SECTION A

Question 1 (15 marks)

Answer the questions by choosing the best option. Fill in the ovals on the Multiple- Choice Questions (MCQ) Answer Sheet provided separately using a black 2B pencil.

1.         Groove Manufacturing Pte Ltd incurred the following expenditure on a factory building which has been approved for Land Intensification Allowance (“LIA”) during financial year 2019 _____________.

(i)        Purchase price of existing building: $500,000 (ii)       Building survey fees: $58,000

(iii)      Refurbishment of existing building: $640,000

(iv)      Construction of office and reception area: $155,000

What is the total cost qualifying for LIA?

(A)      $ 1,353,000 ($500,000 + $58,000 + $640,000 + $155,000)

(B)      $ 853,000 ($58,000 + $640,000 + $155,000)

(C)      $ 698,000 ($58,000 + $640,000)

(D)      $ 1,198,000 ($500,000 + $58,000 + $640,000)

2.         Candyland Pte Ltd has unabsorbed trade loss of $40,000 from YA 2013 and net trade income of $150,000 from YA 2020. Candyland’s financial year ends on 30 September.

What are the comparison dates on which the common shareholders are to be determined in order to satisfy the shareholdings test?

(A)      30 September 2012 and 1 January 2020.

(B)      30 September 2013 and 1 January 2020.

(C)      31 December 2012 and 1 January 2020.

(D)      31 December 2013 and 1 January 2020.

3.         Sing Investment Pte Ltd has its financial year ending on 28 or 29 February.  For financial year ended 28 February 2019, it derived a tax adjusted loss of $40,000 on turnover of $5,300,000.  Which of the following statements is TRUE?

(A)      The company has to file its estimated chargeable income (“ECI”) of NIL

with the Comptroller of Income Tax (“CIT”) by 31 May 2019.

(B)      The company need not file its ECI with CIT as its ECI is NIL.

(C)      The company has to file its ECI with CIT by 30 November 2019.

(D)      The company has to file its ECI with CIT by 30 April 2019.

4.         Landbank Pte Ltd, a Singapore resident company, made the following payments to non-Singapore tax resident companies during the year ended 31 August 2019.

(A)      Interest expense paid to Big Bank plc, a bank tax resident in Country X.

The loan was used to purchase a commercial property in Country X.  The property has been rented out to a company in Country X.

(B)       Rental expense paid to Big Brother plc, a company tax resident in Country

Y, in respect of residential property used as accommodation for its general manager in Singapore.

(C)      Royalty paid to Black Hole Limited, a company tax resident in Country

W. for the use of technical information developed by Black Hole Limited in Landbank’s construction projects.

(D)      Fees for technical training services provided by Black Hole Limited in Country W.

Which of the above payments will be subject to Singapore withholding tax?

5.        Which of the following foreign income will be treated as remitted to Singapore in Year of Assessment 2020 for a company with a financial year ending on 30 April?

(A)      Foreign dividend income used on 26 May 2019 to settle liabilities arising

from a Singapore-based business.

(B)      Foreign rental income used to settle the deposit payment for the purchase

of an immoveable property located in Country K.

(C)      Overseas branch profits used to purchase shares in Black Hole Limited, a company tax resident and located in Country W.

(D)      Foreign interest income used to settle the hotel accommodation expenses incurred on manager’s business trip to Country L on 10 December 2018.

SECTION B

Answer ALL questions.

Question 2 (20 marks)

Jack Tai and his wife Melissa are 48 years old and are Singaporeans. Jack is the human resource director of SBC Singapore Pte Ltd while Melissa is a speech and drama teacher at Playtime Forever Pte Ltd. The following are details of their income /benefits/ receipts applicable to the year ended 31 December 2019, unless otherwise stated.

Additional information

1.      Jack incurred the following expenses during 2019 which were not reimbursed by his employer:

-    $860 on business related meals and drinks;

-    $340 on taxi fares for attending business related meetings; and

-    $500 on petrol for his car which was used for business related meetings and functions.

