CA2.4 Taxation

CA2.4-Taxation

According to ZICA, on completion of this module, candidates will reach a competency sufficient to be able to:

• Describe the principles and role of taxation
• Calculate tax liabilities for individuals, businesses and companies
• Explain the administrative procedures for direct taxes
• Calculate and account for VAT and Customs and Excise Duties
• Identify and respond appropriately to ethical issues arising in the course of performing tax work

Learning outcomes

• LO1: Describe the principles of taxation and explain the role of taxation in the economy
• LO2: Calculate taxable income for unincorporated businesses and compute income tax payable thereon

• LO3: Calculate Income Tax payable on emoluments from employment and advise on how it is paid under the Pay As You Earn system
• LO4: Calculate taxable income from letting of property and calculate withholding tax on all investment income

• • LO5: Calculate company income tax payable and explain how it is payable
  • LO6: Calculate taxable profits from farming and compute income tax payable on farming and fishing income

LO7: Explain the treatment of transfers of value and calculate Property Transfer Tax payable

• LO8: Explain the administrative procedures for direct taxes, including objections and appeals procedure

• LO10: Calculate Customs and Excise duties and advise on the clearing procedure for motor vehicles
• LO11: Explain and apply appropriate ethical standards to taxation practice

1. Tax principles and purpose: LO1
   1. Explain the nature of taxation and the purpose of taxation in Zambia, dealing specifically with:
      1. The Zambian system of tax
      2. Qualities of a good tax system
      3. Function of taxation in the economy
      4. The role of the Ministry of Finance and the Zambia Revenue Authority
      5. Classification of taxes
      6. Taxable and exempt income and gains
      7. Taxable and exempt persons
      8. Residence, ordinary residence and domicile and their implications for taxation
2. Taxation liabilities for individuals, businesses and companies: LO2-7
   1. Calculate tax liabilities of unincorporated businesses, dealing specifically with:
      1. Trades, professions and vocations and badges of trade
      2. Taxable business profits for individual sole traders
      3. Capital allowances on implements, plant and machinery, industrial buildings and commercial building
      4. Taxable profits for partnerships and allocation to individual partners
      5. Accounting dates and basis of assessment, including rules applicable on commencement, cessation and change of accounting date
      6. Income tax on business profits for sole traders and partners
      7. Relief for trading losses
      8. Presumptive taxes
   2. Calculate taxation of income from employment, dealing specifically with:
      1. Emoluments, employment and office
      2. Employment compared with self-employment
      3. Basis of assessment for emoluments
      4. Taxable and exempt emoluments
      5. Taxation of benefits in kind
      6. Allowable expenses
      7. Operation of Pay as You Earn system
   3. Calculate taxation of investment income received by individuals, dealing specifically with:
      1. Types of investment for individuals and companies
      2. The withholding tax system
      3. Taxable income from letting of property and loss relief
      4. Treatment of income from savings and financial investments
      5. Treatment of dividends received from Zambian companies
   4. Calculate taxation of company income, dealing specifically with:
      1. Residence of a company for income tax purposes
      2. Business profits for companies
      3. Investment income received by companies
      4. Payment of income tax
      5. Relief for losses incurred by companies
      6. Taxation of mining operations
      7. Overseas aspects of Income tax and company tax
      8. Taxation of group companies
   5. Calculate taxation of farming enterprises, dealing specifically with:
      1. Characteristics of farming and fishing enterprises
      2. Farming profits for individuals and companies
      3. Capital allowances for farming enterprises
      4. Relief for losses from farming and fishing businesses
      5. Averaging of farming and fishing income
      6. Valuation of livestock
   6. Calculate Property Transfer Tax, dealing specifically with:
      1. Meaning of transfer and realised value
      2. Transfers within groups of companies
      3. Transfers to members of the immediate family
      4. Payment of tax
3. Administrative procedures for direct taxes: LO8
   1. Explain the administration of direct taxes, dealing specifically with:
      1. Comprehensive computation of income tax payable by individuals
      2. Payment of income tax by individuals
      3. Payment of income tax by incorporated businesses
      4. Payment of withholding taxes, Turnover Tax, and Property Transfer Tax
      5. Objections and appeals procedure
      6. Role, functions and composition of the Revenue Appeal Tribunal
4. VAT and Customs and Excise: LO9, 10
   1. Calculate VAT, dealing specifically with:
      1. Taxable and exempt supplies for VAT purposes
      2. Registration and deregistration
      3. The tax invoice, tax point and tax period
      4. Recovery of input VAT, pre-registration input VAT and partial exemption
      5. Bad debt relief
      6. Special schemes
      7. VAT inspection/control visits, payment of VAT, submission of VAT returns, penalties and appeals for review
      8. Duty and reverse tax
   2. Calculate Customs and Excise due, dealing specifically with:
      1. Introduction to tariffs and computation of Customs Values (VDP), customs duty and excise duty
      2. Importation and clearance of motor vehicles
      3. Valuation principles applicable on imports
      4. Exports and export concessions
      5. Rules of origin and tax implications
      6. Trade agreements and their benefits to the economy
      7. Payment of Customs and Excise Duties
5. Ethical issues in tax practice: LO11
   1. Explain the IFAC Ethical Code guidance for professional accountants providing taxation services
   2. Explain how the provision of taxation services creates self-review and advocacy threats
   3. Explain how the fundamental principles of integrity, objectivity, professional competence and due care, professional behaviour and confidentiality apply when providing taxation services
   4. Explain the nature of and difference between tax avoidance and tax evasion