KASNEB REVISION KIT

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PUBLIC FINANCE

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AND TAXATION
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REVISION KIT

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SOMEAKENYA
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0707 737 890
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2025

SOMEAKENYA
 PUBLIC FINANCE AND TAXATION REVISION KIT

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CPA

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CIFA
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PUBLIC FINANCE AND
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TAXATION
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REVISION KIT
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PAST EXAMINATION PAST PAPERS WITH

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SUGGESTED ANSWERS
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Updated With
APRIL 2025
Past Paper with Answers

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 PUBLIC FINANCE AND TAXATION REVISION KIT

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CONTENT

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TOPIC PAGE

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PARTB: PAST PAPER QUESTIONS

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Topic 1: Introduction to Public Financial Management ……………….……….11

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Topic 2: Relationship between National and County Government on budget and
economic matters…………………………………………………….....…15

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Topic 3: Oversight Function in Public Finance Management …………………...…19
Topic 4: Procurement in public entities ………………………….…………..….….22
Topic 5: Public Private Partnerships Arrangements………………………………...26
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Topic 6: Public Debt management………………………………………….…….…29
Topic 7: Introduction to taxation….…………………………………………...….…32

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Topic 8: Taxation of income ……………………………..………………..………..36
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Topic 9: Investment Allowance/Deductions…………….…………………........…...95

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Topic 10: Administration of income tax and Tax Procedures……………...…...…..116
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Topic 11: Administration of value added Tax (VAT)………………….……..……120
Topic 12: Customs taxes and excise taxes…………………………….…….…..….137
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Topic 13: Miscellaneous fees and levies………………………………………..…..141
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PARTB: SUGGESTED ANSWERS AND SOLUTIONS

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Topic 1: Introduction to Public Financial Management ……………….……....144

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Topic 2: Relationship between National and County Government on budget and

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economic matters…………………………………………………….......…154
Topic 3: Oversight Function in Public Finance Management …………………..…..164
Topic 4: Procurement in public entities ………………………….…………..….…..174
Topic 5: Public Private Partnerships Arrangements………………………………....188
Topic 6: Public Debt management………………………………………….……..…196
Topic 7: Introduction to taxation….…………………………………………...…..…202
Topic 8: Taxation of income ……………………………..……………………..…...219
Topic 9: Investment Allowance/Deductions…………….…………………........…...277
Topic 10: Administration of income tax and Tax Procedures……………...……..…306
Topic 11: Administration of value added Tax (VAT)………………….……………316
Topic 12: Customs taxes and excise taxes…………………………….…….……….335
Topic 13: Miscellaneous fees and levies……………………………………………..345

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 PUBLIC FINANCE AND TAXATION REVISION KIT

TOPIC 1

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INTRODUCTION TO PUBLIC FINANCIAL

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MANAGEMENT

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QUESTION 1
April 2025 Question One B

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Outline EIGHT stages of the budget process for the national government in any financial
year as provided under Section 35 of the Public Finance Management Act. (8 marks)

QUESTION 2
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April 2024 Question One B

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Highlight FOUR documents that are prepared in the process of county government
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budget preparation clearly indicating their timelines as envisaged by the provisions of
Public Financial Management Act. (4 marks)

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a.
QUESTION 3
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December 2023 Question One B
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The Cabinet Secretary for the National Treasury or the state officer responsible for
finance in your country is mandated by law to manage the national budget process. One
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of the task is to issue circulars for setting guidelines to be followed to all government
entities.
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With reference to the above statement, highlight FOUR contents of such a circular.
(4 marks)
QUESTION 4
August 2023 Question One B
The societal needs of most developing countries are mostly greater than the resources
available to the government. The countries must therefore develop a public financial
management framework to act as a tool for guiding formulation and implementation of
public policies so as to improve the welfare of the citizens.

