Definitions

Question 1

Does relatives are associates?

Answer 1

Relatives are associates if they act according to the intentions of each other.

-Relatives and members of an associate shall not be associates where Commissioner is satisfied that no one is expected to act in accordance with the intentions of the other

Question 2

Who are relatives?

Answer 2

Relative in relation to an individual means:

a)
- an ancestor,
- a descendant of any of the grandparents, or
- an adopted child, of the individual, or of a spouse of the individual
b)
- a spouse of the individual or
- of any person specified in above clause

Question 3

Define Charitable purpose?

Answer 3

Charitable purpose includes;
-relief of poor
-education
- medical
- advancement of any other object of general public utility.

Question 4

Define electronic record?

Answer 4

Includes the contents of communication and transaction under this ordinance including;
- attachments
- annexes
- accounts
- returns
- notices
- and any other associated info created sent forward , downloaded, read or printed by one or several electronic resources.

Question 5

Define income?

Answer 5

Income includes;
- any amount chargeable to tax under this ordinance
- any amount subject to collection or deduction of tax which is treated as Final tax
- any amount treated as income under any provision of this ordinance
- any loss of income.

Question 6

What is Industrial undertaking in terms or employee and energy?

Answer 6

An under taking set up in Pakistan and which employs
i)10 or more persons and involves the use of electrical energy or any other energy which is mechanical transmitted and is not generated by human or animal energy; OR

    ii)20 or more persons and does not involve the use of electrical energy or any other energy which is mechanical transmitted and is generated by human or animal energy; and

  iii) is engaged in 

        -the manufacture of goods or materials or 
         - to the processing goods in a way which substantially changed their original condition
         -ship building 
         -for generation conversion transmission or distribution of electrical energy           
         -the working of any mine oil, well or any other source of mineral deposits

Question 7

What is industrial undertaking point (aa) (ab) (c)?

Answer 7

aa) a person doing construction of buildings roads bridges and other structures including the development of land, for import of plant and machinery to be used

ab) resident company engaged in hotel business in Pakistan

c) telecommunication companies (operating under the licence of Pakistan telecommunication authority)

Question 8

Describe Fee for technical services?

Answer 8

“Fee for technical services means amount received weather periodical or lump sum, for rendering of managerial, technical or consultancy services ( including the services of technical or both personnel),
but does not include

   - amount received for services rendered for a construction assembly or like project 
   - receipt which is chargeable under the head salary

Question 9

When when does two persons be called as associates?

Answer 9

Two persons shall be associates were the relationship between two is such that ;

One may reasonably be expected to act in accordance with the intentions of the other, or both persons may reasonably be expected to act in accordance with the intentions of a third person;

One person sufficiently influences, either alone or together with an associate or associates, the other person ;

One person enters into a transaction directly or indirectly with the other who is resident of jurisdiction with zero taxation regime.

Question 10

What is the exception in being associates?

Answer 10

Two persons shall not be associates solely because

 - one person is an employee of the other or
 - both are employees of a third person.

Question 11

Give three examples of associates ?

Answer 11

I)An individual and a relative of the individual
II)Members of an AOP
III) A trust and any person who benefits under the trust

Question 12

Who are associates in AOP?

Answer 12

a) Members of an ap
b) Member of an AOP and the AOP, where the member

   -either alone or
   - together with an associate or associates under another application of this section

controls 50% or more of the rights to income or capital of the association.

Question 13

When does the shareholder is associate with company?

Answer 13

A shareholder in a company and the company are associates, where the shareholder:
-Either alone or
- together with associate or associates,

controls either directly or through one or more interposed person

I: 50% or more of the voting power in the company
II: 50% or more of the rights to dividends; or
III: 50% or more of the rights to capital

Question 14

When does two companies be associates?

Answer 14

Two companies would be associates, where a person ;

-Either alone or 
-Together with an associate or associates, 

Controls either directly or through one or more interposed persons,

–50% or more of the voting power in both companies
–50% or more of the rides to dividends in both companies
–50% or more of the rights to capital in both companies

Question 15

Dr Jamal is planning to establish a hospital as a non profit organisation. Discuss the conditions that should be complied with by Dr Jamal under the tax ordinance 2001.

Answer 15

Non profit organisation means any person other than an individual which is:

a) established for religious educational charitable welfare purpose for general public or for promoting and amateur sport

b) formed by or under a law as a non profit organisation;

c) approved by the commissioner for specified period on an appeal in prescribed form accompanied by the prescribed documents

d) the person do not derive any benefit from the assets