Expenditure is deducted in the computation of income tax if it has been incurred in the production of income or for the purposes of trade. Expenditure on acquisition or construction of fixed assets, known as property, plant and equipment (PPE) is not deducted but is written off against taxable income over the tax life of the PPE by way of capital allowances. Assets ranking for capital allowances include Commercial buildings; Industrial buildings; Staff houses; Farm improvements; Implements, mac ...
Vat apportionment rules
Input tax is tax incurred by a VAT registered operator on goods or services acquired for use, consumption or supply in the production of taxable supplies including that incurred on imports for use, consumption or supply in the production of taxable supplies. Only persons who are registered for VAT, known as registered operators are permitted to claim input tax. They may either offset it against output VAT or recover it as a refund from the ZIMRA. Taxable supplies are supplies which are charged ...
Landlords and tenants must watch out Income Tax issues of lease improvements
A leasehold improvement is expenditure which adds something new to the leased property and which should ordinarily be treated as capital expenditure. Because the land or building on which they are effected belongs to the landlord, the improvement will become the property of the landlord upon termination of the lease through accession. For this reason they are treated as additional rental income to him and additional rental paid by the tenant. They have income tax and VAT implications to both th ...
Tax reliefs for retrenched workers
There are a number of ways in which jobs are lost and these include mutual separation, retrenchment, dismissal, retirement among others. In the current hyperinflationary environment, retrenchment counts for the highest number of job losses as employers adopt cost rationalization strategies or close their businesses. Where an employee is dismissed through no fault of his or her own, an employer often pays a compensation known as severance pay. In practice severance pay and retrenchment package a ...