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Question regarding technical article.

Forums › Ask ACCA Tutor Forums › Ask the Tutor ACCA TX-UK Exams › Question regarding technical article.

  • This topic has 4 replies, 3 voices, and was last updated 7 years ago by Ema.
Viewing 5 posts - 1 through 5 (of 5 total)
  • Author
    Posts
  • November 23, 2015 at 6:17 am #284658
    mayfikry
    Member
    • Topics: 23
    • Replies: 23
    • ☆

    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

    November 25, 2015 at 5:30 am #285062
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    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??

    November 25, 2015 at 1:06 pm #285177
    Ema
    Member
    • Topics: 73
    • Replies: 107
    • ☆☆

    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?

    November 25, 2015 at 2:24 pm #285197
    Tax Tutor
    Member
    • Topics: 2
    • Replies: 3965
    • ☆☆☆☆☆

    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.

    November 25, 2015 at 2:49 pm #285203
    Ema
    Member
    • Topics: 73
    • Replies: 107
    • ☆☆

    Ok

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