University Kaplan University (KU)
Subject Taxation

1. Ms. Catherine works in a beauty salon as a beautician. During the year 2018, in addition to her base salary, Catherine received the following amounts:

  1. Salary for the year $30,000
  2. Contractual Bonus for the year 2018 but not paid as of 31 Dec 2018, $3,000
  3. Personal tips from customers $8,000
  4. The compensation received from a customer who wrongly accused Catherine of a failed beauty procedure $20,000
  5. Alimony received from ex-spouse $6,000
  6. Attended a beautician certification course and paid out of pocket, $1,000

Compute Catherine’s tax liability for the year of assessment 2019 with detailed workings?

2. Ms. Sim took out a bank loan on 1 January 2018 to buy a residential apartment unit for rental purposes. The apartment obtained its temporary occupation permit on 1 April 2018 and was rented out on the same day. Sim’s income and expenses relating to the rental apartment in the year 2018 are as follows:

Sim always calculates her rental income using the most beneficial method.

a. Gross rental income 36,000
b. Less: Interest expense on bank loan (6,000)
c. Property maintenance charges (7,000)
23,000

Compute Sim’s tax liability for the year of assessment 2019 with detailed workings?

3. Mr. Ted, aged 45, is a United States (US) citizen who relocated to Singapore to work for U Singapore Pte Ltd (USPL) on 1 April 2018. USPL is a wholly-owned subsidiary of U Inc. Ted’s remuneration package in 2018 included the following:

1. Joining bonus (Ted received the bonus upon completion of one year’s service on 31 March 2019) 36,000
2. Salary 240,000
3. Air ticket (business trip) 2,000
4. Air ticket – two home leave passages 4,000
5. Apartment (note 1)
6. Birthday gift (note 2) 500

Notes:

  1. USPL rented a fully furnished apartment at a monthly rental cost of $8,000. The annual value of the apartment is $50,000. Ted paid a monthly rental contribution of $500 to USPL.
  2. Birthday gifts are given to all USPL employees.

In addition to his employment income, Ted received the following income in 2018:

$
7. Income distribution from an equity investment in the Marco Polo Fund, a US fund.

Ted deposited the receipts into his Singapore bank account

30,000
8. Interest income from a Singapore pawnshop 2,000
9. Made a cash donation to the National Kidney Foundation, an approved institution of public character on 25 December 2018. 10,000

Required:

Compute Ted’s Tax Liability for the year of assessment 2019.

4. Briefly explain any TWO deductible and TWO non-deductible business expenses as per IRAS with suitable examples for each.

 

 

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