company for policy covering her life.

Mr. VICTOR NICHOLAUS (BIG) 0712 311 100 Page 10

(v) She had two children who are enrolled at the same school. During the year, the school subsidized the
school fees and board expenses of the two children amounting to TZS.2,000,000 in total.
(vi) After successful of year 2015, her contract was not renewed due to employer’s financial crisis. To this
effect, she was paid a lump sum of TZS.2,000,000 as compensation.
Required:
Calculate the total taxable income for Ms. YUNIS for the year of income 2015 and tax liability if her tax
bracket is 25%
QUESTION 14
a) Explain the meaning of ‘an employment’.
b) Mr. Kizu has just been appointed as a financial consultant of MTANASHATI Ltd for a contract of one
year and he will be stationed at MTANASHATI Ltd’s premises for the whole period of the contract. His
terms of the contract include a weekly remuneration based on hours that Mr. Kizu will be working at
MTANASHATI Ltd.
Required
Distinguish between ‘a contract of service’ and ‘a contract for service’ using the information above.
c) Rabia & Assey Ltd employed Ms. Malaika Mukoba as the company human resource officer with effect
from 1st September 2010. By the time the company submitted a statement of employment income for year
2010, the following information was revealed to her as her annual emoluments:
i. Basic annual salary TZS.6,000,000
ii. Transport allowance TZS.2,500,000
iii. Lunch allowance TZS.1,500,000
iv. Medical allowance TZS.1,000,000
The employer housed her for free. The annual market rental value of that area was TZS.4,000,000 and the
expenditure claimed by the company per annum for that premise was TZS.1,500,000. The contribution
made by the employee was TZS.500,000 as rent. Besides the emoluments stated above, the employee had
the following benefits:
➢ A self-driven car for private use, which is 3000 cc, brand new. The company claims expenditure of
car maintenance.
➢ Other benefits included electricity TZS.30,000 and water TZS.25,000 per month in her office.
Though her employment services were terminated on 31st December 2010, the company paid her
TZS.30,000,000 as termination benefits (compensation for lost employment). Other income she
received in 2010 was TZS.300,000 interest from MBY Bank, TZS.1,500,000 – lease amount from
MSK Company for the building she leased to the company since 2009.
Required
Calculate the total income for Ms. Malaika Mukoba for the year of income 2010.
Mr. VICTOR NICHOLAUS (BIG) 0712 311 100 Page 11
QUESTION 15
Mr. Li Ching Chinese expert was employed by the Nuwe Mining Corporation (NMC) a private resident
company on expatriate terms, to construct the Rungwe Coal Mine complex in Mbeya.
He came to the United Republic of Tanzania on 1st February 2013 and started to work with the company on
the following day.
(i) He was being paid duty allowance of Tshs Tshs.300,000 per month and a salary of Tshs. 600,000 per
month.
(ii) For one month he was in China, he was working with the Government of China which had paid him
equivalent to Tshs. 500,000 per month.
(iii) The firm provided him a car (3000cc, of 2011) from the day he arrived in the United Republic. This
was wholly used for employment.
(iv) For the first two months of his stay in the United Republic, he was accommodated in a hotel. The firm
paid a total of Tshs. 1,500,000 for full board. After then, he was provided with a fully furnished house. The
firm had installed the furniture in the house which belonged to the NPC limited which cost T shs.6,000,000.
NMC was paying a monthly rent of Tshs. 800,000 per month for the house to NPC and was deducting a
token rent of only Tshs. 50,000 per month from Mr. Li Ching’s salary. Half of the house was used as an
office, and the company was entitled to claim repair and maintenance expenditure.
(v) According to the contract of employment, he had a right of going on leave once annually. However, due
to his important role in the project, the firm decided to pay him on 30.5.2013, Tshs. 1,000,000 in
consideration of him foregoing his 2013 annual leave.
(vi) On several occasions he had, on behalf of the company, to tender some consultancy services to the
State Mining Corporation. As thus the employer company paid him a token sum of Tshs. 500,000 as
appreciation for the services as he gave the firm a considerable amount of revenue, in the form of
consultancy fees from the State Mining Corporation.
(vii) Water bills for the year totaled Tshs. 80,000 and were fully met by the employer. The bills stood in the
name of the employer. Electricity bills (which stood in the name of the employee) totaling Tshs. 50,000
were also met by the company.
(viii) A night watchman earning Tshs. 80,000 was employed by the company for the house. However, he
was only responsible for part of the house used for employment purpose. This watchman was also provided
with a house by the company.
(ix) When he came to the United Republic, he came with a number of equipment to be used in his work. He
had purchased them in China and the company reimbursed him a total of Tshs. 900,000 for such equipment.
(x) The company paid the following annual membership fees for him:
- Tshs. 60,000 as membership fee to the Lion Hotel swimming pool
- Tshs. 100,000 as membership fee to Mining Experts Club
Mr. VICTOR NICHOLAUS (BIG) 0712 311 100 Page 12
- Tshs. 10,000 to Officers mess
- Tshs. 200,000 to the Safari Club
Though he was working in Mbeya, he used to come to DSM during the week-ends. The firm was also
paying for his trip to and from Mbeya in which Tshs. 2,300,000 was used for those trips.
(xi) On the basis of his contract, the company provided him with free lunch which was worth Tshs. 10,000
each and two crates of beer for each month. He had taken only 30 lunches for 2013. A crate of beer was
purchased at Tshs. 25,000.
(xii) On one of the trips to DSM he toured Chui Textile Mill, where he was given complimentary of 6
pieces of ‘kitenge’ dressing materials each worth Tshs. 5,000.
(xiii) At the end of each year he was paid a gratuity of Tshs. 1,500,000.
Required:
From the above information, compute Mr. Li Ching taxable income for 2013 year of income.

Mr. VICTOR NICHOLAUS (BIG) 0712 311 100 Page 13