Question

Any amount received or accrued by a taxpayer from an educational policy, which has
been expended for providing education or training at a recognised educational
institution of a child or stepchild is exempt according to Section 16(1)(ab).
On the last day of the year of assessment, the child or stepchild is not required to be? a) Not over the age of 26 years b) Living with the parents c) All of the above d) None of the above

6. In the case Lategan v CIR (CPD 1926), the word accrued was held to mean: a) ‘’accrued to” b) “to which he has become entitled” c) “received on his own behalf” d) “received for his benefit”

7. Jackson Samuel is a 27-year old writer who is a Namibian resident. He paid a royalty of
N$ 100 000 by Crazy Films for the right to use one of his copyrighted books in the next
film.
The royalty payment received will be included in Jackson’s Gross Income for the year. a) False b) True

8. What is the tax treatment of the royalties received? a) Included in Gross Income only b) Included in Gross Income and then Exempt c) Not Taxable d) Specifically deductible

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9. Mrs Martha retires and is paid a pension retirement of N$10 000 per month from a fund
in Botswana. She has spent the last 9 years of her 16 years of service in Namibia. What
is the amount deemed to be Namibian source income for the specific year of
assessment? a) N$ 5 625 b) N$ 90 000 c) N$ 67 500 d) N$ 17 778

10. The onus is on the tax payer to prove that certain amounts are of a capital nature. If
there is a dispute and the case goes to court, the court will take into account certain
factors in reaching a decision. Which of the following is not a factor to consider? a) The intention of the taxpayer b) The objective of the taxpayer c) The period the assets are held d) The type of asset held

11. Ms Charon has been working in Namibia for the past 5 months. She is an employee of a
company operating in Britain and was sent to Namibia to supervise the opening of the
company’s new branch in Oshakati. The salary that she has earned for the five months is
taxable in Namibia. a) True b) False

12. Sara Maneti has recently retired after a long career in the mining industry of Namibia.
Upon retirement, she received N$ 250 000 lump sum from her employer. She used N$
180 000 to purchase an annuity from a foreign insurance company.

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What amount should the lump sum from employer be in order to be taxable in three
equal instalments, starting in the year of payment and two following years? a) Over N$ 500 000 b) Over N$ 300 000 c) Over N$ 200 000 d) Under N$ 300 000

13. The following is a requirement for the lump sum from employer exemption. a) The person attained the age of fifty b) Termination of service due to criminal conviction c) Termination of service due to end of employment contract d) The minister is satisfied that the person is retrenched

14. An employee receives housing benefits provided in terms of approved housing schemes.
Where the remuneration of the employee does not exceed N$ 15 000 per annum, the
housing benefit is exempted as follows: a) One third of the benefit is exempt b) Benefit is fully exempted c) Benefit does not qualify for exemption d) Two third of the benefit is exempt

15. Where an employee’s remuneration exceeds N$ 15 000 per annum but not N$ 30 000
the housing benefit is reduced by Y% in the formula
? = 100−
? 150
Where X in the formula represents: a) Remuneration less housing benefit b) Employee’s remuneration c) Amount of housing benefit d) Excess of employee’s remuneration

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16. According to Section 16(1)(q), alimony refers to any amount … a) Received by a spouse married in community of property b) Received by a spouse married out of community of property c) Received by a spouse of behalf of a child d) Received from a former spouse after divorce settlement

17. Which of the following is not a characteristic of an annuity? a) Repetitive cash payment b) Annual payment c) Chargeable against a person d) Continuous payment

18. 65-year old John Smith retired in January 2020. He received N$ 200 000 lump sum from
his employer. Some of his receipts for the year also included N$ 8 000 withdrawal
benefit from a pension fund, N$ 300 000 retirement benefit from a provident fund and
N$ 2 000 war pension. After retirement, John continued running the business that he
had started a few years ago. During the year, the business earned N$ 90 000 in profits.
Which one of the above does not constitute John’s income for the year of assessment
ending 29 February 2020? a) Business profits b) Withdrawal benefit from pension fund c) War pension d) Retirement benefit from provident fund

