Q: Which formula is used to determine the statutory amount for retirement contribution deduction if the total contribution required by statute exceeds Tshs 2,400,000 per annum?

$$\text{Statutory Amount} = 20\% \times \text{Basic Salary}$$

Question 1

Which of the following best describes 'employment' as defined under Section 3 of the Income Tax Act (ITA)?

Accepted Answer

A position entitling an individual to periodic remuneration for services performed, including public office, past, present, or prospective employment.

Question 2

According to Section 7 of ITA, which of the following is considered employment income?

Accepted Answer

All gains and profits obtained by the individual from conducting employment during the year of income.

Question 3

Which of the following allowances is NOT taxable under employment income, according to the study materials?

Accepted Answer

Housing allowance provided to employees of government institutions with budgets substantially funded by the government.

Question 4

An employee receives a motor vehicle from their employer for both private and official use. The car has an engine size of 1800cc and is less than 5 years old. According to the 5th Schedule, what is the annual motor vehicle benefit in kind to be included in taxable income?

Accepted Answer

$$500,000$$

Question 5

Which of the following conditions must be met for a loan benefit in kind to be taxable?

Accepted Answer

The loan rate is below BOT rate, the loan amount is more than 3 months’ basic salary, or the loan is repaid in 12 months or more.

Question 6

How is the housing benefit in kind quantified for an employee?

Accepted Answer

The lesser of the market value of renting the house (including furniture) and the higher of 15% of total income before housing benefit or the amount claimed by employer for repair, maintenance, and ownership, reduced by rent paid by the employee.

Question 7

Which of the following is an amount to be excluded from employment income?

Accepted Answer

Actual travel cost for passage of the individual and family on leave, provided the individual works for only one employer.

Question 8

An employee donates cash to an education fund established under Section 12 of the Education Fund Act. How is this treated for tax purposes?

Accepted Answer

It is deductible when computing employment income for tax purposes.

Question 9

Which formula is used to determine the statutory amount for retirement contribution deduction if the total contribution required by statute exceeds Tshs 2,400,000 per annum?

Accepted Answer

$$	ext{Statutory Amount} = 20\% 	imes 	ext{Basic Salary}$$

Question 10

Which of the following is NOT considered a benefit in kind under employment income?

Accepted Answer

Housing allowance paid directly to the employee.

Question 11

A government employee receives a transport allowance for home-office trips. How is this treated for tax purposes?

Accepted Answer

It is included in taxable income.

Question 12

Which of the following is a deductible amount when computing employment income?

Accepted Answer

Retirement contribution paid by employer to an approved retirement fund.

Question 13

If an employee receives a motor vehicle benefit in kind, but the employer does NOT claim for repair, maintenance, and ownership, how is this treated?

Accepted Answer

The benefit is excluded from taxable income.

Question 14

Which of the following cafeteria services is excluded from employment income?

Accepted Answer

Cafeteria services available to all employees on a nondiscriminatory basis.

Question 15

An employee receives a housing allowance from their employer, but the lease contract is between the employee and employer. How is this treated?

Accepted Answer

It is considered a housing allowance and is taxable.

Question 16

Which of the following is considered administrative impracticable to be included in employment income?

Accepted Answer

Monthly telephone voucher given to employee for office and private use.

Question 17

Which formula is used to quantify the housing benefit in kind for an employee?

Accepted Answer

$$	ext{Housing Benefit} = \min \left( 	ext{Market Value}, \max \left( 0.15 	imes 	ext{Total Income}, 	ext{Amount Claimed by Employer} ight) ight) - 	ext{Rent Paid}$$

Question 18

Which of the following is NOT an amount to be excluded from employment income?

Accepted Answer

Bonus received for performance.

Question 19

Which of the following is a final withholding payment under Section 86 of ITA?

Accepted Answer

Exempt amount as per the 2nd Schedule.

Question 20

Which formula is used to determine the statutory amount for retirement contribution deduction if the total contribution required by statute does NOT exceed Tshs 2,400,000 per annum?

Accepted Answer

$$	ext{Statutory Amount} = 	ext{Tshs } 2,400,000$$

Taxation of Employment Income – Study Notes

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