Look intoLook into

Article No:8 & 9Article No:8 & 9

Case (5) :Case (5) :

Revenue and expenses accounts for auditing officeRevenue and expenses accounts for auditing office::

expensesexpenses revenuerevenue10,00010,000 salariessalaries 28,00028,000 accounting feesaccounting fees

80008000 rentrent 12,00012,000 auditing feesauditing fees

70007000 hospitality expenseshospitality expenses 15,00015,000 feasibility study feesfeasibility study fees

30003000 water and electricitywater and electricity

50005000 bad debitsbad debits

10001000Loss of Exchange Loss of Exchange computercomputer

800800 phone expensephone expense

500500Allowance for Doubtful Allowance for Doubtful accountaccount..

40004000 training expensestraining expenses

70007000 donation for ministrydonation for ministry

87008700 net profitnet profit

55,00055,000 totaltotal 55,00055,000 totaltotal

You have the following informationYou have the following information::

11 - -cost of computer 1000$ and accumulated depreciation cost of computer 1000$ and accumulated depreciation 300$ and the exchange price for old 100$ and the new 300$ and the exchange price for old 100$ and the new cost 1000$cost 1000$..

22 - -tax officer accept 60% of phone expense and the bad tax officer accept 60% of phone expense and the bad debits documented with judgmentdebits documented with judgment..

33 - -the office owned by Mr. Haider and he is married and the office owned by Mr. Haider and he is married and has 8 sons and one university studenthas 8 sons and one university student..

Required: calculate the income tax to be paid annually Required: calculate the income tax to be paid annually and monthlyand monthly..

answeranswerexpensesexpenses revenuerevenue

10,00010,000 SalariesSalaries 28,00028,000 accounting feesaccounting fees

80008000 RentRent 12,00012,000 auditing feesauditing fees

00 hospitality expenseshospitality expenses 15,00015,000 feasibility study feesfeasibility study fees

30003000 water and electricitywater and electricity

11001100bad debits(55000*2%)bad debits(55000*2%)

((item 6 of article 9item 6 of article 9.).)

600600 Exchange computer lossExchange computer loss

480480phone phone expense(800*60%)expense(800*60%)

00Allowance for Doubtful Allowance for Doubtful accountaccount..

550550

training expense training expense (55000*1%)(55000*1%)

((item 10 of article 8item 10 of article 8.).)

00 donation for ministrydonation for ministry

31,27031,270 net profitnet profit

55,00055,000 totaltotal 55,00055,000 totaltotal

Calculated net profit before hospitality expensesCalculated net profit before hospitality expensesand donation =31,270and donation =31,270Deduct donation = (31270*20%) = 6254 Deduct donation = (31270*20%) = 6254 )item 3 of article 9()item 3 of article 9(..

Deduct hospitality expensesDeduct hospitality expenses = = (31270*3%) = 938(31270*3%) = 938 )item 5 )item 5 of article 9(of article 9(..

Taxable income=24,078Taxable income=24,078Deduct exemptionsDeduct exemptions::Resident=3000Resident=3000Wife=500Wife=500Sons (500*8)= 4000Sons (500*8)= 4000University student = 2500University student = 2500Total = (10000)Total = (10000)Net taxable income=14078Net taxable income=14078

((1000010000**8%8% + +40784078**12%12% = ) = )800800 + +489.36489.36 = = 1289.361289.36 annuallyannually1289.36/121289.36/12 = =107.44107.44 monthlymonthly..

Case (6)Case (6): :

Dr. Yahia works in his own private clinic and you Dr. Yahia works in his own private clinic and you have the following information on 31-12-2007have the following information on 31-12-2007 The total gross income = 13,0000 NISThe total gross income = 13,0000 NISAnd paid the following expensesAnd paid the following expenses::

--Electricity bills 1800 NIS annuallyElectricity bills 1800 NIS annually..--Water bills 600 NIS annuallyWater bills 600 NIS annually..

--Phone bills 2160 NIS annuallyPhone bills 2160 NIS annually..--In January 2007 bought clinic equipment (CT) In January 2007 bought clinic equipment (CT)

amounted 5000$ and the depreciation rate is amounted 5000$ and the depreciation rate is 7% annually7% annually..

