Reference no: EM132527040 , Length: word count:3000

UGB225 Business Taxation - University of Sunderland

Section A

Problem 1

Holmes is a CEO of a Singapore company. He is a US citizen, and is considered to be a tax resident in Singapore for tax purposes.

His wife, Kylie, is a Singapore citizen. She is a dentist and her net trade income for the year 2018 is $550,000

Both of them have three children who are all Singapore citizens. Zachary is born in year 2000 and is currently a full time student at a local university. Danielle is born in year 2002 and is currently pursuing a full time course at SIM. Esther is born in year 2012 in the US and is a US citizen and is currently studying at the American International School.

The family is staying together with Kylie's mother, aged 85, who is maintained by Kylie. She helps to look after the three children while Holmes and Kylie are at work.

The family is also staying with Celia, youngest sister of Holmes, who is physically handicapped due to an accident three years ago. Celia is maintained by Holmes.

The following details relate to the income and expenditure of Holmes and Esther for the year 2015:

	Holmes	Kylie
Year of birth	1960	1970
	$	$
Salary & bonus	240,000
Director fees - for financial year ended	30,000
31.03.2018. Voted & approved for
payment at AGM on 30 June 2018
Net rental income	27,000	27,000
Net rental income	32,000
Singapore one tier dividend
AIA Ltd	2,900
Traders Pte Ltd		900
SingTel	1,850
Bank interest
Citibank	750
UOB		500
CPF contributions
Voluntary		9,900
Statutory	16,700
Foreign maid levy		720

Donations :
MINDS - IPC	1,600
Rainbow Club - IPC	1,200

Kylie has attended courses in the year 2018 in relation to her job as required by the related professional body. Total course fees incurred was $10,550

Required:

Prepare the tax computations which shows the income tax liability of Holmes and Kylie for YA 2019. You are required to take into account any Personal Tax Rebate for the relevant YA

Problem 2

Forbidden City Pte Ltd is a company incorporated in year 2013. The company is a wholesaler and retailer of cosmetic and skincare products.

The Trading, Profit and Loss Account of the company for the financial year ended 30 June 2018 is provided below:

	Notes	$
Sales		4,350,000
Less : Cost of Goods Sold
Purchases		1,670,000
Freight and handling charges		229,920
		1,899,920
Gross Profit		2,450,080
Add : Other Income	1	8,200
		2,458,280
Less : Expenses
General and Admin	2	566,700
Staff	3	420,600
Selling and Distribution	4	327,550
Finance and others	5	45,800
		1,360,650
Net Profit before Tax		1,097,630

Required:

Compute the company's income tax liability for YA 2019 You are required to take into account any Corporate Tax Rebate for the relevant YA.

Problem 3

Omakase Pte Ltd (OPL) is a company incorporated in Singapore and with its management and control office in Singapore. OML has carried on the business of providing training courses in Singapore on making ramen since incorporation in the year 2016.

In the financial year ended 31 December 2018, OPL incurred the following expenses:

(1) OPL paid $50,800 to a law firm in respect of a legal action taken by OPL against another company for the infringement of OPL's registered trademark.

(2) OPL incurred total costs of $80,000 in maintaining a liaison office in Vietnam for the purposes of promoting the sale of the products.

(3) OPL contributed a sum of $5,000 to an institution of a public character, in return for two tickets to attend the gala opening of a movie at a local cinema.

(4) Michiko, the Accounts Assistant was on her way to the bank to deposit cash takings and was robbed of $12,000. A police report was made. OPL was not insured for such losses.

(5) OPL wrote-off $22,000 of outstanding loans as bad debts. This comprised an amount of $5,000 in relation to a trade debt owing by a company, which OPL continued to trade with. The balance of the amount written off was in relation to a loan made to a company that has never had a business relationship with OPL.

(6) OPL paid $8,000 legal fees for drafting a Shareholders' Agreement in the year 2018 as there are 4 more new shareholders.

(7) $2,500 was paid as a monthly allowance to the Sales Manager as the he uses his personal car for travelling to meet customers for business purposes. The amount paid to him is to reimburse him for ERP, parking and petrol.

Required:
State whether each of the above listed expenses is deductible for tax purposes or not, giving reasons in support of your answers.

Problem 4

Required:

a) What are the four conditions which will deem that a supply exists and hence GST will be chargeable?

b) What are the two types of taxable supply? Give an example of each.

c) Le Neuve Pte Ltd is a GST registered trader. The following are the transactions for the last quarter of 2018. Calculate the GST to be paid or claim a refund for the quarter ended 31 December 2018. All prices below are GST inclusive. The company has been following the new time of supply rules.

01.10.2018	Rental of $12,840 was paid for the private apartment for the company's Marketing Director.
12.10.2018	Purchases of inventory, $10,272 was paid
09.11.2018	Sale of inventory, $20,116 was received
20.11.2018	Paid $642 to Magnum Insurance Company for insurance for staff. The insurance policy is required under the Workmen's Compensation Act.
20.11.2018	Paid $26,750 to Marine Cove Club for club entrance fees for the company's
	Marketing Director
24.12.2018	Purchases of inventory, $6,741 was paid
30.12.2018	Goods worth $2,675 was sent to customer. Invoice was issued on 5 January 2016.

Problem 5

a) Athens Ang received his YA 2019 notice of assessment which was issued on 15 April 2019. The due date for payment of tax assessed of $34,800.44 in his NOA was 15 May 2019, i.e. one month from the date of the NOA.

As Athens Tan did not pay his tax assessed by the due date, a demand note was issued to him on 10 June 2019 for failing to pay the tax assessment by the due date. Athens Tan, however, did not pay his tax until 25 December 2019.

Calculate the outstanding tax and penalties.

b) Ly Nguyen is the newly appointed Human Resource Manager of Soko Glam Pte. Ltd. She is uncertain as to the income tax obligations as an employer towards the company's employees. She is very concerned about this issue as the company has local and foreign employees.

In your advice to her, state clearly what are the income tax obligations of an employer towards:

(i) Employee.

(ii) Employee who is ceasing employment; and/or an employee who is departing from Singapore?

c) The Marketing Director, Mr Sim, has come to you on advice on his latest notice of assessment (NOA). He disagrees with the NOA and has sought your advice on how to proceed.

In your advice to him, state clearly the following:

(i) What should a taxpayer like Mr Sim do if he disagrees with the NOA?

(ii) When does an NOA become final and conclusive?

(iii) Under what circumstances can a final and conclusive assessment be amended?

Attachment:- Business Taxation.rar