Background
Harvey Ngiam graduated with a business administration degree. He is a marketing strategist. Ingrid Chiam graduated with an accountancy degree. She is a full-time housewife after being married to Harvey and giving birth to Jayden Ngiam, Kayden Ngiam and Layden Ngiam, all of whom are Singaporeans.

Harvey’s Employment Matters
Harvey was employed by ABC Private Limited (“ABC”), a Singapore-incorporated company specialising in meetings, incentives, conferences and exhibitions (“MICE”). He was promoted to senior management two years ago. Harvey was contractually entitled to the following payments as a regional marketing director:
• Bonus of $15,000 per year;
• CPF contribution according to statutory requirements;
• Entertainment allowance of $500 per month;
• Transport allowance of $6,000 per year; and
• Wages of $15,000 per month.

During the calendar year ended 31 December 2020, Harvey spent two months working overseas for ABC, and received additional wages of $2,000. ABC also paid Harvey a one-off commission of $100,000 for bringing in new clients from overseas.

On 2 January 2020, ABC provided Harvey with a new laptop worth $2,149 to be used for work, a new handphone worth $1,299 to be regarded as Harvey’s lucky draw prize won at ABC’s family day and a new car to facilitate the discharge of Harvey’s employment duties.

ABC paid $61,000 for the car. Harvey found out that ABC paid another $45,000 for the car’s certificate of entitlement. Hence, he agreed to pay for the car’s running costs and maintenance expenses. The car dealer estimated the car’s PARF rebate to be $10,000.

ABC’s business was badly hit by COVID-19. Clients cancelled their projects with the company due to the closure of borders in the region. Harvey was retrenched with immediate effect on 30 June 2020 as a result. ABC compensated him with the following payments:

• Discretionary bonus of $20,000 for outstanding performance in the last financial year;
• Severance payment computed based on three months of wages; and
• Payment in lieu of notice computed based on three months of wages.

Before leaving the company, Harvey made a claim for the following expenses in accordance with the company’s policies, which shall be applicable to all staff, whether they belong to the revenue centres or cost centres:
• Food and beverage (“F&B”) of $765 incurred for official meetings; and
• F&B of $234 incurred for Harvey’s private consumption only.

On 1 July 2020, Harvey joined his ex-boss’ marketing firm temporarily, while he looked out for new opportunities in the MICE industry. He was contractually entitled to the following payments as a marketing consultant:
• CPF contribution according to statutory requirements;
• Miscellaneous allowance of $300 per quarter; and
• Salary of $8,000 per month.

The firm provided Harvey with uniforms worth $450 as part of the firm’s branding efforts. During the calendar year ended 31 December 2020, Harvey incurred laundry expenses of $585 on these uniforms worn at corporate events. The firm reimbursed Harvey in full.

Harvey’s Personal Matters
Both ABC and the marketing firm deducted $3 from Harvey’s wages and salaries for onward payment to Chinese Development Assistance Council every month as Harvey’s donation to an institution of a public character. Harvey gifted $1,000 to his neighbour too.

On 1 January 2020, Harvey employed a foreign domestic worker (“FDW”) to help Ingrid with the family’s household chores. Harvey’s retired parents, who were living in the same household, looked after the boys, who were primary school kids as at 31 December 2020.

During the calendar year ended 31 December 2020, Harvey did not perform any reservist duties due to the cancellation of trainings pursuant to COVID-19. As a non-key appointment holder in the army, Harvey was unsure when trainings for national servicemen will resume.

Ingrid’s Personal Matters
Ingrid owns two private residential properties, which were both tenanted as at 31 December 2020. Property 1 was tenanted from 1 August 2019 to 31 January 2020 and from 1 March 2020 onwards. Property 2 was tenanted from 1 October 2018 onwards.

Being an accountant by training, Ingrid keeps track of her finances diligently. During the calendar year ended 31 December 2020, she prepared a simplified profit and loss account pertaining to both Property 1 and Property 2 as presented below.

Apart from rental income, Ingrid also received income from various passive investments funded by excess cash in the bank. During the calendar year ended 31 December 2020, she recorded the following income:
• Distributions from real estate investment trust (“REIT”) of $1,800;
• Dividends from both Singapore and non-Singapore resident companies of $780;
• Interests from Development Bank of Singapore of $1,240; and
• Interests from loan to cousin-in-law of $200.

Ingrid was relieved that Harvey paid for a FDW to help out with the family’s household chores, especially since her own parents do not live with her in the same household. Harvey also paid for the FDW levy at the concessionary rate.

On 20 May 2020, Ingrid celebrated her 40th birthday with Harvey, who was two years older. During the celebration, Ingrid explained to Jayden, Kayden and Layden that their grandparents belong to Singapore’s pioneer generation and had no income after retirement.
Required:

(a) Compute Harvey’s income tax payable for the YA 2021.

(b) Compute Ingrid’s income tax payable for the YA 2021.

Show all workings in your answer. Account for all income and deductions in your income tax computations. For example, if an income is not taxable, that income must be included in your income tax computation as “$0”. Similarly, if an expense or relief is not claimable, that expense or relief must be included in your income tax computation as “$0”.
 

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Rental income Less: Expenses Commission expenses Fire insurance premiums Furniture Housing loan interests Internet subscription Maintenance expenses Property taxes Repair costs Utilities Profit and Loss Account Note 1 ~ 310 10 10 2 3 5 4 5 5 5 Property 1 $36,000 Fire insurance premiums of $17; Housing loan interests of $1,059; Internet subscription of $65; and Property taxes of $70. ($3,960) ($207) ($44,789) ($12,710) ($780) ($1,344) ($845) ($1,238) ($29,873) Property 2 $21,600 ($86) ($9,528) ($690) ($427) ($731) ($192) ($546) $9,400 Net profit/(loss) Notes to profit and loss account: 1. Ingrid gave $1,000 per month to each of her retired parents from the rental income. 2. Expenses were revenue in nature, unless otherwise stated. 3. Expenses were incurred to secure a new tenant for Property 1 after 31 January 2020. 4. Expenses of $10,500 were incurred to buy additional furniture for the new tenant. 5. Expenses included the following, which were incurred during the vacant period of Property 1 from 1 February 2020 to 29 February 2020: Rental income Less: Expenses Commission expenses Fire insurance premiums Furniture Housing loan interests Internet subscription Maintenance expenses Property taxes Repair costs Utilities Profit and Loss Account Note 1 ~ 310 10 10 2 3 5 4 5 5 5 Property 1 $36,000 Fire insurance premiums of $17; Housing loan interests of $1,059; Internet subscription of $65; and Property taxes of $70. ($3,960) ($207) ($44,789) ($12,710) ($780) ($1,344) ($845) ($1,238) ($29,873) Property 2 $21,600 ($86) ($9,528) ($690) ($427) ($731) ($192) ($546) $9,400 Net profit/(loss) Notes to profit and loss account: 1. Ingrid gave $1,000 per month to each of her retired parents from the rental income. 2. Expenses were revenue in nature, unless otherwise stated. 3. Expenses were incurred to secure a new tenant for Property 1 after 31 January 2020. 4. Expenses of $10,500 were incurred to buy additional furniture for the new tenant. 5. Expenses included the following, which were incurred during the vacant period of Property 1 from 1 February 2020 to 29 February 2020:

Answer rating: 100% (QA)

a Taxable income is the amount of money that is subject to taxation by the government In general it ... View the full answer