Question 3 (Amounts in Namibia Dollars [N$])
iPhone X (Pty) Ltd has a company policy to pay performance bonuses to employees once the financial statements have been signed-off by the auditors. The financial statements in respect of the company’s 2020 financial year (ending 31 January 2020) were signed-off by the auditors on 20 February 2020. One of the key employees of iPhone, Steve Jobs, (a Namibian Resident), had a few transaction during the year, and would need your tax expertise as soon as possible as he is about to be fined. In terms of the employment contracts, monthly salaries are paid on the 25th of a respective month and amounts to 15000 p.m.
1. Mr Steve Jobs is one of the Directors on the company for Apple Ltd, and he is entitled to sitting fees amounting to 43000 p.a. of which only 75% of the amount is received so far, but the rest in due to him at the end of the year. 2. In 2010, Steve invested some money in Nedbank Namibian Ltd at a simple interest of 15% p.a. the principal amount invested was 500 000, and to date is not yet withdrawn.
3. In 2018, Steve Jobs heard of a scheme called MyLifeChange, and heard that if one joins, you make quick money in the shortest period. Steve decided to invest 45 000 for3 months, which will return him 250000 at the end of the three months. The amount was indeed received and Steve decided to invest it in the Barclays Bank in the United Kingdom at a fixed interest rate of 10%. The investment has not been withdrawn to date.
4. In 2017, Steve heard that a Company called Letshego Ltd is being listed on the Namibia Stock Exchange (NSX), and the public could subscribe for Shares. Steve Decided to invest in the shares, and he bought 20000 shares at the value of 100000. During the year ended 2019 for Letshego Ltd, the Board of Directors decided to declare a dividend of 350 cents per share, and Steve has received his Dividends during the year.
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5. Steve was lucky to receive some price money out of lottery, and it amounted to 25000
6. Because of the generous heart and the best attitudes at iPhone X, his colleagues decided to get him a gift to the value of 60000 and cash payment as gift amounting to 1800.
7. Steve was also an employee at a company called ITC Hub Ltd, based in Windhoek, Namibia, were he was the only specialist in the job that he does. There is only one competitor in Windhoek called SoftwareTech Ltd of which the directors has been of target of Steve even his time at ITC Hub. Steve decided to resign from ITC Hub in the current year, and ITC Hub paid him 2400000 not to work for Software as well any similar company, nor start his own company offering the same service. Steve has signed the following contact and his money was paid.
8. Steve was one of the luckiest to start working during when the property market in Namibia was still growing, and properties were affordable by then. He bought a house in Ausblick, Windhoek, Namibia and a couple of other houses in Kleine Kuppe, Windhoek Namibia. During the current year, he realised that he really would like to focus on living with his family in Kleine Kuppe, and the house in Ausblick was too expensive for him, especially on the rates and Taxes. He made a decision to cease renting it out, and sold the house to the tenants, and made a profit of 2060001 of which shocked him.
9. Steve Received a share premium receipt and a subsidy on a soil Erosion amounting to 4300 and 30000 respectively.
10. Steve resignation from ITC Hub Ltd has resulted in him receiving his pension from a Fund as it was a requirement for all the employees to have a pension fund. Since he was not interested in receiving the amount as a lump sum, he opted to be receiving an annuity of with Old Mutual of 1000 p.m. of which he was only two quarters in the resignation period for the current year of assessment.
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11. Steve has lived with his uncle for almost the entire time before his success of university completion with the University of Namibia and University of Witwatersrand in Republic of South Africa. His uncle has passed on two years ago, and one of the beneficiaries in the estate was him, and after the finalisation of all the papers with the legal process before the distribution of the estate, Steve only received his portion of inheritance from the estate in the current year, and it amounted to 80000.
12. During the current year, Steve was so exhausted and after spending 15 years with iPhone X Ltd he decided to resign from the company to rest for 2 months till he start his new job at an audit firm called Deloitte and Touché in the IT department and also focus getting a qualification in auditing to be an IT auditor. His employer decided to pay out his lump sum as subjected in his employment contract, and the amount due and received amounted to 105000.
13. Steve has his half-brother in Cape Town, South Africa and they have a good relationship ever. They have had a couple of businesses together in the construction industry as well as some IT consultations that goes on with about 17 employees that works for them as consultants. During the year Steve has received his share of profit from these business branches in Cape Town amounting to 86007.
14. As Steve owns properties all over the city of Windhoek, he has been renting them out to different tenants and has been making out good money. During the year, he received rental income amounting to 188000. Additionally, he just recently furnished on of his properties in Otjomuise Ext.4 of which he immediately got a tenant and a deposit of 9000 was received in terms of this new lease contact finalised between the two parties.
15. Steve had some investment listed on the Johannesburg Stock Exchange (JSE) and decided to sell them. He had shares held for speculation purpose amounting to 7500 and for capital growth amounting to 5000.
Required – Calculate the Gross Income for Steve Jobs for the year of assessment and as part of your answer, state or include an explanation for each item on the inclusion or exclusion thereof (30 marks) Get Finance homework help today