C4-Direct Taxes

C4-DIRECT TAXES

This Paper introduces students to Income Tax, covering topics like the Role and purpose of taxation, taxation of unincorporated businesses, taxation of employment and investment income, company taxation, property transfer tax and the general administration of Direct Taxes.

Objectives

On completion of this paper, the student should be able to:

1. Explain the role and purpose of taxation in the economy;
2. Calculate capital allowances and taxable business profits for unincorporated businesses;
3. Compute emoluments from employment and explain the operation of the PAYE system,
4. Describe the various categories of investment income and calculate the tax payable on each one of them;
5. Calculate the taxable business profits of companies and income tax thereon; and
6. Explain the role of the ministry of finance and ZRA in tax administration Structure of the examination paper There shall be a three hour examination consisting of five (5) compulsory questions of twenty (20) marks each. Candidates will be allowed fifteen minutes’ reading and planning time.

Detailed syllabus

• UNIT 1- ROLE AND PURPOSE OF TAXATION

• Element 1: The Zambian system of Taxation
• Element 2: History of Taxation in Zambia
• Element 3: Qualities of a good tax system
• Element 4: Functions of taxation in the economy
• Element 5: The Concept of Income
• Element 6: Classification of taxes
• Element 7: Taxable and Exempt income and gains
• Element 8: Taxable and exempt persons
• Element 9: Residence, ordinary residence and domicile
• Element 10: Political and Social Dimensions on Taxation

• UNIT 2 - INCOME TAX AND UNINCORPORATED BUSINESSES

• Element 1: Trades, Professions and Vocations
• Element 2: Computing taxable business profits for individual sole traders
• Element 3: Capital allowances
• Element 4: Computing taxable profits and allocations to individual partners
• Element 5: Accounting dates and Basis of Assessment
• Element 6: Computing income tax on business profits for sole traders and partners
• Element 7: Turnover tax
• Element 8: Presumptive Taxation
• Element 9: Taxation of SMEs under the Zambia Development Act
• Element 10: Unincorporated Mining Operations
• Element 11: Unincorporated Farming Operations

• UNIT 3 - INCOME TAX AND EMPLOYMENT INCOME

• Element 1: Emoluments, employment and office
• Element 2: Employment compared with self-employment
• Element 3: Taxable and exempt emoluments
• Element 4: Operation of the Pay As You Earn system

• UNIT 4 - INCOME TAX AND INVESTMENT INCOME

• Element 1: Types of investments for individuals and companies
• Element 2: The withholding tax system
• Element 3: Computing taxable income from letting of property
• Element 4: Treatment of income from savings and financial investments

• UNIT 5 - COMPANY INCOME TAXATION

• Element 1: Residence of a company for income tax purposes
• Element 2: Computing business profit for companies
• Element 3: Treatment of investment income for companies
• Element 4: Computing company income tax payable
• Element 5: Turnover tax
• Element 6: Tax losses of companies

• UNIT 6 - PROPERTY TRANSFER TAX

• Element 1: Meaning of transfer and realized value
• Element 2: Transfers within groups of companies
• Element 3: Transfers to members of the immediate family
• Element 4: Computation of property transfer tax and its payment

• UNIT 8 - ADMINISTRATION OF DIRECT TAXES

• Element 1: The Role of the Ministry of Finance and Zambia Revenue Authority
• Element 2: Computation of Income Tax payable by Individuals
• Element 3: Payment of income tax by individuals
• Element 4: Payment of income tax by incorporated businesses
• Element 5: Payment of withholding taxes, turnover tax, and Property Transfer Tax
• Element 6: Objections and appeals procedure

Reading material

1. ZICA, (2010) Direct Taxes, ZICA Publications, Lusaka, Zambia
2. Mulenga Mohammed Hassan (2003), Taxation in Zambia, Lusaka, Zambia
3. Mulolani A. C. (2009), Taxation Principles and Practice, ZCAS, Lusaka, Zambia