In relation to the above statement, outline FOUR principles of public financial

management regulations that govern all aspects of public finance in your country.
(4 marks)

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 PUBLIC FINANCE AND TAXATION REVISION KIT

QUESTION 5

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April 2023 Question One C
Identify FIVE matters that are included in the budget estimates submitted to the County

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Assemblies by the County Executive Committee members for finance in respect of the

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budget for every financial year. (5 marks)

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QUESTION 6

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December 2022 Question One C
Outline SIX contents that should be included in development plan prepared by every

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county government as specified under Section 126 (1) of the Public Finance Management
Act, 2012. (6 marks)

QUESTION 7
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August 2022 Question One D
Outline the stages to be followed in the budget process for the national government in

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any financial year. (8 marks)

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QUESTION 8 a.
April 2022 Question Two A
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With reference to public finance management, distinguish between "planning" and
"budgeting". (4 marks)
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QUESTION 9
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December 2021 Question Two A

Outline two objectives of the Public Finance Management Act. (2 marks)
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QUESTION 10
December 2021 Pilot Paper Question Two A
Highlight the steps followed by your county government in developing its annual budget.
(9 marks)
QUESTION 11
September 2021 Question One B
Outline four functions of a County Treasury as provided in the Public Finance
Management Act. (8 marks)

QUESTION 12
September 2021 Question Two A
Explain the following attributes that must be considered when preparing a national
budget:
(i) Periodicity. (2 marks)
(ii) Predictability. (2 marks)
(iii) Comprehensiveness. (2 marks)
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 PUBLIC FINANCE AND TAXATION REVISION KIT

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QUESTION 13
May 2021 Question One B

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In managing the national government public finances, the National Treasury or such state

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organ in your country enforces certain fiscal responsibility principles in accordance with

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the Constitution and the Public Finance Management Act.

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In relation to the above statement, explain four fiscal responsibility principles. (8 marks)

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QUESTION 14
May 2021 Question One D
Highlight four responsibilities of a County Treasury with respect to county public funds.

QUESTION 15
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November 2020 Question One A

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The Public Finance Management Act requires that, not later than 30th August in each
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year, the Cabinet Secretary shall issue to all national government entities a circular

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setting out guidelines on the budget process to be followed by them.
a.
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With reference to the above provision, outline four contents of the circular. (4 marks)
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QUESTION 16
November 2020 Question One C
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Explain four fiscal responsibility principles enforced by National Treasury in managing

national government public finance. (8 marks)
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QUESTION 17
November 2019 Question One C
Outline the stages to be followed in the budget process for the National Government in
any financial year. (10 marks)

QUESTION 18
May 2019 Question One A and C
a) Budgetary rules exercise effective control over government entities in public spending
and accountability.

With reference to the above statement, identify four ways used by the national
government to demand budgetary accountability by the government entities.
(4 marks)
c) Citing three reasons, justify the importance of information contained in the circulars
guiding the budget processes for county governments. (6 marks)

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 PUBLIC FINANCE AND TAXATION REVISION KIT

TOPIC 8

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TAXATION OF INCOME

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QUESTION 1

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April 2025 Question Three C
Jackson Mutiso is an employee of Kabazi Food Processing Company. He has provided

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the following details relating to his employment for the year of income 2024:
1. Basic salary of Sh.198,000 per month (PAYE deducted Sh.44,600 per month).
2. He is provided with an accommodation by the employer where he contributed
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Sh.8,000 towards house rent. The house was connected with a telephone line where
the average bill per month amounted to Sh.7,200. The telephone bill is paid by the

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employer.
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3. He is a member of a registered pension scheme, where he contributed Sh.30,000 per
month towards the scheme, with the employer contributing similar amount.

