D4-Personal Taxation

D4-PERSONAL TAXATION

This Paper focuses on personal income taxation, including aspects such as determination of tax residence for individuals, taxation of income from employment, taxation of income from sporting activities, Tax planning for individuals, taxation of Income from Intellectual Property and presumptive taxation.

Objective

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

1. Make Personal Income Tax Computations
2. Explain the criteria used in Zambia to determine tax residence for individuals
3. Distinguish between Employment and Self Employment
4. Carry out tax planning for individuals

Structure of the examination paper

There shall be a three hour examination consisting of four (4) compulsory questions of twentyfive (25) marks each. Candidates will be allowed fifteen minutes’ reading and planning time.

Detailed syllabus

• UNIT 1 - SCOPE OF INDIVIDUALS’ TAXATION

• Element 1: Introduction to personal taxation
• Element 2: Persons Liable to Taxation
• Element 3: The Meaning of Income
• Element 4: Basis of Assessment for Individuals
• Element 5: Opening Years
• Element 6: Closing Years
• Element 7: Emoluments from Employment
• Element 8: Income from Savings
• Element 9: Income from Business Element 10: Income from Property

• UNIT 2 - DETERMINATION OF INDIVIDUAL’S TAX RESIDENCE

• Element 1: Introduction
• Element 2: Ordinary Residence
• Element 3: Tax Residence
• Element 4: The non- applicability of Domicile Rules in Zambia

• UNIT 3 - EMPLOYED OR SELF EMPLOYED

• Element 1: Control
• Element 2: Personal service
• Element 3: Equipment
• Element 4: Financial risk
• Element 5: Basis of payment
• Element 6: Mutuality of obligation
• Element 7: Holiday pay, sick pay and pension rights
• Element 8: Part and parcel of the organisation
• Element 9: Right to terminate a contract
• Element 10: Opportunity to profit from sound management
• Element 11: Personal factors
• Element 12: Length of engagement
• Element 13: Intention of the parties.

• UNIT 4 - TAXATION OF INCOME FROM EMPLOYMENT

• Element 1: Meaning of Employment
• Element 2: Taxable Income of an Employee
• Element 3: Income Deemed to be from a Source within Zambia
• Element 4: Tax Treatment of Offshore Payments
• Element 5: The Pay As You Earn Scheme
• Element 6: Employee Pension Schemes
• Element 7: Contributions to Foreign Based Pension Schemes
• Element 8: Taxation of Expatriate Employees
• Element 9: Zambian Employees Seconded to work abroad
• Element 10: Double Taxation Treaties
• Element 11: Taxation of Gratuity
• Element 12: Taxation of staff drinkages, Meals and Entertainment
• Element 13: Treatment of Deferred Bonus Schemes
• Element 14: Employee cost recharge schemes
• Element 15: Provisions for Redundancy costs
• Element 16: Taxation of Directors’ Fees
• Element 17: Payment on termination to connected persons
• Element 18: Cost of Removing an Unsatisfactory Employee
• Element 19: Non – Competition Clauses
• Element 20: Workers supplied by Agencies Element 21: Wages in lieu of Notice

• UNIT 5 - TAXATION OF BENEFITS IN KIND

• Element 1: Beneficial Loans
• Element 2: Passages and Leave Pay
• Element 3: School Fees and other cash payments
• Element 4: Free Accommodation
• Element 5: Company Motor Vehicles
• Element 6: Children’s School Fees
• Element 7: Servant Allowances
• Element 8: Club Subscriptions
• Element 9: Payment of Employee Utility Bills by the Company
• Element 10: ESOP Schemes
• Element 11: Golden hand Shakes

• UNIT 6 - TAXATION OF INDIVIDUALS’ RENTAL INCOME

• Element 1: What is Rental Income?
• Element 2: How is Rental income taxed in the hands of an individual?
• Element 3: Deductibility of Expenses
• Element 4: Responsibility for Deducting Withholding Tax
• Element 5: Provisional Income Tax Return for Letting Income
• Element 6: Value Added Tax Considerations

• UNIT 7 - PRESUMPTIVE TAXATION FOR INDIVIDUALS

• Element 1: Meaning of Presumptive Taxation
• Element 2: Income Subject to Presumptive Taxation
• Element 3: Income Thresholds
• Element 4: Commercial Imports & the Advance Income Tax

• UNIT 8 - PERSONAL INCOME TAX COMPUTATIONS

• Element 1: Introduction
• Element 2: Format of Personal Income Tax Computation
• Element 3: Separate Taxation for husbands and Wives
• Element 4: Amalgamation of Income from Different Sources
• Element 5: Adjustments for Capital Allowances
• Element 6: Adjustments for Double Taxation Relief

• UNIT 9 - TAX PLANNING FOR INDIVIDUALS

• Element 1: Introduction
• Element 2: Tax Avoidance & Tax Planning
• Element 3: Opening years of a new business
• Element 4: Selection of Cessation Date
• Element 5: Loss Relief
• Element 6: Maximising Capital Allowances
• Element 7: Personal Pension Schemes
• Element 8: Investment Schemes
• Element 9: Salaries versus Dividends
• Element 10: Foreign versus domestic income

• UNIT 10 - INCOME TAX ASPECTS OF INCOME FROM SPORT ACTIVITIES

• Element 1: Meaning of Sporting activities
• Element 2: Amateur versus professional Sporting Activities
• Element 3: Income tax aspects of other income related to sports activities including, Publicity on clothing, use of products, sponsorships, subsidies and grants, inducement payments, Athlete’s image rights and Merchandising.
• Element 4: Income tax aspects of sports clubs and associations
• Element 5: Taxation of sports events
• Element 6: Foreign income derived by resident Sportsmen
• Element 7: Taxation of Footballers and other athletes’ transfer fees

• UNIT 11 - TAXATION OF INTELLECTUAL PROPERTY

• Element 1: An overview of the structures and operation of the law that protects key intellectual property assets such as copyright, patents, designs, trade - marks, confidential information, trade secrets, know - how and goodwill.
• Element 2: Taxation of the acquisition, development, use and disposal of these intellectual property assets under the Income Tax Act including:
  • Depreciation rules for intellectual property;
  • Research and development concessions;
  • International tax issues for intellectual property including royalty withholding tax and transfer pricing;
  • Business structures for commercialization of intellectual property and the tax impact on such structures; and
  • Employee equity and commercialization of intellectual property.