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:
- Salary for the year $30,000
- Contractual Bonus for the year 2018 but not paid as of 31 Dec 2018, $3,000
- Personal tips from customers $8,000
- The compensation received from a customer who wrongly accused Catherine of a failed beauty procedure $20,000
- Alimony received from ex-spouse $6,000
- 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:
- 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.
- 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.
