Hello, dear friend, you can consult us at any time if you have any questions, add WeChat: daixieit

ACC3004 Taxation

Diploma in Accounting

2022 Semester

INSTRUCTIONS TO STUDENTS:

This assignment consists of ONE (1) question with three parts. You are required to provide ALL workings clearly.

Type your answers in a Word document using Times New Roman, font size 12 and submit via CANVAS. Assignments submitted through other ways (e.g. through email or hardcopy to the lecturer) will not be accepted.

Open your document in CANVAS after upload to ensure that the document submitted is complete and in order.

You should receive a confirmation email from CANVAS after submission.

Your submission should include a cover page that follows the following format:

Module Code & Module Name

Diploma Name

CA 1 (Individual Assignment)

Name

SIM Student Number

Do not type the questions into your submission.

Deadline: 22 July 2022 (Friday), 11:59am.

Late submission is subject to a 20%-mark deduction. Submissions that are late by more than one day will NOT be graded.

CA1 is an individual assignment and should be worked upon independently. Any form of plagiarism and/or collusion will be penalised.

Important Note:

Students caught for Plagiarism and/or Collusion will be subjected to heavy penalties.

Plagiarism & Collusion

(extracted from Student Handbook) 

3.7.2 Plagiarism/Collusion

Plagiarism is theft of intellectual property.  It is a form of lying, stealing and mistreating others.  Students are reminded that plagiarism is a serious offence subject to the Institute’s disciplinary procedures.

Plagiarism can mean any one of the followings:

· direct copying of phrases and/or passages without a reference and/or quotation marks;

· paraphrasing another writer’s work in your written work without citing the reference;

· making a direct reference to an author you have not read although you may have read about him. The correct way is to reference the secondary source you have actually read rather than referencing the original which you have not read;

· copying the work of another student, in part or in whole;

· handing in assignment that has already been submitted for assessment in the same or any other course.

Please note that it is also a disciplinary offence for students to allow their work to be plagiarised by another student.

A student found guilty of any of the above offences will render the student liable for disciplinary actions which may result in the voiding and adjustments to the continuous assessment grade

 and may result in expulsion from the Institute.

Learning Objective:

· Understanding the tax residence rules and the application of the rules

· Reading and comprehending information provided to prepare a tax computation for tax resident individuals in accordance with tax rules and concessions.

· Maximizing deductions of expenses, personal reliefs, etc available to individuals.

[All amounts provided in the information are in Singapore dollars]

Matt Lim is a 45-year-old Singaporean.  He has been working for Micro Inc (“Micro”), a company tax resident in Country X for the past 10 years. Micro is listed on the Stock Exchange of Country X. To be closer to his elderly parents, Matt accepted the position of technical director at Microelectronics (Singapore) Pte Ltd (“MES”), the Singapore subsidiary of Micro, when the position became vacant in 2020. He relocated back to Singapore on 14 October 2020. He is married to Jennifer, a citizen of Country X and the couple have two children, Christian and Christopher, a pair of 4-year-old twins who hold Singapore citizenship.  Jennifer is 40 years old and she moved to Singapore with the children on 10 July 2021 after settling personal matters and completing the notice period given to her employer in Country X.

Matt received the following employment benefits/income and incurred the following expenses given below for the year ended 31 December 2021:

a. Monthly salary of $28,000.

b. As Matt is required to work largely from home, he is provided with a one-off allowance of $4,000, paid in January 2021, to cover extra expenses incurred during the year under this work arrangement. In this regard, he incurred the following expenses:

- Matt signed up for fibre broadband for his sole use at home for business purposes. The monthly subscription fee is $75/month.

- He paid $100 for a WiFi Booster to improve the internet connection at home as well as $600 for a high-speed printer.

- Matt incurred $500 for purchase of printing papers ($150) and replacement of ink cartridges ($350) during the year.

c. Matt was provided with a car for his use by his employer effective from 1 November 2020. The car costs $200,000 (not inclusive of COE of $80,000) and has a PARF value of $70,000. The insurance, road tax and maintenance expenses for the car is paid for by PPS and totalled $14,000 for year 2021.  

d. Matt is paid a monthly transport allowance of $200 which he uses to cover the petrol and other daily running expenses of the company car provided (see (j) below).

e. As part of his employment package with MES, Matt was granted the option to purchase 30,000 shares in MES at $5.50 per share. On 16 July 2021, he exercised the option and bought 10,000 shares; the market price represented by the net tangible assets of the company was $6.50.

f. Matt was provided with accommodation in a rented apartment until he and his family can move into their own home (see (n) below.  The fully furnished rental accommodation has an annual value of $66,000 and the rental of $96,000 for the year 2021 was paid by MES.

