TUTORIAL #3: 25TH FEBRUARY 2021

James Rose, a resident of Trinidad and Tobago is an accountant employed with KEY Accounting
Services Ltd, a company resident in Trinidad and Tobago as a Manager in its audit department.

For the 2020 year of income, his compensation package was as follows:

• Salary $25,000 per month

• Vacation Grant $15,000

• Use of a company owned vehicle for private purposes. The vehicle was acquired on 1st January
2018 at a cost of $200,000. The company’s policy is to place motor vehicles in class B of the capital
allowances pool.

• Use of a company owned cellular phone which is available for his private use. The phone was
acquired on 1st July 2020 at a cost of $3,000 and was given to him for his usage at that date. The
company’s policy is to place cellular phones in class C of the capital allowances pool.

• He was granted a loan of $100,000 on 1st October 2020 at an interest rate of 2% per annum.
Assume the Central Bank repo rate as of 31st December 2019, 1st October 2020 and 31st December
2020 were 3%, 4% and 5% respectively.

In addition, during the 2020 year of income, he incurred the following items of expenditure which
were of relevance from a taxation perspective.

• NIS contributions of $138.10 per week with his employer making contributions of $276.20 per
week.

• He and his wife jointly acquired a house at a cost of $2,000,000 on 1st July 2017. This was acquired
by way of a mortgage and they have paid $15,000 in mortgage interest for the 2020 year of income.
This is the first home they have acquired. They have agreed to share any tax benefit they may be
entitled to in the ratio 3:2 between husband and wife respectively.

• He has made monthly contributions to his approved deferred annuity plan of $4,000 per month.

• He acquired a CNG kit for his motor vehicle on 3rd March 2020 at a cost inclusive of installation of
$20,000.

• He paid his annual ACCA subscription fees of $3,000 on 4th January 2020.
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 TUTORIAL #3: 25TH FEBRUARY 2021

TUTORIAL #3

• He bought two business suits on 12th June 2020 at a total cost of $6,000.

• He has kept records of his work-related travelling expenses and has quantified the respective
annual cost as follows:

a. Home to work $8,000 (commuting to work)

b. Office to clients $10,000 (to perform work on the field)

c. Clients to home $4,000 (commuting to home)

d. Office to home $4,000 (commuting to home)

In addition, his employer has made aggregate deductions on his behalf of PAYE in the amount of
$45,650 with respect to the 2020 year of income.

REQUIRED:

a. James Rose has come to you in your capacity as a taxation adviser. With reference to the relevant
statutory provisions and case law, prepare a memorandum to him in which you advise him of
whether he is entitled to any deductions with respect to his ACCA subscription fees, the cost of his
business suits and his work-related travelling expenses. (8 marks)

b. Compute the income tax liability for James Rose for year of income for 2020 and determine if he
has a balance of tax payable or refundable. (12 marks)