(a) List and explain any three deductions that may be available against gains or profits from employment.
(b) Mr. Matata has approached you with a view to obtaining help in determining his taxable income for 2005. He has supplied the following information:
1. Business Income
He runs a small garage that generate taxable income of Sh.60,000. In 2004, he had a tax loss of Sh.40,000 from this business.
2. Wife's Income
His wife was employed by Mafuta Ltd. as the Finance Director. Her salary was sh.52,000 p.m. Additional benefits include:
Company car 1800 cc.
House at New Muthaiga (market value of rent Sh.20,000 per month)
Staff gifts of oil products worth Sh.1000 p.m
3. Capital Gains
In the course of the year, the Matatas sold one plot they owned in Nairobi for Sh.1,200,000. This represented a gain of Sh.600,000 which they used to take a holiday to Mombasa.
4. Investment Income