19. If John had deposited N$ 100 000 of his lump sum into a NamPost saving account and
earned interest on the savings account, the interest received by John would not be
taxable. a) False b) True

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20. Specifically included in John’s Gross Income should be any amount, excluding all
voluntary award, received or accrued in respect of services rendered or to be rendered. a) True b) False

21. Lucas Josephat is a Namibian resident employed as a salesperson at Build-In Wholesaler
in Ongwediva. During the 2019 year of assessment he won a prize for being its most
productive salesperson of the year. The prize was valued at N$ 20 000 (this amount was
also the cost of this prize to his employer). Why will the prize received not be included in
his gross income for the year of assessment ending 2019? a) Not arising out of an operation of business b) Closely connected with his employment c) Constitute a receipt of a capital nature d) Benefit of his employment

22. Desmond Xaweb 68-year old pensioner owns three tuck shops in Kunene Region. He has
lived his whole life in Namibia and has never left the country. Desmond is also the
owner of a house located a few kilometres outside Okahandja. After his death in January
this year, Desmond’s grandson, Dion, inherited the house. The house was valued at N$ 2
500 000 by an independent real estate evaluator. After facing cash flow problems, Dion
decided to sell the house for N$ 2 000 000 during the same year. Will the proceeds from
the sale of house by Dion be considered of income nature? a) True b) False   

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23. Under which circumstances will the receipts from the house sold by Dion be considered
of capital nature? a) If he had not inherited the property b) If he had a scheme of selling the property for profit c) If his intention was that of speculation or investment d) If he did not enter into an extensive advertising campaign to sell it

24. Lisa Kutako, a property developer living and trading in Pretoria, inherited a block of flats
in Windhoek on 3 March 2019, valued at N$ 8 000 000, from aunt who lived in Outjo.
Since Lisa was at that time selling two other blocks of flats under sectional title, she
immediately applied for sectional title rights on her inherited property. By 29 February
2020, she had sold all the flats in her inherited property for N$ 9 000 000.
Where will Lisa be taxed on the receipts from the flats sold? a) South Africa b) Namibia c) All of the above d) None of the above

25. All exemptions are first included in gross income and thereafter deducted. Funds of
certain associations and enterprises are fully exempted from paying income tax due to
their nature of operation. Which of the following Namibian associations do not qualify
for such an exemption? a) Namibia Stock Exchange b) Teachers’ Union of Namibia c) Hope Village d) GIPF

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26. After a few years of learning about the tax effects of different investment options,
Martha Nami, 34-year old woman married in community of property, decided to buy
treasury bills. Based on their tax implications, why did Martha decide to purchase them? a) All expenses incurred are deductible b) Interest earned does not constitute of income c) All of the above d) None of the above

27. During the 2019 year of assessment, Gina Garises earned N$ 75 000 taxable income.
What is the applicable normal tax rate for her? a) 29% of the amount by which the taxable income exceeds N$ 50 000 b) 25% of the amount by which the taxable income exceeds N$ 50 000 c) 29% of the amount by which the taxable income exceeds N$ 40 000 d) 27% of the amount by which the taxable income exceeds N$ 40 000

28. The newly appointed non-executive director of Metro Small Company, Shawn Wilson, is
a Namibian resident who lives and works in Outapi. Upon his appointed to the office, he
receives an annual housing allowance of N$ 20 000 and a travel allowance of N$ 15 000
along with the right to use of the company car that has a market value of N$ 178 000.
Which of the above are fringe benefits? a) The housing and travel allowances b) The right to use the company car c) None of the above mentioned benefits d) Only the travel allowance and the right to use the company car

29. Goldie-Locks is a licenced gold producer headquartered in Toronto, Canada. Founded in
2010, today, Goldie-Locks has three operating gold mines located in various countries
including the Philippines, Namibia, and Congo. In 2020, Goldie-Locks forecasts
consolidated gold production of between 1,000,000 and 1,055,000 ounces.