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a.
4. He was provided with a motor car a Land Cruiser of 3500cc whose cost as at 1
January 2024 was Sh.2,400,000.
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5. The house provided by the employer was fully furnished at a cost of Sh.380,000.
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6. On 1 October 2024, he moved into his own private residence, which he had acquired
on a 15% mortgage loan of Sh.6,000,000 on 1 April 2024.
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7. On 1 April 2024, he obtained an insurance policy for his children‘s education at a

monthly premium of Sh.8,000.
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8. He was out of his work station for five (5) days in the month of September 2024 on
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official duties. The employer paid him a per diem of Sh.4,700 per night.
9. His other incomes included:
• Dividends (net of withholding tax) from Kibao cooperative society of Sh.51,000.
• Royalties from patent rights net of tax of Sh.95,000.
10. Assume the following in computation of taxable income and tax purposes:
• The incomes accrued evenly during the year of income.
• The employer effected the changes relating to pension contribution and
mortgage interest introduced in the month of December 2024.
• That the employer did not deduct Affordable Housing Levy and Social Health
Insurance Fund (SHIF) contribution during the year.

Required:
(i) Compute the total taxable income for Jackson Mutiso for the year ended 31 December
2024. (10 marks)
(ii) Determine tax payable (if any) from the income computed in (c) (i) above. (2 marks)

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 PUBLIC FINANCE AND TAXATION REVISION KIT

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QUESTION 2
April 2025 Question Five C

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Wambua and Baraza have been trading as Wambah Traders sharing profit and loss in the

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ratio of 2:3, respectively.

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The following statement of profit or loss was obtained from the firm‘s accounting records

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for the year ended 31 December 2024:
Sh. Sh.

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Gross profit 29,600,000
Profit on disposal of furniture 324,000
Foreign exchange gain 180,000
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Insurance compensation for stolen motor vehicle 2,093,800
Interest from fixed deposits - Foreign accounts 150,000

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Dividends from investment (gross) 200,000
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32,547,800

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Less expenses: a.
Salaries and wages 9,340,000
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Interest on capital:
Wambua 180,000
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Baraza 250,000
Legal expenses 1,720,000
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Conveyancing fees 128,200

Purchase of office equipment 360,000
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Stamp duty on lease agreement (100 years) 84,000

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Depreciation 736,00
General allowance for bad debts 145,800
Partner‘s medical expenses 52,400
Donation to a non-charitable organisation 35,000 (13,031,400)
Net profit 19,516,400

Additional information:
1. The reported gross profit includes value added tax (VAT) at the rate of 16% on sales
amounting to Sh.6,960,000.
2. Legal expenses included: Sh.
 Drafting of tender documents 124,800
 Legal cost of debt collection 832,000
 Defending a partner in a fraud case 328,000
 Negotiating bank loan 230,000
 Defending the firm against trade dispute 205,200
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 PUBLIC FINANCE AND TAXATION REVISION KIT

3. Salaries and wages include salaries to Wambua and Baraza of Sh.400,000 and

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Sh.600,000 respectively.
4. Wambua made drawings of Sh.248,000 with interest on drawings of Sh.15,000 being

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included in the interest from fixed deposits.

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5. General allowance for bad debts included bad debts written off of Sh.34,600.

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6. Commission paid to Baraza of Sh.80,000 was completely omitted from the books of
the firm.

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Required:

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(i) Prepare a statement of adjusted taxable profit or loss for the year ended 31 December
2024. (8 marks)
(ii) A schedule of allocation of taxable income for each partner for the year ended 31
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December 2024. (4 marks)

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QUESTION 3
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December 2024 Question Three B

