SINGAPORE MANAGEMENT UNIVERSITY

SMU ACCT 305 2008/09 T1 Workshop 1 (Adapted from past midterms)

INSTRUCTIONS TO STUDENTS 1. Time allowed 1½ hours. 2. This paper comprises two (2) Questions. 3. Answer BOTH Questions. 4. Answers will be graded for content and appropriate presentation. 5. Show all relevant workings.

1

2 .

600 Notes 1.750.000 84.600 72.600 2.000 2.200.750.417.600 474.000 61. 2.000 469.000) 136.886. Top Performance Pte Ltd (TPPL) is a Singapore incorporated and resident company.000 33.000 65.000 156. Interest income was from its fixed deposit in ANZ Bank in Sydney.000 1. 3 .000 (15.000.000 40.000 (13.500.000 2.000) $ 2. Q1.000 80.000 12. Cost of sales included specific write downs of obsolete stocks of $75.000 123.000 Gross sales Cost of sales Other income:Interest Dividends Rental Loss on disposal of truck Less:Depreciation Salaries & wages CPF Interest expense Foreign exchange loss Loss on sale of investments Professional fees Rental Travelling & transport Entertainment Advertising & promotion Donation Miscellaneous Net Profit 18. It manufactures components for the aerospace industry and makes up accounts to 31 December.SMU ACCT 305 AY 2007/08 Modified Term 2 Answer BOTH questions. The results for year ended 31 December 2007 are as follows:$ 16.000 is net of the 10% withholding tax. Australia imposed a 10% withholding tax on the interest.000 144.000 4. The $18.

Dividends are made up as follows:Date Paid 1/3/07 1/4/07 1/5/07 1/6/07 Company Singapore Singapore Malaysia BVI Gross Amount $ 10.000 1. 9. Depreciation consist of:Asset Factory Factory extension Furniture & fixtures Plant & equipment Assembly line Computers Truck Year of Purchase 1997 2007 2006 2001 2007 2006 2007 Cost $ 6. Rental of $72.200 15.000 25.000 150.000 20.000 90.000 474.600 Net Amount $ 7.800 Exempt 5.000 .000 50.000 per year to JTC. 6.000 14.000 20.000 was from the rental of TPPL’s investment property in London.500. The company only contributes the statutory CPF contributions.000 15. It pays land rental of $120.3.000. Professional Fees Audit fees Legal fees:4 $ 16.000 140. 8.000 100. 10.000 30.000 Depreciation $ 200.000 and was sold on 1/6/07 for $35.000 10.000 The factory was purchased from JTC under a 30-year lease.000.000 1. The interest expense was incurred in the financing of the purchase of Malaysian shares. 5. The truck was purchased in 2002 for $100.000 61. Foreign Exchange Loss Exchange loss arose from the settlement of trade debts.400 25.000 120.600 4. 7. The truck was purchased to replace the old truck which was disposed of for $35.000 14. The extension was built to house the new assembly line.000. This amount is net of 30% UK tax.000.000 Tax Deducted $ 1.

15.000 13.000 123. Travelling and Transport Taxi and public transport Reimbursement of vehicle expenses incurred by salesmen on their private cars used for business purposes Expenses incurred on trucks $ 47.Debt collection New tenancy agreement for general manager Dispute with customers 12.000 11.500 600 1.00 0 $ 42.000 10.900 .00 0 IE Singapore has approved the expenses of 2 staff under S14B for this trade fair.000 42.000 1.000 33.000 58. Rental Rental of cars for Directors Apartment rental for general manager $ 36.000 84. Advertising & promotion $ Media advertising Participation in an approved overseas trade fair: Airfare & accommodation of 6 staff Rental of booth Promotional materials $ 65.000 65.000 30. Entertainment Entertainment of customers Staff dinner & dance 14.000 48.000 12.000 18.000 67.000 4. Miscellaneous expenses Traffic offences (incurred by sales staff) Parking fines (incurred by sales staff) Microwave oven for staff pantry 5 $ 2.000 23.000 156.

