Apply the principles of Income Tax to Ms ABC and determine if she was exercising an...

 

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Apply the principles of Income Tax to Ms ABC and determine if she was exercising an employment or a profession in the relevant Year of Assessment ("YA"). Discuss whether income tax is payable by Ms ABC on the rents derived from her residential and commercial units in the relevant YA, even though property taxes were previously paid on these units. Calculate the amount of income, which is taxable in the relevant YA, derived by Ms ABC from PwC Singapore. Calculate the amount of income, which is taxable in the relevant YA, derived by Ms ABC from her residential and commercial units. Calculate the amount of income tax, which is payable by Ms ABC in the relevant YA - round your answer to two decimal places. When calculating the amount of income and income tax in Questions (3) to (5), you are required to show all your workings. In addition, you are required to account for all income and deductions in your calculation - for example, if an income is not taxable or a deduction is not claimable, that income or deduction must be indicated as "$0" in your answer. Marks will be deducted if the requirements above are not adhered to. Professional Background Ms ABC is a Chartered Accountant. She provides audit services to the clients of PwC Singapore in exchange for remuneration pursuant to her contract of service with the firm. Ms ABC reports to her engagement partners, who dictate the methodologies to be adopted in the firm's audit engagements. 1. 2. 3. Ms ABC is not a party to the engagement letters concluded between PwC Singapore and its clients. She does not negotiate the terms and conditions of audit engagements, sign off audited financial statements and attend clients' annual general meetings to answer shareholders' queries. Receipts from PwC Singapore during the Calendar Year Ended 31 December 2020 4. 5. 6. 7. PwC Singapore provides Ms ABC with a laptop and a handphone to facilitate the discharge of her official duties and responsibilities. It also provides Ms ABC with a team of associates employed by the firm to assist with the voluminous groundwork of the firm's audit engagements. 8. Ms ABC was promoted to the rank of Senior Manager with effect from 1 July 2020. She was entitled to a monthly salary of $8,125 before her promotion and an annual salary of $109,200 after her promotion. Ms ABC was also given monthly transport allowances of $500 and monthly handphone allowances of $200 after her promotion. Ms ABC was paid a discretionary bonus of $50,000 for her outstanding performance in PwC Singapore's financial year ended 30 June 2019. She was also presented with a long service award for her tenure of 10 years with the firm - this award consisted of a certificate and a designer watch valued at $200. Ms ABC was reimbursed by PwC Singapore for her annual subscription fees of $449 paid to the Institute of Singapore Chartered Accountants ("ISCA"). She was provided with access to professional updates, knowledge banks and networking opportunities as a member of ISCA. Ms ABC was required to contribute to the Central Provident Fund ("CPF") according to statutory requirements. In addition, she was required to donate to the Chinese Development Assistance Council Fund at the prevailing rate. PwC Singapore was obligated to deduct both amounts from Ms ABC's monthly salary. Ms ABC was required to receive continuing professional education to uphold her professional and ethical standards as a Chartered Accountant. She was invoiced by ISCA for the courses attended by her, which amounted to $6,420. Ms ABC was rejected by PwC Singapore when she tried to recover these course fees. Family Background Ms ABC was born on 17 December 1977. She is currently attached to her jobless boyfriend with plans for marriage in 2021. Ms ABC stays with her retired parents, who belong to the pioneer generation, in a condominium unit located in Pasir Ris. She had a brother, who was bed-ridden for two years before his death in 2019. 9. 10. 11. 12. Ms ABC inherited one residential unit and one commercial unit (both with tenancies) from her brother in 2019. She continued to rent them out to derive rental income in 2020. Ms ABC did not derive rental income from the residential unit in the full months of March and April 2020, as it was left vacant after her tenant returned to Malaysia - a subsequent tenant was found. Ms ABC bought an additional residential unit in July 2020, after she was promoted. She rented this new residential unit out in the full months of August to December 2020. Ms ABC was too busy to keep track of the financials re: rents and solicited help from her parents - refer to Annex 1 for the relevant information. Ms ABC is concerned with her retirement needs when she grows old in the future. She has the habit of saving and tops up her CPF (Special Account) regularly under the CPF Retirement Sum Topping-Up Scheme. Ms ABC topped up her CPF (Special Account) by transferring $8,000 from her CPF (Ordinary Account) in 2020. Annex 1: Financials re: Rents for the Calendar Year Ended 31 December 2020 Commercial Residential Unit: Unit: Inherited (S) Acquired (S) 2,022 100 249 49 13 12,894 56 87 146 3,970 2,311 1,440 1,440 1,800 3,828 179 Advertisements Presents - Note 1 Electricity bills Fire insurance premiums Fittings - Note 2 Furniture - Note 3 Internet charges (per month) Maintenance costs - Note 4 Miscellaneous costs - Note 4 Mortgage interests Property agent fees Property taxes paid in 2020 Property taxes paid in 2021 Rents (per month) Repairs - Note 5 Water/gas bills (gross) - Note 6 Notes to financials: 1. 2. 3. 4. 5. 