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Ezekiel Ledama is a resident individual and an investment analyst employed by Salab
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Insurance Group Ltd. as a senior investment analyst.
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The following details were availed to you in respect of his income for the year ended 31
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December 2023:
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1. He received a monthly basic salary from Salab Insurance Group Ltd. of Sh.244,800
net of PAYE. The total PAYE deducted during the year amounted to Sh.607,200.
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2. He received a monthly bonus of 20% of his basic salary during the year.
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3. He attended a five day training for investment analysts organised by the professional
body. The employer paid Sh.70,000 for his training and also paid a daily subsistence
allowance of Sh.14,000 to cater for his expenses while in the training.
4. He has a life insurance policy where the annual premiums amount to Sh.180,000. He
pays 30% of the premiums whereas the balance is paid by the employer on his behalf.
5. On 1 September 2023, he was provided with a leased saloon vehicle of 2600cc by the
employer. The vehicle was acquired in January 2023 at Sh.2,800,000. The employer
paid Sh.36,000 per month as lease charges for the vehicle.
6. Salab Insurance Group Ltd. has a medical cover for all senior management. He was
entitled to a maximum cover of Sh.2,500,000 per annum although he utilised
Sh.280,000 on medical bills during the year.
7. He paid subscription fees to his professional body amounting to Sh.18,000 during the
year.
8. He has invested Sh.2,500,000 with Salab Insurance Group Ltd. money market fund.
He received interest at the rate of 12% per annum in the year 2023.

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 PUBLIC FINANCE AND TAXATION REVISION KIT

TOPIC 9

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INVESTMENT ALLOWANCE/DEDUCTIONS

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QUESTION 1

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April 2025 Question Four C
The following information relates to SmartFarm Ltd., a company involved in farming

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activity. The company registered and started operations on 1 January 2024:

The company‘s statement of profit or loss for the year ended 31 December 2024:
Income
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Sale of poultry
Sh. Sh.
3,200,000

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Sale of livestock 4,400,000
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Sale of milk 3,450,000
Sale of manure 560,000

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Sale of sugarcane a. 1,456,200
Discount received 180,000
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Dividend received (net) 530,000
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Insurance claim 3,120,800

16,897,000
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Expenses:
Cost of seeds 670,000
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Cost of cane tubers 3,860,000

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Salaries and wages 1,250,000

Depreciation for the year 120,000
Cost of billboards 250,000
Machine repairs 620,000
Mulching costs 50,000
Animal vaccines 28,000
Installment tax paid for the year 200,000
Directors emoluments 1,500,000
Legal fees 960,000
Pesticides 12,900 (9,520,000)
Net profit 7,376,100

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 PUBLIC FINANCE AND TAXATION REVISION KIT

Additional information:

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1. Dividend received from:
Sh.

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Ukulima Co-operative Ltd. 340,000

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Waridi Ltd. 190,000

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530,000
2. Legal fees comprised the following:

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Sh.
Parking fines 120,000

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Debt collection from customers 360,000
Stamp duty on land 480,000
960,000
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3. Insurance claim relate to compensation from insurance company for the loss of crops
through floods during the year.

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4. Machine repairs include Sh.184,000 spent on purchasing of farm machines during the
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year.

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5. The company had the following assets at the commencement of the farming activity:
a.
Asset Cost (Sh.)
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Solar panels 140,000
Computers 420,000
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Chicken shed 188,000

Furniture 250,000
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Dog kennels 230,000

2 tractors 8,900,000
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2 saloon cars 6,800,000

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Irrigation networks 410,000

3 pick-up motor vehicles 6,600,000
Farmhouse 3,240,000

6. A cattle dip and silo were constructed at a cost of Sh.860,000 and Sh.620,000
respectively and put into use from 1 October 2024.
7. The following assets were acquired on 1 July 2024.

Sh.
Delivery van 2,200,000
Loose tools 120,000
Wheelbarrows 360,000

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 PUBLIC FINANCE AND TAXATION REVISION KIT

Required:

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(i) Compute the investment allowances due to SmartFarm Ltd. For the year ended 31
December 2024. (8 marks)

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(ii) Prepare a statement of adjusted taxable profit or loss and tax payable, (if any) for

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SmartFarm Ltd. for the year ended 31 December 2024. (6 marks)

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QUESTION 2

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December 2024 Question Four C
Adamil Mwemah, a retired engineer, set up a manufacturing factory in industrial area on