--Huda works as a nurse with monthly salary 900 Huda works as a nurse with monthly salary 900 NISNIS

--Akram works as an office assistant with monthly Akram works as an office assistant with monthly salary 600 NISsalary 600 NIS

Dr. Yahia married with Dr. Sozan and she work in the Dr. Yahia married with Dr. Sozan and she work in the ministry of healthministry of health..They have three sons, Ahmed student in the 6th class and They have three sons, Ahmed student in the 6th class and Amjad student in Palestine university with certificate Amjad student in Palestine university with certificate document, and Rana married and lives with here document, and Rana married and lives with here husbandhusband..Dr. Yahia live with his father and he has pension from Dr. Yahia live with his father and he has pension from Palestinian AuthorityPalestinian Authority..They live in a rent house 200$ monthly paid by Dr. YahiaThey live in a rent house 200$ monthly paid by Dr. Yahia

If you know that Dr. Yahia has no income except 200$ If you know that Dr. Yahia has no income except 200$ monthly salary from (UN) paid for his medical monthly salary from (UN) paid for his medical consultingconsulting..Required: calculate the followingRequired: calculate the following::

11 - -total gross incometotal gross income..22 - -taxable incometaxable income..

33 - -The deductions and exemptionsThe deductions and exemptions..44 - -the accrued value of tax annually and monthlythe accrued value of tax annually and monthly..

The exchange rate for dollar 4.5 NISThe exchange rate for dollar 4.5 NIS..

11 - -The total gross income from all recourses = 130000/4.5= The total gross income from all recourses = 130000/4.5= 28888.8$28888.8$

200$200$ * *1212 = = 2400$2400$

Total income = 31288.8Total income = 31288.8

Gross taxable income = 28888.8Gross taxable income = 28888.8

DeductionsDeductions

Electricity 1800/ 4.5 = 400$Electricity 1800/ 4.5 = 400$

Water 600/ 4.5 = 133$Water 600/ 4.5 = 133$

Phone 2160/ 4.5 = 480$Phone 2160/ 4.5 = 480$

Depreciation of CT 5000$* 7% =350$Depreciation of CT 5000$* 7% =350$

Huda salary = 900*12/ 4.5 = 2400$Huda salary = 900*12/ 4.5 = 2400$

Akram salary = 600*12/ 4.5 1600$Akram salary = 600*12/ 4.5 1600$

total of deductions = 5363$total of deductions = 5363$..

ExemptionsExemptions::

Resident 3000$Resident 3000$

Wife 0$Wife 0$

Sons 500$Sons 500$

University student 2500$University student 2500$

Married daughter 0$Married daughter 0$

Rent of house 2000$ (200*12=2400) max 2000$Rent of house 2000$ (200*12=2400) max 2000$

Total of exemption 8000$Total of exemption 8000$

Total of deductions and exemptions = 5363+8000 =13363$Total of deductions and exemptions = 5363+8000 =13363$

Net taxable income =28888.8 – 13363 = 15525.8$Net taxable income =28888.8 – 13363 = 15525.8$

Annual income tax = (10000*8% + 5525.8*12%)Annual income tax = (10000*8% + 5525.8*12%)

800800 + + 663663 = = 1463$1463$

Monthly income tax = 1463/12 = 121.9$Monthly income tax = 1463/12 = 121.9$

121.9121.9* * 4.54.5 = = 548.6548.6 NISNIS

Case (7)Case (7): :

Mrs. Eman is a relict woman, she works in Mrs. Eman is a relict woman, she works in private company with monthly salary private company with monthly salary 1850 NIS, She has three sons and lives in 1850 NIS, She has three sons and lives in a rent house 8500 NIS annuallya rent house 8500 NIS annually

Required: calculate the income tax to be Required: calculate the income tax to be paid (the exchange rate 5 NIS)paid (the exchange rate 5 NIS)

Note : in this case we have family woman, Note : in this case we have family woman, and she will have all the exemption have and she will have all the exemption have been given to the family manbeen given to the family man..

Annual income 1850*12/5 = 4440$Annual income 1850*12/5 = 4440$..Deduct the exemptionDeduct the exemption Resident 3000$Resident 3000$Husband (dead) 0$Husband (dead) 0$Sons 1500$ (3*500)Sons 1500$ (3*500)

Rent 1700$Rent 1700$ Total 6200$Total 6200$So tax is 0$ because the exemption are So tax is 0$ because the exemption are more than the incomemore than the income..

AnswerAnswer::