CAF-2 · Chapter 12 · Question 8 of 15
Mr. Qasim received Rs. 400,000 as his share of profit from an AOP that has already paid tax on its income. He also has a personal taxable business income of Rs. 800,000. What is the tax treatment of his Rs. 400,000 share from the AOP?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) C) It is exempt from tax, but it will be included in his total income solely for the purpose of determining the applicable average rate of tax on his personal business income.
Explanation
If the AOP has paid tax, the share received by a member is exempt from tax. However, such share is included in the income of the member for determination of the tax rate (i.e., for rate purposes).
More Taxation of Individual and Association of Persons MCQs
- Q10Mr. Y has a personal taxable income of Rs. 1,000,000 (represented as 'C') and an exempt share from an AOP of Rs. 500,000. His total income…
- Q11A professional firm of Chartered Accountants operates as an AOP because they are prohibited from incorporating as a company by their…
- Q12Mr. A transferred a commercial plaza to his wife solely out of natural love and affection (without adequate financial consideration). The…
- Q13Mr. B transfers an income-generating asset to his minor child without adequate consideration. To which of the following minor children can…
- Q14Mr. Junaid succeeded Mr. Tariq's manufacturing business on 1 January 2026 (mid-way through the tax year). Mr. Tariq subsequently…