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1 January 2023 to fabricate mechanical and automotive parts at a cost of Sh.44,900,000.
Operations commenced on 1 January 2023 except for the commercial building which was
put into use from 1 September 2023.
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The cost of manufacturing comprised of:

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Sh.
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Factory building 18,000,000

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Office within factory building a. 800,000
Second hand imported machinery 4,400,000
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Land 8,000,000
Engineers fee for machine installation 1,400,000
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Parking bay 900,000

Conveyor belt 1,400,000
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Commercial building 10,000,000

44,900,000
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Additional information:
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1. Commercial building cost included cost of showroom and retail shop amounting to
Sh.2,800,000 and Sh.3,200,000 respectively.
2. The factory building cost included a warehouse at Sh.2,200,000.
3. A building that had been constructed at a cost of Sh.12,000,000 was leased from
Juhudi Manufacturers Ltd. for 5 years. Annual lease rentals were agreed at
Sh.2,200,000. Adamil Mwemah imported a processing machinery from China at a
cost of Sh.5,200,000 and installed it in the building and started operations on 1
January 2023.
4. To improve the performance of the factory operations, Adamil Mwemah on 1 July
2023 computerised all its operations at a total cost of Sh.15,000,000 out of which 30%
related to software cost.
5. The following assets were also purchased on 1 July 2023:
Sh.
Furniture and fittings 620,000
Second hand BMW vehicle 4,300,000

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 PUBLIC FINANCE AND TAXATION REVISION KIT

TOPIC 11

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ADMINISTRATION OF VALUE ADDED TAX (VAT)

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QUESTION 1

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April 2025 Question Two C
Bandika Enterprises Ltd. deals with both vatable and non-vatable supplies. The following

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transactions were obtained from the accounting records of the company for the month of
March 2025:
Sh.
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Sales at standard rate
Purchases at standard rate
9,810,816
6,521,984

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Exports to Zambia 400,000
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Exempt sales 250,000
Stationery 23,200

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Audit fees a.
174,000
Catering expenses 69,600
ny
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Additional information:
1. The company issued credit notes worth Sh.53,360 for goods wrongly priced.
ea

2. The company received debit notes worth Sh.41,760 for goods underpriced by
suppliers.
m

3. A debtor of goods valued at Sh.20,880 was declared bankrupt and the amount owed
So

written off as bad debts.

4. A customer of goods valued at Sh.9,280 returned the goods to the business and a
credit note issued immediately.
5. 20% of purchases at standard rate could not be directly identified from sales at
standard rate and exempt supplies.
6. All transactions are inclusive of VAT at the rate of 16% where applicable, unless
otherwise stated.

Required:
Calculate the following for Bandika Ltd. for the month of March 2025:
(i) Deductible input tax. (5 marks)
(ii) Output tax. (3 marks)
(iii) VAT payable by or refundable to Bandika Ltd. for the month of March 2025.
(2 marks)

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QUESTION 2

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December 2024 Question Two C
Delight Ltd., a company registered for the value added tax (VAT) purposes provided the

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following details for the month of October 2024:

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October 1: Purchased raw materials from Dubai for Sh.2,981,200 inclusive of import
duty at the rate of 25% and VAT at the rate of 16%. The raw materials were

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transported to business for further processing. The processed goods were
later sold on 8 October 2024 at Sh.4,785,000 inclusive of VAT.

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October 3: Purchased goods from suppliers for Sh.3,840,000 net of VAT out of which
20% were from unregistered suppliers.
October 8: Paid for audit and accounting services amounting to Sh.290,000. October 12:
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Sold goods to a client in Rwanda for Sh.720,000.
October 15: Sold goods on credit to Mamba Traders based in Mombasa for Sh.835,200.

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Mamba Traders paid Sh.320,000 during the month and the balance to be paid
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in the following two months.

