December 2012 answers out

@admin: can you or some other tutor comment. I believe I’ve found some problems with question 4, part ii (profit distributed as dividends).

Problem with question: The question says 64,000 are net dividends and therefore grosses up the amount to 71,111. But 71,111 plus 16,000 corporate tax is 87,111, which is higher than the total taxable profits of 80,000. How can this be? (in this example, not in general) It would appear to me that 64,000 should be gross dividends.

Problem 1 with answer: On page 22 of the answers, point 4 says that the total tax is 16,000 plus 6,443. This is only the corporation tax and the income payable by Sophia. What about the 10% tax suffered at source? Surely that should be added to the total sum of tax. It would appear to me that instead of taking income payable it would be correct to use her income liability.

Problem 2 with answer: tax suffered at source is calculated as 63,636 at 10% (63,636 is the amount taxable income), but the correct figure should imho be 71,111 at 10%,