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TAX Mock 1 Solution

This document provides an explanation of key tax concepts in Pakistan including: 1) It defines normal, special, and transitional tax years and provides an example of Mr. Quaid's tax years. 2) It outlines the procedure for changing from a normal to special tax year which requires permission from the tax commissioner. 3) It discusses residency rules for individuals, AOPs, and deductible allowances for education expenses in relation to examples provided in questions.

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30 views

TAX Mock 1 Solution

This document provides an explanation of key tax concepts in Pakistan including: 1) It defines normal, special, and transitional tax years and provides an example of Mr. Quaid's tax years. 2) It outlines the procedure for changing from a normal to special tax year which requires permission from the tax commissioner. 3) It discusses residency rules for individuals, AOPs, and deductible allowances for education expenses in relation to examples provided in questions.

Uploaded by

syedameerhamza762
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PDF, TXT or read online on Scribd
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CAF-02: TAX PRACTICES

MOCK-1 SOLUTION
TOPIC: Introduction to Key Concepts

Question # 1:

(a) Mr. Quaid

Year Normal Tax Year Sepcial Tax Year Transitional Tax Year
Starting from 1-Jul-23 1-Dec-24 1-Jul-24
Ending on 30-Jun-24 30-Nov-25 30-Nov-24
Tax Year NTY-2024 STY-2026 TTY-2025

(b) Procedure for change of Tax Year from Normal to Special:

1) A person using normal tax year may apply in writing to the commissioner to allow him to use Special Tax Year
and the commissioner may by an order in writing, allow him to use Special Tax year.

2) The commissioner shall grant permission only if the person has shown a compelling (i.e in the given Scenario
Parent's company financial year end's on 31 Dec each year) to use Special tax Year, and the permission shall be
subject to such conditions, if any, as the commissioner may impose.

3) A person dissatisfied with the order may file a review application with the board against that decission of the
commissioner, and the decission by the board shall be final.

Question # 2:

(i) As per Income tax Ordinance, 2001 an employee of Provincial Government Posted abroad in
the tax year shall be considered as a resident individual for that tax year. Therfore, in the given
Scenario Mr. Saleem, an employee of Punjab Government, who has been sent to Las Vegas shall
be considered as a resident individual for Tax Year 2024.
(ii) In the Light of Income Tax Ordinance, 2001 an AOP shall be considered as a resident person for
a tax year if control and management of affairs of the firm wholly or partly is situated in
Pakistan at any time during a tax year. Therefore, ASK & Co., a partnership firm, shall be
considered as Resident AOP as control and management of affair of the AOP is situated partly in
Pakistan.

(iii) As per ITO, 2001 a person shall be cosidered as a resident individual for a tax year if the
individual is present in Pakistan for a period of, or periods amounting in aggregate to 183 days
or more in the tax year. Therefore, Mr. Sameel who is present in Pakistan for 151 Days shall be
considered as non-resident person for tax year 2024.

Question # 3:

As per the provision contained in ITO, 2001 a deductible allowance relating to educational expense shall be
allowed to a person only if the taxable income of the person shall not exceed Rs. 1.5 million. Therefore in the
given Scenario, Mrs. White shall not be allowed a deductible allowance on education expense as her taxable
income is Rs. 2.5 million (i.e exceeding Rs. 1.5 million). However, Mrs. White shall be allowed a deductible
allowance of Zakat paid during the year under Zakat and Ushr Ordinance, 1980.

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