Molly M, aged 49, has a daughter and a son aged 14 and 19 respectively. The...

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Molly M, aged 49, has a daughter and a son aged 14 and 19 respectively. The children are from her previous marriage and they are all Singaporeans and live in Singapore. Molly worked as a Vice President, Corporate Communications with a company ("SC") in Singapore for more than 10 years. SC is a wholly owned subsidiary of a US large corporation ("LC") listed on New York Stock Exchange. Due to restructuring and downsizing of businesses in South East Asia, her employment was terminated on March 31, 2019. Before the termination, Molly's remuneration and benefits received were as follows: (1) Monthly salary of $10,800. (2) Monthly entertainment allowance of $800 and estimated 70% of it is spent on business lunches and dinners with financial journalists. (3) (4) (5) (6) A car, costing $110,000 (including COE of $40,000) with PARF rebate of $28,000, was provided to her for both business and personal use since January 1, 2016. (2) The car was returned to SC on March 31, 2019 and all the running expenses (including petrol) amounted to $900 for the period ended March 31, 2019 was fully borne by SC. SC had granted Molly one-month discretionary performance bonus for her satisfactory performance in 2018 after the financial year ended December 31, 2018. The sum was credited to her bank account on February 28, 2019. Molly exercised the option to acquire 10,000 shares in LC on February 10, 2019 at an exercise price of US$5.80 per share, on meeting all the conditions of the award. The stock option was awarded to her on February 1, 2018 and the stock price for LC on February 10, 2019 was US$6.50 per share. The average rate of exchange for February 2019 is US$1:S$1.35. Molly was reimbursed $700 for the specialist medical bills for her children. This benefit is available to all employees though a lower threshold ($300) applies to staff with job grades below Molly's job grade. For the termination, the following retrenchment payments were made to Molly on March 30, 2019: (1) A lump sum payment of $54,000 as compensation for the loss of employment. This is based on 2 weeks of salary per year of service. One-month salary in-lieu of notice. (3) A special ex-gratia payment of $10,000 as a token of appreciation for Molly's past services and contributions to the company. Additional information for year 2019: (1) (2) (3) (4) Molly's daughter is receiving full-time education at a Singapore Secondary School. Molly's son is serving National Service ("NS") since December 2018 and received a monthly NS allowance of $630 since enlistment. In June 2019, he accepted the offer from a University in Singapore to commence his academic study in July 2021. Molly's widowed mother, aged 69, lives with her. She has no other income of her own in the year except a monthly allowance of $400 from her other child (i.e. Molly's sibling). She helps to look after her grandchildren. Molly paid a monthly fee of $450 for a part-time domestic helper to clean the house. Molly has inherited a fully paid up shop unit in Singapore from her deceased father 4 years ago and the unit was rented out since 2016. She bought a small condominium for investment in October 2018 and has its first tenant for 12 months from February 1, 2019. Below is the relevant information in respect of the 2 properties: Shop House $1,800 Period: Jan 1- Dec 31, 2019 Monthly rental income Direct Expenses (2019) Property tax (annual) Fire insurance (annual) Pest control Sofa set and television set Replacement of storeroom racks Monthly maintenance charges Monthly interest on housing loan Agent's commission 1,700 400 800 0 1,300 0 ΝΑ 0 Condominium $1,200 Period: Feb 1 Dec 31, 2019 1,100 200 0 1,000 0 300 300 800 (5) (a) (6) (7) Required: A dividend of US$2,000 (S$2,800) was received in respect of Molly's shareholding in LC. The amount was credited to Molly's Singapore bank account on July 10, 2019. Molly provided a loan to her best friend in Singapore in 2018. Her friend could repay the loan and an interest of $2,300 together with the loan amount was credited to Molly's bank account in Singapore in November 2019. Molly sold 10,000 shares in LC in December 2020 and derived a gain of S$7,000. Compute the minimum income tax payable by Molly for the year of assessment 2020, indicating "0" on items which are tax exempt or are not taxable/deductible. For personal reliefs, all relevant reliefs based on information given should be accounted for in the tax computation and where it is not available, please insert "0". (34 marks) Molly M, aged 49, has