g. MES reimbursed medical and dental expenses of $4,900 for Matt and his family under the company’s medical and hospitalisation scheme.

h. Matt incurred car hire charges of $5,000 while on an overseas business trip. The hire charges were reimbursed by his employer.

i. The company paid for the following overseas trips during the year:

- air tickets costing $3,000 to Country Y to attend a business conference as well as for customer visits; and

- air tickets costing $25,000 for Matt to fly to Country X to bring his family home to Singapore.

j. Matt incurred the following expenses which were not reimbursed by his employer:

- business entertainment expenses of $9,000;

- taxi fares of $1,500 for trips to/from business entertainment venues to home; and

- car running expenses totalling $800 for business-related trips using the company car provided.

k. Matt and his employer, MES, make CPF contributions within the statutory limits.

In addition, Matt derived the following other benefits and gains in the year ended 31 December 2021:

l. Matt was rewarded with 40,000 stock options for excellent work performance while working for Micro.  During the year 2021, Matt exercised his options and purchased 10,000 shares in Micro at the option price of $15.  The market value of the shares on the same day was $25.

m. Matt remitted to Singapore $200,000 of his savings amassed from his salary earned while working overseas and which were kept in a bank account in Country X. The money remitted was used to finance his acquisition of shares in Micro.

n. Matt also has the following receipts in the year 2021

- Dividend paid by a Singapore tax resident company of $4,500.

- Interest income of $1,500 from HSBC Bank, an approved bank in Singapore.

- Interest income of $600 from a loan to his friend’s company in Singapore.

- Matt owns an apartment that has always been rented out.  His tenant moved out on 30/11/2021. For the year 2021, the income and expenses from the apartment are as follows:

· Gross monthly rental: $7,000

· Fire insurance and property tax (annual): $9,000

· Monthly maintenance fee: $1,000

· Replacement of air-conditioners (the new equipment has improved functions compared to the old air-conditioners that were replaced) in January 2021: $ 15,100

· Mortgage repayment (monthly): $3,000 (comprising capital repayment of $2,000 and interest of $1,200)

Renovations commenced after the tenant moved out as the family will be moving in thereafter.

- Matt also derived net rental income of $5,600 from a commercial property in Singapore that is jointly owned with his wife, Jennifer.

Matt’s wife, Jennifer, is a chartered accountant and she accepted a position with PWC Singapore on a one-year contract basis to be reviewed towards the end of the contract in 2022.  She derived the following income in the year ended 31/12/2021:

o. Jennifer commenced employment with PWC Singapore on 1 September 2021 with a monthly salary of $12,000.

p. She will be given a one-month bonus if she completes her one-year employment contract.

q. She is provided with a monthly transport allowance of $300 and during her employment period, she spent $200 on commuting to work and $400 on employment-related travels, both using public modes of transportation.  

r. Jennifer derived net rental income of $5,600 from a commercial property in Singapore that is jointly owned with her husband Matt.

Other information:

s. Matt has hired three (3) foreign domestic helpers at a monthly salary of $800 to help with domestic chores and childcare duties.  The monthly levy of $60 is paid by Matt and the helpers commenced employment with the family on 1 July 2021.

t. Matt’s parents moved in to live with Matt in 2020. Matt’s father, a retiree, won a lottery cash prize of $50,000 in year 2021. Matt’s mother is a housewife and derives no income. His parents also help to look after the grandchildren while the parents are working.

u. Matt was not called up for reservist training during the year. He does not hold any key appointment in the army (reservist).

v. Matt and his wife have yet to claim the parenthood tax rebate on their children.

Requirements:

Part I

Explain the tax residence status of Jennifer for YA 2022 using the tests of residence and relevant administrative concession.  You should address how Jennifer may qualify as tax resident under the respective test of residence, whether she cleared the tests and whether she may qualify under the relevant administrative concession.

(18 marks)

Part II

Explain if the exercise of stock option by Matt under point (l) above will be subject to Singapore tax.

(2 marks) 

Part III

Prepare the YA 2022 tax computation for Matt and Jennifer in the format provided below (you are to treat both individuals as tax resident in Singapore).  If benefits are to be pro-rated based on usage, please use the actual number of days to pro-rate (there are 28 days in February 2021 and 365 days in the calendar year 2021).

Where an item of receipt is not brought to tax (or conversely an item of expense is not claimed for deduction), please insert in “0” (zero) in the tax computation and state the reasons separately – e.g., not taxable as not remitted to Singapore or not deductible as capital in nature.

Matt and Jennifer would like to maximise any claims for deduction to achieve an overall lower tax liability.  You are to consider all relevant personal tax relief and where it is not available, please insert in “0” (zero) in the tax computation and state the reasons why the claim is not admissible – e.g., income in excess of $4,000.

(80 marks)