the chief engineer will be in Singapore for one and a half months from 1 May 2008.000 40.000 5. (c) Jack. Malaysia and UK but not with BVI. 6 .000 4. He is paid a monthly salary of £3. Details of the 3 employees are as follows:- (a) John.000 17. You are required to compute the tax payable by TPPL. He is paid a monthly salary of £2. (30 marks) 2. Donations were made to:NKF * SMU * Buddhist Lodge # PAP ** Com Chest * * IPC # Charity ** Political Party $ 5. the supervisor will be in Singapore for 8 months from 1 May 2008. Singapore has double taxation agreements with Australia. Malaysia operated a full imputation corporate tax system. To avoid any unnecessary foreign exchange exposure.000. (b) Joe.Factory repairs Replacement of 50 chairs in staff pantry Allowable Staff medical expenses 4. the chief training officer will be in Singapore for 4 months from 1 May 2008.000 16. He is paid a monthly salary of £4.000 40.000 11. A large UK based group is contemplating sending three employees to Singapore (to be attached to its Singapore distributor) to conduct technical training for staff of distributors in the ASEAN region. 19.000 17. 18.000.500. all overseas income are remitted into its OCBC bank account in Singapore.000 80. TPPL did not provide any portable medical benefits to its staff.000 26.000 3.

They are all single. The 3 individuals will be staying in the Marriott Hotel. (Exchange rate £1 : S$3) (20 marks) 7 . It is agreed that air fares ($10. You are required to compute the tax payable by these 3 individuals.The salaries of all the 3 individuals will be borne by the Singapore distributor.000 return air fare each) and all Singapore taxes will also be borne by the Singapore distributor. and per night charge of $200 is also borne by the Singapore distributor.

Koh Tong has recently graduated from NAFA and is contemplating to take advantage of the increasing demand for Chinese antiques to set up an antique business in Singapore.000 per year.000 and $750. 8 . he is uncertain of the commercial and tax implications of doing business. However.2006 / 2007 MT2 3. he should be making anything between $300. break even in the second year and from the third year onwards. He expects to incur a loss of $50. as he is an art graduate. You are required to advise Koh Tong on all the tax and related issues on the setting up of the sole proprietorship and company and also to advise him on how to structure his antique business for maximum tax efficiency.000 in the first year. He is now considering either to set up the antique business as a sole proprietorship or as a limited company with him holding 100% of the shares.

9 .

5% 7.000 42.200 On the first Excess over 320.700 20.YA 2007 Corporate Tax Rates Partial Exemption:1st $10.00 15.5% 5% Employer 14.000 14.PERSONAL TAX RATES – PART A Chargeable Income S$ On the first On the next 20.50 900 3.50 Tax S$ 0 350 On the first On the next 30. there is a one-off tax rebate of 20% (maximum $2.000 40.00 For YA 2008.5% 5% 5% * With effect from 1/7/07.00 4.000 80.000 Next $90.000 320.000 Tax Rate % 0.5% * 10.000 160.000 5.50 350 550 On the first On the next 40.000 8.400 On the first On the next 80.000 10.000 10.00 3.500 27.000 20% 75% 50% YA 2008 18% 75% 50% GST Goods and Services Tax Rates 7% 10 . YA 2005.300 11. 13% before that date.000) CPF Contribution Below 50 years Above 50 years to 55 years Above 55 years to 60 years Above 60 years to 65 years Above 65 years Employee 20% 18% 12.000/$290.5% 7.000 17.200 On the first On the next 160.

000 $1. 11 $3.000 $3.500 $6. 2nd. 3rd. however.000 $3.000 $2.000 $6. CPF contributions and life insurance premium together) is subject to a maximum of $5. the total deduction (ie.000.000 $3. 4th child $3.000 each Nil Normal $1.000 $2.500/$8.000 Handicapped $2.000.000 Handicapped child relief Handicapped Child’s annual income shall not exceed $2.500 $750 $750 $7.000 $10.500/$5.000 Working Mother’s child relief (% of mother’s income) 1st child 2nd child 3rd child 4th child Maximum per child Parenthood Tax Rebate 2nd child 3rd child 4th child Life Insurance Premiums  Where compulsory CPF contributions are less than $5.000 .000 $3.000 $5.000 $20.000 $20.500 5% 15% 20% 25% $25. taxpayer may claim qualifying life insurance premiums on his or his wife’s life as deduction.000 $4.The following tax rates and allowances are to be used in answering the questions: SELECTED RELIEFS/REBATES Personal Earned Income Below 55 years old 55 – 59 years old 60 years and above Wife relief Handicapped spouse relief Dependent relief NS Relief (active) NS Relief (inactive) NS Relief (wife) NS Relief (each parent) CPF topping up scheme Grandparent Caregiver relief Normal child relief 1st.

Sign up to vote on this title
UsefulNot useful

Master Your Semester with Scribd & The New York Times

Special offer for students: Only $4.99/month.

Master Your Semester with a Special Offer from Scribd & The New York Times

Cancel anytime.