2.      The couple and their employers contribute CPF according to the statutory limits on both their ordinary and additional wages.

3.      Jack made a cash donation of $3,000 to National Kidney Foundation, an IPC, on

16 September 2019 while Melissa made cash donations of $500 to Singapore Red Cross Society, an IPC, on 20 June 2019 which was raising funds for earthquake victims in Indonesia.  Both are institutions of public character in Singapore.

4.      The couple has a 20-year old son, Sherman, who completed his National Service enlistment duties in 2019 and will be going for further studies at the University of New South Wales, Australia in 2020. Apart from the NSman allowance of $3,150 for year 2019, he also gave tuition to earn extra pocket money during the year. His tuition earnings were $2,850.  The couple also has a 17-year old daughter, Su-Ann who  is  studying  at  St.  Joseph’s  Institution  (International).   Both  children  are Singapore citizens.

5.      The couple hires a foreign domestic worker who takes care of the family’s needs. Jack paid the annual levy of $720 for the foreign domestic worker.

6.      Jack is no longer required to attend reservist training. He did not hold any key appointments.

7.      The couple has fully utilised the parenthood tax rebate.

Required:

Compute the  couple’s tax  liabilities  for YA 2020.   They would like to utilise the maximum reliefs and rebates available to them in order to minimise their tax liabilities. Prepare your tax  computation in the  format given in Appendix  3. Please  show  all workings and also take note of the following:

a)        All items of receipts given in the question are to be accounted for.  Where no tax adjustment is required, please state why – Tax exempt, Capital or Not remitted yet or Taxable in YA 20XX.

All items of expenses given in the question are to be accounted for.  Where the expense does not qualify for deduction, please indicate “Not deductible or ND” .

b)         All donations given in question are to be accounted for. Where it does not qualify for deduction, please indicate “Not deductible or ND or ‘0’” .

c)         All reliefs relevant to the question are to be listed.  Where the conditions are not met and relief cannot be claimed, please indicate “0” .

Question 3 (25 marks)

For the transactions listed below, comment on the GST implications as follows:

Where it relates to output tax, identify the type of supply made (standard-rated, zero-

rated, out-of-scope or no supply) and compute the output tax chargeable.

Where it relates to input tax, compute the input tax claimable. Where not claimable,

insert “0” and state reason why the input tax is not claimable.

State the value of supply, where applicable.

Provide your answer in the format below:

Nature’s Stone Pte Ltd is in the business of selling natural stone flooring materials. It is a GST registered business. The following are transactions for the quarter ended 30 September 2019:

(a)         Made  sales  of  $245,000, before a  15%  discount,  to  non-GST  registered

Singapore customers. (4 marks)

(b)         Made export sales of $500,000 which comprise sales of $300,000 relating to

goods shipped from stocks kept in an overseas warehouse to customers in the region. The remaining $200,000 sales were shipped to overseas customers from its stocks kept in Singapore. (4 marks)

(c)          Sold a residential apartment that was used as accommodation for staff for $1,300,000. The company purchased built-in cabinets and furniture from a GST registered company worth $10,000 to furnish the apartment before it was sold off. (6 marks)

(d)         Bought  new  furniture  worth  $30,000  from  a  GST-registered  supplier  and $15,000 from a supplier who is not registered for GST.  The furniture was used to decorate its retail outlets. (5 marks)

(e)       Donated leftover balloons and party supplies worth  $3,000 to the  Singapore

Children’s Society, an institution of public character.  They were bought from a GST-registered supplier in a previous GST quarter. (3 marks)

(f)        Interest of $2,500 paid to an overseas supplier which does not have any business

operations  in  Singapore.      The  payment  arose  from  the  late  settlement  of outstanding accounts with the overseas supplier. (3 marks)

All amounts stated are exclusive of GST, unless otherwise stated.