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Tax Question...
Rank: Elder Joined: 7/22/2008 Posts: 2,702
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A woman has a garden on which she grows mboga and rears cows. From the milk and mboga proceeds she nets about Ksh. 10,000 per month. She also has some rental houses that bring in another Ksh. 15,000. She has 5 grown children who each give her Ksh. 5,000 every month. All for a total of Ksh. 50,000 per month.
Question:
According to KRA (For taxation purposes) what is her income? Are all monies received considered income?
Naomba kufunzwa.
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Rank: Elder Joined: 2/8/2013 Posts: 4,068 Location: At Large.
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All looked at seperately fall below the tax bracket so hakuna malipo. Love is beautiful and so are those who share it.With Love, Marriage is an amazing event in ones life time, the foundation of joy, happiness and success.
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Rank: Veteran Joined: 4/1/2009 Posts: 1,883
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Bigchick wrote:All looked at seperately fall below the tax bracket so hakuna malipo.
am no tax expert but that doesn't sound right.
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Rank: Member Joined: 12/2/2011 Posts: 176
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Kusadikika wrote:A woman has a garden on which she grows mboga and rears cows. From the milk and mboga proceeds she nets about Ksh. 10,000 per month. She also has some rental houses that bring in another Ksh. 15,000. She has 5 grown children who each give her Ksh. 5,000 every month. All for a total of Ksh. 50,000 per month.
Question:
According to KRA (For taxation purposes) what is her income? Are all monies received considered income?
Naomba kufunzwa. am not sure whether the rental income is within the tax bracket but am sure she should not be taxed from the money she receives from her children. she has not "earned" it
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Rank: Elder Joined: 12/7/2012 Posts: 11,908
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mkenyan wrote:Bigchick wrote:All looked at seperately fall below the tax bracket so hakuna malipo.
am no tax expert but that doesn't sound right. KRA got some work to do: 1st 2 are taxable i.e. 25k though amout can be reduced! In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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Kusadikika wrote:A woman has a garden on which she grows mboga and rears cows. From the milk and mboga proceeds she nets about Ksh. 10,000 per month. She also has some rental houses that bring in another Ksh. 15,000. She has 5 grown children who each give her Ksh. 5,000 every month. All for a total of Ksh. 50,000 per month.
Question:
According to KRA (For taxation purposes) what is her income? Are all monies received considered income?
Naomba kufunzwa. Taxable income Agricultural income 10K(assuming she has deducted all the expenses including capital and farm house allowances) Rental Income-15K(again assuming she has deducted interest and other running expenses) Total Taxable income is Kshs.25KYou cannot tax the money given by her children since it has already been taxed If Obiero did it, Who Am I?
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Rank: Elder Joined: 6/21/2008 Posts: 2,490
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Angelica _ann wrote:mkenyan wrote:Bigchick wrote:All looked at seperately fall below the tax bracket so hakuna malipo.
am no tax expert but that doesn't sound right. KRA got some work to do: 1st 2 are taxable i.e. 25k though amout can be reduced! Farming income is taxable. Rental income is looked at separately hence taxable at 30% but one can reduce using expenses associated with the house. Money from the kids not taxable. The man who marries a beautiful woman, and the farmer who grows corn by the roadside have the same problem
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Bigchick wrote:All looked at seperately fall below the tax bracket so hakuna malipo.
That's not the correct way to look at it! Look at this Tax Returns Form: http://www.kra.go.ke/notices/pdf2013/IT12012.pdf
Go to pg3 and look at line 35 in PART H. It requires that ALL the income categories are added together and then the tax due calculated on the TOTAL income. In my view, the taxable income is that which comes from her work. Gifts from her children, however high cannot qualify for taxation. Thus the tax should be calculated only on the 25k from the farming and rental houses....assuming that the figures given here are the net profits, not the turn-over (sales) Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 11/26/2008 Posts: 2,097
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Taxable income is the sum of rental and farming income, less personal relief. "Never regret, if its good, its wonderful. If its bad, its experience."