6. Residential Unit: Inherited (S) 1,348 100 598 103 95 2,889 56 118 1,876 9,528 2,889 1,800 1,800 2,000 5,982 431 100 2,399 158 42 56 1,030 10,681 19,056 7,200 7,200 8,000 7,178 1,724 These were gifted to tenants by Ms ABC's parents on a (more) personal level. These were incurred as subsequent replacements of spoilt fittings during tenancies. These were acquired in the calendar year ended 31 December 2020. These were not capital expenditure and were incurred in the production of rents. These were not supported by contracts, invoices or receipts. These were shared between Ms ABC and tenants at the ratio of 50%:50%. Apply the principles of Income Tax to Ms ABC and determine if she was exercising an employment or a profession in the relevant Year of Assessment ("YA"). Discuss whether income tax is payable by Ms ABC on the rents derived from her residential and commercial units in the relevant YA, even though property taxes were previously paid on these units. Calculate the amount of income, which is taxable in the relevant YA, derived by Ms ABC from PwC Singapore. Calculate the amount of income, which is taxable in the relevant YA, derived by Ms ABC from her residential and commercial units. Calculate the amount of income tax, which is payable by Ms ABC in the relevant YA - round your answer to two decimal places. When calculating the amount of income and income tax in Questions (3) to (5), you are required to show all your workings. In addition, you are required to account for all income and deductions in your calculation - for example, if an income is not taxable or a deduction is not claimable, that income or deduction must be indicated as "$0" in your answer. Marks will be deducted if the requirements above are not adhered to. Professional Background Ms ABC is a Chartered Accountant. She provides audit services to the clients of PwC Singapore in exchange for remuneration pursuant to her contract of service with the firm. Ms ABC reports to her engagement partners, who dictate the methodologies to be adopted in the firm's audit engagements. 1. 2. 3. Ms ABC is not a party to the engagement letters concluded between PwC Singapore and its clients. She does not negotiate the terms and conditions of audit engagements, sign off audited financial statements and attend clients' annual general meetings to answer shareholders' queries. Receipts from PwC Singapore during the Calendar Year Ended 31 December 2020 4. 5. 6. 7. PwC Singapore provides Ms ABC with a laptop and a handphone to facilitate the discharge of her official duties and responsibilities. It also provides Ms ABC with a team of associates employed by the firm to assist with the voluminous groundwork of the firm's audit engagements. 8. Ms ABC was promoted to the rank of Senior Manager with effect from 1 July 2020. She was entitled to a monthly salary of $8,125 before her promotion and an annual salary of $109,200 after her promotion. Ms ABC was also given monthly transport allowances of $500 and monthly handphone allowances of $200 after her promotion. Ms ABC was paid a discretionary bonus of $50,000 for her outstanding performance in PwC Singapore's financial year ended 30 June 2019. She was also presented with a long service award for her tenure of 10 years with the firm - this award consisted of a certificate and a designer watch valued at $200. Ms ABC was reimbursed by PwC Singapore for her annual subscription fees of $449 paid to the Institute of Singapore Chartered Accountants ("ISCA"). She was provided with access to professional updates, knowledge banks and networking opportunities as a member of ISCA. Ms ABC was required to contribute to the Central Provident Fund ("CPF") according to statutory requirements. In addition, she was required to donate to the Chinese Development Assistance Council Fund at the prevailing rate. PwC Singapore was obligated to deduct both amounts from Ms ABC's monthly salary. Ms ABC was required to receive continuing professional education to uphold her professional and ethical standards as a Chartered Accountant. She was invoiced by ISCA for the courses attended by her, which amounted to $6,420. Ms ABC was rejected by PwC Singapore when she tried to recover these course fees. Family Background Ms ABC was born on 17 December 1977. She is currently attached to her jobless boyfriend with plans for marriage in 2021. Ms ABC stays with her retired parents, who belong to the pioneer generation, in a condominium unit located in Pasir Ris. She had a brother, who was bed-ridden for two years before his death in 2019. 9. 10. 11. 12. Ms ABC inherited one residential unit and one commercial unit (both with tenancies) from her brother in 2019. She continued to rent them out to derive rental income in 2020. Ms ABC did not derive rental income from the residential unit in the full months of March and April 2020, as it was left vacant after her tenant returned to Malaysia - a subsequent tenant was found. Ms ABC bought an additional residential unit in July 2020, after she was promoted. She rented this new residential unit out in the full months of August to December 2020. Ms ABC was too busy to keep track of the financials re: rents and solicited help from her parents - refer to Annex 1 for the relevant information. Ms ABC is concerned with her retirement needs when she grows old in the future. She has the habit of saving and tops up her CPF (Special Account) regularly under the CPF Retirement Sum Topping-Up Scheme. Ms ABC topped up her CPF (Special Account) by transferring $8,000 from her CPF (Ordinary Account) in 2020. Annex 1: Financials re: Rents for the Calendar Year Ended 31 December 2020 Commercial Residential Unit: Unit: Inherited (S) Acquired (S) 2,022 100 249 49 13 12,894 56 87 146 3,970 2,311 1,440 1,440 1,800 3,828 179 Advertisements Presents - Note 1 Electricity bills Fire insurance premiums Fittings - Note 2 Furniture - Note 3 Internet charges (per month) Maintenance costs - Note 4 Miscellaneous costs - Note 4 Mortgage interests Property agent fees Property taxes paid in 2020 Property taxes paid in 2021 Rents (per month) Repairs - Note 5 Water/gas bills (gross) - Note 6 Notes to financials: 1. 2. 3. 4. 5. 6. Residential Unit: Inherited (S) 1,348 100 598 103 95 2,889 56 118 1,876 9,528 2,889 1,800 1,800 2,000 5,982 431 100 2,399 158 42 56 1,030 10,681 19,056 7,200 7,200 8,000 7,178 1,724 These were gifted to tenants by Ms ABC's parents on a (more) personal level. These were incurred as subsequent replacements of spoilt fittings during tenancies. These were acquired in the calendar year ended 31 December 2020. These were not capital expenditure and were incurred in the production of rents. These were not supported by contracts, invoices or receipts. These were shared between Ms ABC and tenants at the ratio of 50%:50%.

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Answer Sure lets go through each question specifically Employment or Profession Based on the provided information Ms ABCs relationship with PwC Singap... View the full answer