Workbook question 2 – Taxation of Investments

[Peter]

#319327

Hi again,

I also think that question 2 and 3 are ambiguous as far as what is required from the candidate.

In each case I calculated the total income tax payable by the individual, which included any tax due on the interest and dividend. However, the answers given are looking for just the tax payable on the interest and dividend payment.

Perhaps they could be tightened up by having the questions as ‘State how much income tax would be payable relating to the interest payment only/dividend payment only, in each of these scenarios’.

Other candidates might not have seen this ambiguity – perhaps it’s just me!

Thanks again,

Peter

[Tessa Roberts]

#319335

Thanks for the feedback Peter – am always looking to improve the resources :-)

[Peter]

#319832

Hi Tessa,

I think I’ve worked out what the question is asking!

It wants the total tax payable on the net interest, including the tax deducted at source (in the net scenario).

I’ve answered the question asked, and then done some further calculations to work out how much additional tax the person will need to pay over and above that deducted at source.

Unfortunately, doing extra work won’t give me extra marks in the exam!

Many thanks,

Peter

[Peter]

#319324

Hi Tessa,

Sorry to be jumping ahead a little – I’m on holiday for 2 weeks so don’t want to be too far behind when I’m back.

I’m a little confused with the answers to this question. I would have thought the tax already deducted, when looking at the grossed up net interest, should be deducted from the tax payable by the individuals to give the final figure. The answers given are just the tax payable on the grossed up net interest.

Sorry for the rather ugly terminology and hope you understand!

I’d welcome your help with this one, please.

Many thanks,

Peter

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