Question 1: a>Tax treatment to an individual if his employer was to provide the following benefits in package 1: Rental of apartment $ Salary Airfare for home leave (1trip) (20% x 5000) 1,000 220,000
Rental of apartment (housing accommodation benefit) for a non- director will be assessed based on the lower of: the annual value of the accommodation provided or 10% of the employee’s remuneration inclusive of all other benefits except hotel accommodation. Therefore, housing benefit will be assessed at $22,100 because it is assessed based on the lower of (10% x 221,000= $22,100) or annual value of rental apartment of $60,000. Home leave passage According to Singapore tax law, home leave passage is provided by the employer to nonSingaporeans and non-permanent residents, the benefit is assessable to tax based on 20% of the cost to the employer. This concessionary treatment only can apply to ONE return leave passage per annum each for the employee and spouse, and TWO return passage for each child of employee per annum if child should be unmarried, under 16 years old or otherwise receiving full-time education or incapacitated. Therefore, in this package 1, Mr Rouse will be assessed for home leave passage at: 20% x 5,000= $1,000 Relocation passage
According to Singapore tax law, relocation passages are by concession not a taxable benefit on the employee so that all the relocation expenses is not taxable benefit for Mr Rouse. b> Package 1: $ Salary Annual rental of apartment Home leave passage (20% x 5000) Statutory income Less: donation Assessable income Less : Relief Chargeable income Tax on 1st $160,000 Balance @ 17% (238,100 – 160,000) x 17% 220,000 22,100 1,000 243,100 NIL 243,100 (5,000) 238,100 15,500 13,277 28,777 Less : 20% tax rebate (capped at $2000) Net tax payable (2,000)
$ Salary Statutory Income Less: donation Assessable income Less: Relief Chargeable income Tax in 1st $160,000 Balance @ 17% 17% x (295,000-160,000) 300,000 300,000 NIL 300,000 (5,000) 295,000 15,500 22,950 38,450 Less : 20% tax rebate (capped at $2,000) Net tax payable (2,000)
c> Mr Rouse should choose package 1 because in this package, he can receive many benefits as well as many concessionary treatments that can reduce the net tax payable, in order to get higher return than in package 2. d> Singapore is a country where the government uses many policies that include many benefits, treat with consideration to attract talents from many the other countries and tax law is not the exception. Therefore, Mr Rouse should choose or ask more benefits instead of only high salary such as house accommodation benefit, home leave passage, relocation passage, transportation benefit, etc….to earn many concessionaries to minimize his statutory income as well as to reduce tax payable.
Question 2: a>The relevant dates in shareholder’s continuity test are different for unabsorbed capital allowances and trade losses and donation. Unabsorbed capital allowances can be carried against future profits provided the shareholdings are substantially the same (50% or more) in the 2 relevant dates: The last day of the YA (31 Dec) it arose And The first day of the YA (1 Jan) it is utilized Trade losses and donations can be carried against future profits provided the shareholdings are substantially the same (50% or more) in the 2 relevant dates: The last day of the year it arose (31 Dec of the calendar year) And The first day of the YA it is utilized (1 Jan of YA) b> YA 2008: - Adjusted tax loss (trade loss) YA 2009: - Adjusted profit $40,000 $422,000
The shareholders of Feathers Pte Ltd based on % are as follows: 31/12/2007 Ee Mei Sarah 60% 40% 30/9/2008 40% 60% 31/12/2008 40% 60% 1/1/2009 10% 90%
Assumption: on 1 Jan 2009, Donald still holds 5000 shares (total shares are 50,000 shares) Therefore, Queens’s shareholders and their shareholdings are as follows:
Number of share 31/12/2007...
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