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October 20: Delight Ltd. issued credit notes to the client in Rwanda for defective goods
a.
worth Sh.60,000.
ny
October 24: Purchased computers for resale at a hire purchase price of Sh.420,000
exclusive of VAT. Hire purchase interest was Sh.92,000.
ke

October 25: The Directors of the company took goods worth Sh.160,000 from business
for their personal use and donated goods worth Sh.240,000 to Neemah
ea

Children‘s Home. It is the policy of the company not to charge VAT on

drawings and donations.
m

October 26: A customer who was declared bankrupt in May 2024 paid the debt of goods
So

amounting to Sh.100,000 he owed Delight Ltd. Delight Ltd. had claimed a

bad debt relief in respect of the debt.
October 29: Purchased goods for cash amounting to Sh.1,240,000. October 30: Paid for
the following expenses:
Sh.
• Bottled water for directors 30,000
• Rent for the business premises 48,000
• Private parking for directors vehicles 30,000

Note: All transactions are inclusive of VAT at the rate of 16% where applicable unless
otherwise stated.

Required:
Compute the value added tax (VAT) payable by or refundable to Delight Ltd. for the
month of October 2024. (12 marks)

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 PUBLIC FINANCE AND TAXATION REVISION KIT

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QUESTION 3
August 2024 Question Two C

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Suntec Traders is a business registered for value added tax (VAT) purposes. The

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following transactions were recorded in the month of May 2024:

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Sh.
May 4: Purchases of goods (local) 4,640,000

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May 6: Purchase of a computer 162,400
May 8: Return outwards 139,200

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May 10: Legal fees 62,640
May 12: Imports Cost, Insurance and Freight (CIF) 300,000
May 14: Advance salaries and wages 580,000
May 16: Sales (local) 5,916,000
m
May 18: Export sales 600,000
May 20: Exempt sales 1,840,000

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May 24: Printing and stationery 27,840
Sa
May 28: Electricity 53,940

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Additional information: a.
1. During the month, import duty was at 20% on Cost, Insurance and Freight (CIF)
ny
basis.
2. A debtor of goods valued at Sh.121,800 was declared bankrupt on 20 May 2024.
ke

3. Input tax relating to goods sold as exempt sales could not be directly identified and it
ea

was found appropriate to restrict deductible import tax.

4. Transactions are inclusive of VAT at the rate of 16% where applicable.
m
So

Required:
(i) Output tax. (3 marks)
(ii) Deductible input tax (5 marks)
(iii) VAT payable or refundable. (2 marks)

QUESTION 4
April 2024 Question Two C
Kenley Ltd. is a merchandising company operating in Kenya. The following transactions
were extracted from the company‘s records during the month of September 2023:
Sh.
Sales at standard rate 6,199,997
Exports to Egypt 800,000
Purchases at standard rate 4,000,000
Purchase of oil and fuel for delivery van 360,500
Repairs of office furniture 64,000

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 PUBLIC FINANCE AND TAXATION REVISION KIT

TOPIC 1

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INTRODUCTION TO PUBLIC FINANCIAL

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MANAGEMENT

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QUESTION 1
April 2025 Question One B

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Stages of the budget process
According to Section 35(1) of the Public Finance Management Act the budget process for
the national government in any financial year shall comprise the following stages
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1. Integrated development planning process which shall include both long term and
medium term planning;

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2. Planning and determining financial and economic policies and priorities at the
Sa
national level over the medium term;
3. Preparing overall estimates in the form of the Budget Policy Statement of national

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a.
government revenues and expenditures;
4. Adoption of Budget Policy Statement by Parliament as a basis for future
ny
deliberations;
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5. Preparing budget estimates for the national government;

6. Submitting those estimates to the National Assembly for approval;
ea

7. Enacting the appropriation Bill and any other Bills required to implement the
National government‘s budgetary proposals;
m

8. Implementing the approved budget;

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9. Evaluating and accounting for, the national government‘s budgeted revenues and
expenditures; and
10. Reviewing and reporting on those budgeted revenues and expenditures every three
months.

