TUTORIAL QUESTIONS ON EMPLOYMENT

State whether the following is true or not and provide reasons for your choice
2 marks for your choice and 2 marks for your reason(s))
(a) Mr. Abdallah was employed by Kirikiri Co Ltd in the year 2011. He left
employment in January 2015. The payment for the month of January 2015
was paid in January 2016. This amount was paid after he left employment and
is therefore not taxable as individuals are taxed on a cash basis.
(b) Joram was employed for only six months by XYZ Co Ltd in the year 2016. The
tax payable will be calculated based on a twelve months period ending on
31st December 2016.
(c) Payments for redundancy or loss or termination of employment are taxed in
the year of receipt.
(d) Payments made by an employer or an associate of an employer or on behalf
of the employee, are taxable gains or profits of the employment of the
employee.
(e) Employment means a position of an individual as manager of an entity and as
a partner of a partnership.
(f) Where any amount is paid to a resident person in respect of employment or
services rendered by a non- resident person the amount will be taxable
provided the employee was resident at the time of employment or services
rendered.
(g) Karim commenced employment on 30th June 2015; the tax payable will be
calculated based on a twelve months period ending on 29 th June 2016 which
is twelve months.
(h) Many businesses bear directly certain expenses of their employees, and in
case of directors and senior employees fixed expense allowance is often paid
in addition to the salary. This amounts are not taxable as they are paid
because the directors and senior employees work wholly and exclusively for
their employers.
(i) Gifts for special services will be taxable if they are received in respect of an
office or employment notwithstanding that there is no enforceable right to
receive the payments, that they are received after the employment has
terminated and that they are paid by way of gift.
(j) Mr. Sanjay was recruited from India by a resident Company Iqbal Inc. in
January 2015. He has a big family of four children, his wife and his Mother
and Father. These are totally dependent on him and could not leave them in
India. He came by Air India and each person was charged $ 700 which was
paid by the company. $ 5,600 will not be included in calculating his income
for the year 2015.
(k) Retirement contributions paid by an employer on behalf of the employees
towards approved retirement funds, subject to the limit of the actual
contribution or the statutory amount are allowable. Rajabu contributed
Sh.3,000,000 in the year 2015. Only Sh 2,400,000 as the statutory amount
required by law will be allowed as a deduction on his employment income.

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 TUTORIAL QUESTIONS ON EMPLOYMENT

(a) Tanzania-China Friendship Textile Mill Ltd. presented to each employee three
pairs of ‘khangas’ and two pairs of “kitenge to commemorate twenty years of
the Textile Mill. Explain whether this liable to be taxed on the employees.
(b) Section 27(1)(a) provides the method of quantifying a payment consisting of
the availability for use of a motor vehicle during a year of income provided in
return for services rendered or to be rendered whether by way of employment
or otherwise.
Required:
Depending on the capacity and age of the vehicle explain on the method.
How is the age of the motor vehicle determined?
(c) What does the word “employment” mean as per the Income Tax Act?

(d) The Act provides in section 7(2) a list of payments that are to be included in
calculating gains or profits of an individual from the employment, where they
are made by the employer or an associate of the employer to or on behalf of
the employee. These payments include wages, salary, payment in lieu of
leave, fees, commissions, bonuses, gratuity or allowances, payments proving
discharge of reimbursements. What other payments have been listed.
(e) The Act provides to charge tax payments of any subsistence, travelling,
entertainment or other allowance received in respect of employment or
services rendered. However there are circumstances where these allowances
are not taxable. What are these circumstances?

(f) Section 7(3) provides types of payments that are to be excluded in calculating
employment income. What are these payments?
(g) Section 27 provides the methods for quantification of various types of
payments to be included or deducted in calculating income. Which special
quantification rules have been provided?
(h) The Act does not provide a definition for the term “market value” with respect
to a payment; what does the word “market value mean”?

(i) An employer provides an interest free loan of TZS. 3,000,000 payable in 24

monthly installments (Assume the applicable statutory rate was 12%),
Calculate the benefit that is taxable. The basic salary is TZS 100,000 per
month.

(j) Under which conditions is an employee required at the employee’s choice, to

select an employment to be the employee’s primary employment.
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