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Question The following information was provided to your relating the farming operations of Wame....

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Accounting

Question
The following information was provided to your relating the farming operations of Wame. She has opted to be registered as a farmer to allow her to utilize all the relevant loss relief available to farmers.
Results for the year ended 31 December
2017(P)2018(P)2019(P)2020(P)
Taxable farming income(loss)
Chargeable gains
Allowable loss
Bank interest
Employment income 960,000
93,000
75,000
185,000(2,250,000)
330,000
84,000
190,000570,000
(270,000)
84,000
200,0001.500,000
180,000
105,000
210,000
Required
a) Calculate Wames tax liabilities (tax payable) for each of the four years after claiming maximum loss relief at the earliest possible times.
i) Assume that Wame has decided to apply Section 46.[6 marks]
ii) Assume that Wame has decided to apply Section 42 in 2019[6 marks]
iii) Assume that Wame has decided to apply Section 42 in 2020[6 marks]
iv) Identify the option which minimizes Wames tax payable. [2 marks]
b) Explain the different ways in which farming losses may be relieved by an individual and by a company. [4 marks]

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