QUESTION 2
April 2024 Question One B
Documents that are prepared in the process of county government budget
preparation
1. County Fiscal Strategy Paper (CFSP): This document outlines the county's budget
priorities and resource envelope for the medium term. It is prepared by April 30th of
the preceding financial year.
2. County Budget Review and Outlook Paper (CBROP): This paper reviews the
county's economic and fiscal performance and presents the county's budget proposals

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 PUBLIC FINANCE AND TAXATION REVISION KIT

for the upcoming financial year. The County Treasury prepares the CBROP by

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November 30th of the preceding financial year.
3. Budget Estimates (BE): These are detailed proposals for spending by each county

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department for the upcoming financial year. Sector Committees within the county

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government submit their Budget Estimates by October 31st of the preceding financial

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year.
4. County Assembly Budget Bill (CABB): This bill formalizes the county's budget

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proposals and requires approval by the County Assembly by April 30th of the
financial year.

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QUESTION 3
December 2023 Question One B
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Contents of the circular issued by Cabinet Secretary
 A schedule for preparation of the budget indicating key dates by which various

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exercises are to be completed
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 The procedures for the review and projection of revenues and expenditures

c
 Key policy areas and issues that are to be taken into consideration when preparing
a.
the budget
ny
 Procedures setting out the manner in which members of the public shall participate
in the budget process;
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 The format in which budget information and documents shall be submitted; and
 Any other information that, in the opinion of the Cabinet Secretary, may assist the
ea

budget process.
m

QUESTION 4
So

August 2023 Question One B

Principles of public financial management regulations that govern all aspects of
public finance in Kenya
According to Article 201 of the Constitution of Kenya, The following principles shall
guide all aspects of public finance in the Republic:-
(a) There shall be openness and accountability, including public participation in
financial matters;
(b) The public finance system shall promote an equitable society, and in particular—
(i) The burden of taxation shall be shared fairly;
(ii) Revenue raised nationally shall be shared equitably among national and county
governments; and
(iii) Expenditure shall promote the equitable development of the country, including
by making special provision for marginalised groups and areas;
(c) The burdens and benefits of the use of resources and public borrowing shall be
shared equitably between present and future generations;
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 PUBLIC FINANCE AND TAXATION REVISION KIT

(d) Public money shall be used in a prudent and responsible way; and

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(e) Financial management shall be responsible, and fiscal reporting shall be clear.

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QUESTION 5

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April 2023 Question One C

07
Under Section 130(b) Public Financial Management Act 2012 the following matters are
included in the budget estimates submitted to the County Assemblies by the County

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Executive Committee members for finance in respect of the budget for every financial
year

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1. A list of all county government entities that are to receive funds appropriated from
the budget of the county government;
2. Estimates of revenue projected from the Equalisation Fund over the medium term;
m
3. All revenue allocations from the national government over the medium term,
including conditional and unconditional grants;

om
4. All other estimated revenue by broad economic classification;
Sa
5. All estimated expenditure, by Vote, and by programme, clearly identifying both

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recurrent and development expenditures;
a.
6. Information regarding loans made to the county government, including an estimate
ny
of principal, interest and other charges to be paid by that county government in the
financial year in respect of those loans;
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QUESTION 6
ea

December 2022 Question One C

Contents that should be included in development plan prepared by every county
m

government as specified under Section 126 (1) of the Public Finance Management
So

Act, 2012
1. Strategic priorities for the medium term that reflect the county government‘s
priorities and plans
2. A description of how the county government is responding to changes in the
financial and economic environment
3. Programmes to be delivered with details for each programme of:
 The strategic priorities to which the programme will contribute;
 The services or goods to be provided
 Measurable indicators of performance where feasible and
4. The budget allocated to the programme
5. Payments to be made on behalf of the county government, including details of any
grants, benefits and subsidies that are to be paid
6. A description of significant capital developments

