In October 2019 Sheldon Anthony was considering setting up a business in either Trinidad & Tobago or Jamaica.Income Statement Projection for 2020 is as follows:

USD

Income

Sales

100,000

Interest Income

1,500

Dividend Income

5,500

Expenses

Depreciation

20,000

Interest Expenses (1)

7,000

Repairs & Maintenance

1,500

Legal & professional fees (2)

8,000

Salaries

30,000

Bad debts (3)

3,000

Other Expenses (4)

20,000

Notes

1. All Interest was paid and as such there was no accrued interest at year end
2. Professional fees consist of:

• Audit and accountancyfees$3,600
• Legal fees for collection of bad debts$2,000
• Cost of setting up business in the selected location$900
• Architect's fee for designing a new Warehouse which was not used$1,500

3. The Bad debts represent a debt that was outstanding for 180 days.

4. Other expenses include $1,000 for expenses paid for another company owned by Sheldon and $600 for fines and penalties.

The following assets were acquired in 2020:

Asset

Cost $

1 Honda Motor car purchased in March 2020

38,000

Equipment

50,000

Computes

4,000

Office Building

72,000

5. Based on your research the capital allowance rates in Trinidad & Tobago iscalculated on the reducing balance and the rates are as follows:

-Building and improvements - 10%

-Motor vehicles - 30%

-Equipment and Computer equipment 33.33%

6. The Capital Allowance Rate Sheet for Jamaica is attached.

7. Estimated Tax of $700 was paid to the relevant Tax Authority.

8. Assume Exchange Rates:J$ 140: 1 USD and TT$ 6 :1 USD

9. Corporation Tax Rate in Jamaica is 25%. The Corporation Tax rate in Trinidad is25%on the first TTD 1 million of chargeable income, and 30% on chargeable income in excess of TTD 1 million.

Required

1. Assuming the projection represents actual amounts, calculate the Corporation Tax payable/ refundable for 2020 if the business operates in JamaicaorTrinidad.. Your calculation should be for only one country.
2. What would be the difference in capital allowance for 2021 if the company operates in Trinidad and Tobago compared to operating in Jamaica.
3. Advise Sheldon on circumstances in which obtaining capital allowances on the reducing balance basis is more beneficial.

1. Sheldon would like to know whether he should consider payroll taxes and sales taxes. If he should, he would like to know the applicable rates, thresholds, registration, and reporting requirements. Advise Sheldon on these requirements if he were to operate in Jamaica or Trinidad & Tobago. (answer for one country only)
2. Identify 2 documents that must accompany the Corporation Tax return when it is filed.