Question regarding technical article.

Mmayfikry10y ago

I dont understand why example one of the following example 1 in the technical article below , the tax liability is calculated in a different way. Isn't it supposed to be : NSI: 27,000 @20% = 5,400 SI : 1,000 @ 20% = 200 DI : 10,000 @ 10% = 1000 -------- ------ 38,000 6,600 --------- --------- https://www.accaglobal.com/an/en/student/exam-support-resources/fundamentals-exams-study-resources/f6/technical-articles/finance-act-2014.html Please can u clarify? Thanks in advance

TTTax Tutor10y ago#1

By just looking at your answer I can see that you are wrong as you have not correctly taxed the dividend income, as a part of the dividend income falls in the higher rate band and should be taxed at 32.5% - have you worked through the notes and examples of OT notes chapter 2??

EEma10y ago#2

Sir, but even then solution should be like that: Here in this question they have done that collectively but the answer should be: EI 37000-10000=27000 Building society interest 1000 dividend income 10000 27000*20%=5400 1000*20%= 200 3865*10%=387 6135*32.5%=1994 Isn't this the correct solution sir?

TTTax Tutor10y ago#3

Hi Ema that is the answer given except that the answer would have been better if they had divided out the non savings and savings income in the way that you have done above and separately shown 27,000 x 20% and 1,000 x 20% instead of a total 28,000 x 20%. So the calculated tax liability will be the same but your method of presenting the computation would be right way to present the answer in the exam.

EEma10y ago#4