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 PUBLIC FINANCE AND TAXATION REVISION KIT

TOPIC 8

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7
TAXATION OF INCOME

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07
07
e
QUESTION 1
April 2025 Question Three C

pl
i) Computation of the total taxable income for Jackson Mutiso for the year ended 31
December
Sh. Sh.
m
Basic Salary (198,000 × 12)
9
Housing benefit (15%× /12×3,129,140 = 352,028
2,376,000

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Less: Rent paid (8,000 × 9) (72,000) 280,028
Sa
Telephone bills (7,200 × 9 × 30%)
Pension contribution:

c
Actual a. 360,000
Set limit 250,000 250,000
ny
30% × Pensionable pay (30% 2,376,000) 712,800
ke

Employer contribution (excess)

Motor vehicle – Land cruiser
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% base (2% × 12 × 2,400,000) 576,000

CC rating 86,400 576,000
m

Furniture benefit (1%×9×380,000 34,000

So

Mortgage interest
Max (300,000×8/12)+30,000 230,000 (230,000)
9
(15%× /12×6,000,000) 675,000
Per diem (excess of 2,000) (2,700×5) 13,500
Other incomes
Dividends (Gross) 60,000
Royalties (Gross) 100,000
Total taxable income 3,089,168

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TOPIC 9

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7
INVESTMENT ALLOWANCE/DEDUCTIONS

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07
07
QUESTION 1

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April 2025 Question Four C
(i) Computation for the investment allowances due to SmartFarm Ltd. For the year

pl
ended 31 December 2024

SmartFarm Ltd 2024 Investment Allowance

Assets
Billboards
m Qualifying cost
250,000
Rate
10%
Investment Allowance
25,000

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Farm machines 184,000 10% 18,400
Sa
Solar panels 140,000 10% 14,000
Computers 420,000 25% 1055,000

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Chicken shed a.
188,000 50% 94,000
Furniture 250,000 10% 25,000
ny
Dog kennels 230,000 50% 115,000
ke

Tractors 8,900,000 25% 2,225,000

Saloon cars 6,000,000(R) 25% 1,500,000
ea

Irrigation networks 410,000 50% 205,000

Pick up motor vehicles 6,600,000 25% 1,650,000
m

Farmhouse 3,240,000 50% 1,620,000

So

Cattle dip 860,000 50% 430,000

Silo 620,000 50% 310,000
Delivery van 2,200,000 25% 550,000
Loose tools 120,000 10% 12,000
Wheelbarrows 360,000 10% 36,000
Total 8,934,400

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 PUBLIC FINANCE AND TAXATION REVISION KIT

TOPIC 11

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7
ADMINISTRATION OF VALUE ADDED TAX (VAT)

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07
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QUESTION 1
April 2025 Question Two C

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i) Input tax Deductible
Nature of supply Supply Amount Input Tax Net of Input tax

pl
Purchases 6,521,984 899,584 5,624,400
Stationery 23,200 3,200 20,000
Audit fees 174,000 24,000 15,000

Debit notes
m
Catering expenses 69,600
41,760
9,600
5,760
60,000
36,000

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Total input 942,144 5,753,400
Sa

c
Input tax
a.Sh.
Total input tax 942,144
ny
Less non-deductible input tax 9,600
ke

932,544
ea

Total tax subject to restriction:

Total input tax claimable 932,544
m

Less non-identifiable input tax 20% × 932,544 186,509

So

Deductible tax 746,035

ii) Output tax

Nature of supply Supply Amount Input Tax Sales Amount
Net of Input tax
Sales 9,810,816 1,353,216 8,457,600
Credit notes issued (53,560) (7,360) (46,000)
Goods returned (9,280) (1,280) (8,000)
Total input 1,344,576 596,000

iii) VAT payable by or refundable to Bandika Ltd. for the month of March 2025

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