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Charles Whyte commenced business on May 12019 , making up his accounts to September 30 annually. The statement of the Profit or Loss Account for the first 17 months ended September 30,2020 is as follows: ^(')000 ^(')000 Gross Profit 19,300 Less: 1,500 Repairs and maintenance 2,450 Local transport and travelling 6,500 Salaries and wages 1,350 Provision for bad debts 960 Preliminary expenses 1,630 Depreciation 1,520 Bank interest and charges 1,380 Legal and professional charges 1,870 General expenses (Allowable) 685 Clearing expense on motor vehicle 2,800 22,645_ Bad debt (3,345)_ (i) You are also given the following additional information. Bad debt Amounts written off 1,850.000 Loan to absconded employee 950. 000 (ii) The following qualifying capital expenditures were acquired on: 30/10/2018 Building 5,500,000 1/1/2019 Motor Vehicle 3,800,000 1/5/2019 Furniture and fittings 1,900,000 (iii) Legal and professional charges were: Fines for contravention of the law 350,000 Legal expenses for tax appeal 185,000 Audit and accountancy charges 845,000 1,380,000 (iv) Provision for bad debts was calculated as 5% of balance of trade debtors as at September 30, 2020. (v) Salaries and wages: Senior staff 3,500,000 Junior staff 2,400,000 3 Charles Whytes Children in higher institution 600,000 6,500,000 You are required to: a. Identify FIVE deduction not allowable for the purpose of ascertaining the income of an individual for tax purposes. b. Compute the Adjusted Profit of Charles Whyte for the period ended. September 30 ,2020 c. Identify and explain types of loss relief and their treatment. d. Any good tax system must be based on certain principle. Required: Illustrate with examples, SIX principles as laid down by Adam Smith

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