NAME:

JENJE ROXANE I.R

REG NUMBER:

R135558D

PROGRAMME:

HACC 4 (FULLTIME)

COURSE:

TAX LAW AND PRACTISE 1

ASSIGNMENT:
Section 14 as read with 3rd Schedule -Exemptions
Section 16- Prohibited deductions

Exemptions
Section 14(1) of the Income Tax Act Chapter 23:06 as read with 3rd Schedule sets out the
receipts and accruals, which are exempt from tax.
Paragraph 1 exempts receipts of statutory corporations such as the Reserve Bank of Zimbabwe,
local authorities and POSB
Paragraph 2 exempts agricultural, mining and commercial societies not operating for the profit of
the members, approved benefit funds, pension funds, building societies, friendly societies and
medical aid societies. Religious, Charitable and Educational Institutions of a public character and
Trusts of a public character, Trade Unions Employeessaving schemes
Exemptions according to nature of income
Paragraph 4 exempts
Salary and emoluments
paid in respect of the Presidents office and a member of staff of the President if the
President pays such salary and emoluments
paid in respect of the president
Allowances
payable to a spouse of the President or a Vice-President in respect of duties the spouse
performs for or on behalf of the State
Allowances granted to Senior Government Officials, Minister, Deputy Minister,
Provincial Governor, the Speaker and Deputy Speaker.
Allowances or value of any benefit, which is granted to any person in full time
employment of the State as specified in a Statutory Instrument e.g. housing and transport
allowances.
Allowances payable to a Chief or Headman in his capacity as headman.
Allowances payable by the State to a person in its service in respect of the expenditure
incurred by the person in the discharge of his duties outside Zimbabwe.
So much of the expenditure of the person in maintaining himself, his family or
establishment whilst employed on duty outside Zimbabwe as is in excess of his normal
expenditure if he were employed in Zimbabwe.
an allowance payable by reason of the overseas service of a member of the Defence
Forces which is declared to be active service in terms of any law relating to defence
Paragraph 4(t) exempts the value of an allowance in respect of accommodation and
transport, or the value of the grant of quarters or a residence to any member of staff of a
mission hospital or rural clinic operated or sponsored by any religious body

Gratuities

any gratuity payable to a judge of the Supreme Court or the High Court in terms of his
conditions of service
a gratuity given in conjunction with the award of the Fire Brigades Long Service Medal
or the Medal for Long Service and Good Conduct (Military)
Paragraph 4(s) exempts a reward paid to whistle blowers by the Commissioner General
in terms of section 34B of the Revenue Authority Act (Chapter 23:11).

Bonus

Paragraph 4(o) exempts bonus (to include performance related payments) accruing to an
employee from employment. The exemption shall not exceed $1000
Paragraph 4(p) exempts the greater of $10,000 or 1/3 of the amount of any severance
pay, gratuity or similar benefit received on cessation of employment due to retrenchment
under a scheme approved by the Minister responsible for the Public Service, labour and
Social Welfare

Rental income
Paragraph 4(v) exempts the first $3,000 being rental income accruing to a taxpayer who
has attained the age of 55 years in the year of assessment concerned.
Pension

Paragraph 6(a) exempts a war disability pension;

Paragraph 6(b) exempts a war widows pension
Paragraph 6(h) exempts a pension paid from a pension fund or the Consolidated
Revenue Fund to a taxpayer who attained the age of 55 yrs before the commencement of
the year of assessment.

Awards, Benefits and Compensations

Paragraph 6(e) an award, benefit or compensation, including a pension, to any person or
his dependants or heirs under any law in respect of injury, disease, disablement or death
suffered in employment;
Paragraph 6 (f) an award, benefit or compensation, including a pension, to any person or
his dependants in respect of personal injury, disablement or death which has been paid or
is deemed to have been paid in terms of the War Victims Compensation Act [Chapter
11:16] or any law repealed by that Act;
Paragraph 7 exempts an amount accruing by way of a benefit in respect of the injury,
sickness or death of a person which is paid to the person or his dependants or deceased
estate
a. by a trade union; or
b. from a benefit fund; or

c. in terms of a policy of insurance covering accident, sickness or death; or

d. by a medical aid society.