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Rank: Elder Joined: 12/7/2012 Posts: 11,908
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@Bigchick is part of #teamtaxevasion#  In the business world, everyone is paid in two coins - cash and experience. Take the experience first; the cash will come later - H Geneen
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Rank: Elder Joined: 5/1/2010 Posts: 3,024 Location: Hapa
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Swenani wrote:Kusadikika wrote:A woman has a garden on which she grows mboga and rears cows. From the milk and mboga proceeds she nets about Ksh. 10,000 per month. She also has some rental houses that bring in another Ksh. 15,000. She has 5 grown children who each give her Ksh. 5,000 every month. All for a total of Ksh. 50,000 per month.
Question:
According to KRA (For taxation purposes) what is her income? Are all monies received considered income?
Naomba kufunzwa. Taxable income Agricultural income 10K(assuming she has deducted all the expenses including capital and farm house allowances) Rental Income-15K(again assuming she has deducted interest and other running expenses) Total Taxable income is Kshs.25KYou cannot tax the money given by her children since it has already been taxed Salaries are taxed and the same money still gets taxed at the bank, at the supermarket, kwa petrol station, etc.....no? Float like a butterfly, sting like a bee. - Muhammad Ali🐝
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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butterflyke wrote:Swenani wrote:Kusadikika wrote:A woman has a garden on which she grows mboga and rears cows. From the milk and mboga proceeds she nets about Ksh. 10,000 per month. She also has some rental houses that bring in another Ksh. 15,000. She has 5 grown children who each give her Ksh. 5,000 every month. All for a total of Ksh. 50,000 per month.
Question:
According to KRA (For taxation purposes) what is her income? Are all monies received considered income?
Naomba kufunzwa. Taxable income Agricultural income 10K(assuming she has deducted all the expenses including capital and farm house allowances) Rental Income-15K(again assuming she has deducted interest and other running expenses) Total Taxable income is Kshs.25KYou cannot tax the money given by her children since it has already been taxed Salaries are taxed and the same money still gets taxed at the bank, at the supermarket, kwa petrol station, etc.....no? Income is only taxed when you earn it or when you spend it.Since the income is not earned from her children she will be taxed when she spends teh cash i.e through VAT etc If Obiero did it, Who Am I?
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Rank: Elder Joined: 5/1/2010 Posts: 3,024 Location: Hapa
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Swenani wrote:butterflyke wrote:Swenani wrote:Kusadikika wrote:A woman has a garden on which she grows mboga and rears cows. From the milk and mboga proceeds she nets about Ksh. 10,000 per month. She also has some rental houses that bring in another Ksh. 15,000. She has 5 grown children who each give her Ksh. 5,000 every month. All for a total of Ksh. 50,000 per month.
Question:
According to KRA (For taxation purposes) what is her income? Are all monies received considered income?
Naomba kufunzwa. Taxable income Agricultural income 10K(assuming she has deducted all the expenses including capital and farm house allowances) Rental Income-15K(again assuming she has deducted interest and other running expenses) Total Taxable income is Kshs.25KYou cannot tax the money given by her children since it has already been taxed Salaries are taxed and the same money still gets taxed at the bank, at the supermarket, kwa petrol station, etc.....no? Income is only taxed when you earn it or when you spend it.Since the income is not earned from her children she will be taxed when she spends teh cash i.e through VAT etc i do not think she should be taxed for the gifts from her children as you've mentioned, income is taxed when you earn it or spend it - my point is for mapatos, income is taxed when we earn AND when we spend it  Float like a butterfly, sting like a bee. - Muhammad Ali🐝
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Rank: Elder Joined: 12/6/2008 Posts: 3,548
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You will have to read too many books. But her Age, Dependents, Agricultural policy e.t.c should enable her get some reprieve if our tax system is fair, the best thing for KRA would be to simply create a special category for "self employed" who earn below certain amount and charge a percentage of the TOTAL gross, such as they charge a percentage to commission sales people, and gamblers e.t.c, rather than get into complicated arithmetic of cows here, then subsidy here, tax returns there e.t.c. I think i saw something similar in the tax returns. A New Kenya
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Rank: Elder Joined: 6/27/2008 Posts: 4,114
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Much Know wrote:You will have to read too many books. But her Age, Dependents, Agricultural policy e.t.c should enable her get some reprieve if our tax system is fair, the best thing for KRA would be to simply create a special category for "self employed" who earn below certain amount and charge a percentage of the TOTAL gross, such as they charge a percentage to commission sales people, and gamblers e.t.c, rather than get into complicated arithmetic of cows here, then subsidy here, tax returns there e.t.c. I think i saw something similar in the tax returns. This already exists; it's called Turn-Over Tax [TOT]. It takes 3% of turn-over as the final tax. But the lady in question here cannot enlist for TOT because it excludes those who have rental income. Nothing is real unless it can be named; nothing has value unless it can be sold; money is worthless unless you spend it.
