Question Two Miracle Finance Limited is a Banking Institution providing financial services to the general public. The bank has been in business since 2011 and a summary of its financial results for the year to \( 31^{\text {st }} \) December 2015 is as follows:- \begin{tabular}{|l|r|r|} \hline INCOME & Notes & UGX (000) \\ \hline Interest Income & \( 1,400,000 \) \\ \hline Fees and charges & 750,000 \\ \hline Foreign exchange trading income & 375,000 \\ \hline Other income & 1 & 225,000 \\ \hline Total Income & & \( 2,750,000 \) \\ \hline & & \\ \hline EXPENDITURE & \\ \hline Interest expense & 300,000 \\ \hline Staff expenses & 675,000 \\ \hline Depreciation & 137,500 \\ \hline Repairs and maintenance & 225,000 \\ \hline Loss on disposal of non-current assets & 1,750 \\ \hline Subscriptions & 4,250 \\ \hline Legal fees & & 7,250 \\ \hline Audit fees & & 6,000 \\ \hline Entertainment & 3,000 \\ \hline Fraud \& forgeries & 18,750 \\ \hline Advertising \& publicity & 75,000 \\ \hline Bank of Uganda deposit insurance & 12,500 \\ \hline Insurance of non-current assets & 16,250 \\ \hline Specific loan loss provision & 212,500 \\ \hline General loan loss provision & 37,500 \\ \hline Cash shortages & 6,250 \\ \hline Training expenses (computer courses) & 23,750 \\ \hline Other tax allowable expenses & 212,500 \\ \hline Total expenses & & \( 1,974,750 \) \\ \hline Net profit for the year & 775,250 \\ \hline \end{tabular} Notes 1. Foreign exchange trading income includes UGX.50,000,000 relating to unrealized exchange gains resulting from the translation of accounts denominated in foreign currency. 2. Subscriptions include; UGX.500,000, which related to the subscriptions of the Senior Managers of the bank to LuckOil Kampala Club and LuckOil Entebbe Club and no Pay As You Earn was paid on them. The balance relates to subscription to Uganda Institute of Bankers. 3. The bank's tax assessment from Uganda Revenue Authority for the year of income ended \( 31^{\text {st }} \) December 2014 showed that it had an accumulated tax loss of UGX.112,500,000 as at \( 31^{\text {st }} \) December 2014. 4. Staff expenses are analysed as follows: \begin{tabular}{|l|r|} \hline & UGX 000 \\ \hline Salaries \& Wages & 425,250 \\ \hline NSSF company contribution & 30,000 \\ \hline NSSF Staff contribution & 15,000 \\ \hline Staff PAYE & 192,500 \\ \hline Medical expenses & 2,250 \\ \hline Staff accommodation & 10,000 \\ \hline Total & 675,000 \\ \hline \end{tabular} 2
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The taxable income is the total income minus the total expenses. However, not all expenses are tax deductible. From the notes, we can see that the unrealized exchange gains of UGX 50,000,000 are not tax deductible. Show more…
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Jay P.
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