Paragraph 8 exempts the value of medical treatment (and transport to obtain the same)
and Medical Aid Society subscriptions, paid by an employer on behalf of his employee or
their dependants.

Dividends

Paragraph 9 exempts dividends received by or accrued to or in favour of a person paid

by companies incorporated in Zimbabwe provided that such a company is chargeable to
tax

Interest
Paragraph 10 exempts interest on an amount:

deposited in the Post Office Savings Bank of Zimbabwe;

the first $3,000 being interest from any deposit with a financial institution accruing to a
taxpayer who has attained the age of 55 years in the year of assessment concerned

exempts interest accruing to a person who at the time the income accrues is not ordinarily
resident and not carrying on business in Zimbabwe where the loans is to:
Any person involved in mining and prospecting work in Zimbabwe
The State or a company wholly owned by the State
A Local authority or statutory corporations

Paragraph 14 exempts an export bonus (not the same as import duty drawback) paid to an exporter
of goods by Government. The bonus is a percentage of the value of the exports.
Paragraph 15 exempts that portion of entertainment allowance paid to an employee which is
expended on the business of the employer.
Paragraph 17 exempts the receipts and accruals of an industrial park developer during the first five
tax years of trading.
Paragraph 18 exempts an amount received from the sale, disposal or transfer of any duty exemption
certificate issued by the Reserve Bank of Zimbabwe to an exporter qualifying for a rebate of duty on
imports in terms of an export incentive scheme under which the certificate was issued.
Paragraph 19 exempts an amount accruing to an employee participating in an approved employee
share ownership trust from the sale to or redemption by the trust of any stock, shares, debentures,
units or other interest of the employee in the scheme or trust of any stock, shares, debentures, units or
other interest of the employee in the trust.

Section 14(2) states that the exemption granted to the various organizations listed in paragraph 1
and 2 of the 3rd schedule do not extend to the salaries, pensions paid to the employees of the
organisation.

Section 16 ITA 23:06

Prohibited deductions
Section 16(1) -No deduction shall be allowed in respect of the following expenditures:a. The cost incurred in the maintenance of the taxpayer, his family or establishment
b. domestic or private expenses of the taxpayer, including expenses incurred in travelling
between his home and the place at which he carries on a trade and, in the case of a
taxpayer who carries on two or more trades which are distinct in nature, between the
places at which such trades are carried on
c. Any loss or expense, which is recoverable under any contract of insurance or indemnity
d. Tax levied on income and interest on overdue tax
e. income carried to a reserve fund or capitalized in any way
f. so much of any expenditure or loss, including the whole or any part of an assessed loss in
a previous year of assessment
g. any contribution made by a taxpayer to a fund established for the purpose of providing
pensions, annuities or sickness, accident or unemployment or other benefits for
employees or the widows, children, dependants or nominees of deceased employees or
for all or any of those purposes
h. interest which might have been earned on any capital employed in trade
i. the rent of, or cost of repairs to, any premises not occupied for the purposes of trade, or
any dwelling house or domestic premises,
j. any expenditure incurred by the taxpayer in pursuance of an obligation imposed on him
under an agreement which restrains another person from selling goods other than those
supplied to him by the taxpayer
l.

the cost of any shares awarded by any company to any employee

(m). expenditure incurred by any taxpayer on entertainment whether directly or by the provision
of any allowance to any employee to incur expenditure or entertainment on behalf of the
taxpayer
( o). any expenditure incurred in the production of income consisting of interest payable by
(i) any bank, discount house or finance house registered or required to be registered in
terms of the Banking Act [Chapter 24:20]; or
(ii) any building society registered or required to be registered in terms of the Building
Societies Act [Chapter 24:02]; in respect of any loan to or deposit with that bank,
discount house, finance house or building society.
(q) any expenditure incurred by a local branch or subsidiary of a foreign company, or by a local
company or subsidiary of a local company, in servicing any debt or debts contracted in
connection with the production of income to the extent that such debt or debts cause the person
to exceed a debt to equity ratio of three to one
(r) in the case of expenditure incurred on general administration and management in favour of a
company of which the taxpayer is the subsidiary or holding company