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In which country will the income of Goldie-Locks be taxed? a) Philippines b) Congo c) Canada d) All of the above

30. If Goldie-Locks is to be taxed in Namibia, what will be the applicable flat tax rate for
such a mining company? a) 37.5% b) 35 % c) 50.% d) 18.%

31. DiaNam is a Namibian owned licensed diamond company that performs land-based
prospecting (exploration), mining and rehabilitation operations in the southwest coast
of the country. What is the applicable tax flat rate for DiaNam? a) 37.5% b) 35 % c) 50.% d) 18.%

32. Mate-Rial is a textile manufacturing company that was registered at the Ministry of
Trade and Industry in October 2013. With a factory located in Gobabis, the company
employs over 300 local residents. During the 2019 year of assessment, hired five
Malaysian textile specialist to assist it with the production of a new synthetic leather
fabric in order to abide to its vegan cruelty-free policy.
What is current the applicable flat rate for manufacturing company in Namibia? a) 37.5% b) 34 % c) 50.% d) 18.%

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33. Grace Wandje is a local business woman who lives in Khorixas. She is a teacher at a
primary school in her area and owns property as well as other small businesses. If her
income for the year of assessment ended 29 February 2020 is as follows; what will be
her gross income for the year ended 29 February 2020?
Salary 80 000
Rent received 20 000
Dividends received 4 000
Bet win on result of soccer match 1 000
Profit on sale of shares held as trading stock 4 000
Loss of profits insurance claim 2 000
Interest received 2 000
Restraint of trade payment 8 000
N$125 000
a) N$ 112 000 b) N$ 125 000 c) N$ 117 000 d) N$ 122 000

Answer 1

Q.Any amount received or accrued by a taxpayer from an educational policy, which has
been expended for providing education or training at a recognised educational
institution of a child or stepchild is exempt according to Section 16(1)(ab).
On the last day of the year of assessment, the child or stepchild is not required to be?

a) Not over the age of 26 years b) Living with the parents c) All of the above d) None of the above

“child or step-child” means any such child who on the last day of the said year of assessment was unmarried, was not or would not, had he or she been alive, have been over the age of twentysix years, was wholly or partially dependent for his or her maintenance upon the taxpayer and not liable for the payment of normal tax in respect of such year

c) All of the above

Q. 6. In the case Lategan v CIR (CPD 1926), the word accrued was held to mean:

a) ‘’accrued to” b) “to which he has become entitled” c) “received on his own behalf” d) “received for his benefit”

In 1926, the landmark Lategan case was the first case to determine the meaning of the words “accrued to or in favour of” in the definition of gross income as defined in section 1 of the Income Tax Act. According to the decision in that case, income generally accrues to a person when that person is entitled to an amount (the timing rule), but the amount to which the taxpayer is entitled to must be valued to determine the value of the accrual to be included in gross income.

Answer: b) “to which he has become entitled”

Q. 7. Jackson Samuel is a 27-year old writer who is a Namibian resident. He paid a royalty of
N$ 100 000 by Crazy Films for the right to use one of his copyrighted books in the next
film.The royalty payment received will be included in Jackson’s Gross Income for the year.

a) False b) True

As the royalty payment is income for Jackson Samuel based on source rule

Answer: b) True.

Q.8. What is the tax treatment of the royalties received?

a) Included in Gross Income only b) Included in Gross Income and then Exempt c) Not Taxable d) Specifically deductible

Although the Namibian tax legislation is source based, the Income Tax Act does not define the term ‘source’. The meaning of the source is determined with reference to case law, which establishes the meaning to be ‘originating cause’.

Therefore, where a person (i.e. an ordinary resident of Namibia or a non-resident of Namibia) receives income where the ‘originating cause’ is services rendered within Namibia, the income will be subject to Namibian tax. Where the person is a non-resident, the person may receive relief from being taxed in Namibia if a Double Taxation Agreement (“DTA”) is available which provides for exemption or a credit for tax.

Answer: b) Included in Gross Income and then Exempt

Only first 4 parts are answered based on answering guidelines.