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Rank: Elder Joined: 3/29/2011 Posts: 2,242
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@Kusadikika, The rule of thumb in tax matters is all income is taxable unless exempt or below the threshold limits. The tax man knows the administrative challenges of collecting the tax from mama mbogas and most of the times such pple escape the noose. In your case, all the money is taxable ( even the income from her grown up children as money changes character when it changes hands.) "Things that matter most must never be at the mercy of things that matter least." Goethe
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Rank: Member Joined: 1/13/2014 Posts: 386 Location: Denmark
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ZZE123 wrote:Angelica _ann wrote:mkenyan wrote:Bigchick wrote:All looked at seperately fall below the tax bracket so hakuna malipo.
am no tax expert but that doesn't sound right. KRA got some work to do: 1st 2 are taxable i.e. 25k though amout can be reduced! Farming income is taxable. Rental income is looked at separately hence taxable at 30% but one can reduce using expenses associated with the house. Money from the kids not taxable. Rental income to a resident individual is not taxed at 30%.. Its subjected to the graduated scale as employment income. Therefore the taxable income will be rental income plus farming income(25k) will be subjected to the graduated scale and taxed against the resident individual rates i.e. up to 20% bracket. Seeing is believing
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Rank: Member Joined: 1/13/2014 Posts: 386 Location: Denmark
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jawgey wrote:ZZE123 wrote:Angelica _ann wrote:mkenyan wrote:Bigchick wrote:All looked at seperately fall below the tax bracket so hakuna malipo.
am no tax expert but that doesn't sound right. KRA got some work to do: 1st 2 are taxable i.e. 25k though amout can be reduced! Farming income is taxable. Rental income is looked at separately hence taxable at 30% but one can reduce using expenses associated with the house. Money from the kids not taxable. Rental income to a resident individual is not taxed at 30%.. Its subjected to the graduated scale as employment income. Therefore the taxable income will be rental income plus farming income(25k) will be subjected to the graduated scale and taxed against the resident individual rates i.e. up to 20% bracket. Incase you need need advice on how to reduce the tax liability hit my inbox @njugialex@gmail.com, I am a tax consultant I can help you/her with that. Seeing is believing
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Rank: User Joined: 8/15/2013 Posts: 13,237 Location: Vacuum
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Gathige wrote:@Kusadikika, The rule of thumb in tax matters is all income is taxable unless exempt or below the threshold limits. The tax man knows the administrative challenges of collecting the tax from mama mbogas and most of the times such pple escape the noose.
In your case, all the money is taxable ( even the income from her grown up children as money changes character when it changes hands.)
 Wewe stop lying. Income tax is only imposed on Business income Employment income and benefits Rental income Pension and Investment income If Obiero did it, Who Am I?
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Rank: Veteran Joined: 10/25/2007 Posts: 1,574
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he he he Interesting that Accountants, Auditors and Tax Consultants cannot agree on how much a lady with an income of KES50,000 should pay. Imagine the chaos when the income is 50 Million! No wonder big companies like Nakumatt do not pay tax... Set out to correct the world's wrongs and you will most certainly wind up adding to them.
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