a daughter and a son aged 14 and 19 respectively. The children are from her previous marriage and they are all Singaporeans and live in Singapore. Molly worked as a Vice President, Corporate Communications with a company ("SC") in Singapore for more than 10 years. SC is a wholly owned subsidiary of a US large corporation ("LC") listed on New York Stock Exchange. Due to restructuring and downsizing of businesses in South East Asia, her employment was terminated on March 31, 2019. Before the termination, Molly's remuneration and benefits received were as follows: (1) Monthly salary of $10,800. (2) Monthly entertainment allowance of $800 and estimated 70% of it is spent on business lunches and dinners with financial journalists. (3) (4) (5) (6) A car, costing $110,000 (including COE of $40,000) with PARF rebate of $28,000, was provided to her for both business and personal use since January 1, 2016. (2) The car was returned to SC on March 31, 2019 and all the running expenses (including petrol) amounted to $900 for the period ended March 31, 2019 was fully borne by SC. SC had granted Molly one-month discretionary performance bonus for her satisfactory performance in 2018 after the financial year ended December 31, 2018. The sum was credited to her bank account on February 28, 2019. Molly exercised the option to acquire 10,000 shares in LC on February 10, 2019 at an exercise price of US$5.80 per share, on meeting all the conditions of the award. The stock option was awarded to her on February 1, 2018 and the stock price for LC on February 10, 2019 was US$6.50 per share. The average rate of exchange for February 2019 is US$1:S$1.35. Molly was reimbursed $700 for the specialist medical bills for her children. This benefit is available to all employees though a lower threshold ($300) applies to staff with job grades below Molly's job grade. For the termination, the following retrenchment payments were made to Molly on March 30, 2019: (1) A lump sum payment of $54,000 as compensation for the loss of employment. This is based on 2 weeks of salary per year of service. One-month salary in-lieu of notice. (3) A special ex-gratia payment of $10,000 as a token of appreciation for Molly's past services and contributions to the company. Additional information for year 2019: (1) (2) (3) (4) Molly's daughter is receiving full-time education at a Singapore Secondary School. Molly's son is serving National Service ("NS") since December 2018 and received a monthly NS allowance of $630 since enlistment. In June 2019, he accepted the offer from a University in Singapore to commence his academic study in July 2021. Molly's widowed mother, aged 69, lives with her. She has no other income of her own in the year except a monthly allowance of $400 from her other child (i.e. Molly's sibling). She helps to look after her grandchildren. Molly paid a monthly fee of $450 for a part-time domestic helper to clean the house. Molly has inherited a fully paid up shop unit in Singapore from her deceased father 4 years ago and the unit was rented out since 2016. She bought a small condominium for investment in October 2018 and has its first tenant for 12 months from February 1, 2019. Below is the relevant information in respect of the 2 properties: Shop House $1,800 Period: Jan 1- Dec 31, 2019 Monthly rental income Direct Expenses (2019) Property tax (annual) Fire insurance (annual) Pest control Sofa set and television set Replacement of storeroom racks Monthly maintenance charges Monthly interest on housing loan Agent's commission 1,700 400 800 0 1,300 0 ΝΑ 0 Condominium $1,200 Period: Feb 1 Dec 31, 2019 1,100 200 0 1,000 0 300 300 800 (5) (a) (6) (7) Required: A dividend of US$2,000 (S$2,800) was received in respect of Molly's shareholding in LC. The amount was credited to Molly's Singapore bank account on July 10, 2019. Molly provided a loan to her best friend in Singapore in 2018. Her friend could repay the loan and an interest of $2,300 together with the loan amount was credited to Molly's bank account in Singapore in November 2019. Molly sold 10,000 shares in LC in December 2020 and derived a gain of S$7,000. Compute the minimum income tax payable by Molly for the year of assessment 2020, indicating "0" on items which are tax exempt or are not taxable/deductible. For personal reliefs, all relevant reliefs based on information given should be accounted for in the tax computation and where it is not available, please insert "0". (34 marks)

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Income Tax Computation for Molly M for the Year of Assessment 2020 Income Employment income January ... View the full answer