The partners receive interest on their capital accounts at 9.5 % on the balance of their partner

capital at the end of the budget year. The interest on the capital account was not included in the

income statement.

2. Include in the income statement is $80,000 salary per month for each partner.

3. The partnership paid motor vehicle expenses for vehicles owned by the partners as follows:

- Ebanks -$ 50,000

- Brown - $80,000

- Thomas - $130,000

The partners did not use the vehicles for the partnership business.

4. Profit on disposal was $180,000.

5. Depreciation on plant and machinery for the year was $900,000.

6. In recognition of the new IFRS 9 standard, a provision for bad debt of $75,000 was made. This

represents a % of the business year end receivable balance.

7. A portion of bad debt written off in 2020 for a debtor who was experiencing cashflow issues was

paid. This amount was $270,000. This was not recognized in the 2021 income statement.

8. The business has a policy to write off small equipment valuing under $100,000 in the income

statement. For the year 2021, the total for small equipment written off in the income statement

was $325,000.

9. The income incurred fines of $70,000 for breaching the Surveyor’s Board polices and rules.

10. As at 31, December 2021, the partners’ capital was Ebanks -$5,000,000, Brown $3,000,000 and

Thomas $2,000,000.

11. PAYE of $200,000 was deducted from the salaries of each partner.

12. It is estimated that drawings by each partner was $500,000 per annum.

13. The business donated $450,000 to an entity on CTA ‘s approved list and $600,000 to a political

party.

14. Brown received gross interest income on a fixed deposit at the bank accounting to $250,000. The

tax deducted at source was $ 6,250.

15. Ebanks receives Net Rental income of $3,000,000 per annum.

16. Thomas received $7,000,000 for consultation services.

17. Details of fixed Assets:

- Included in the cost of motor vehicle is a lorry purchased on 1 April 2021 for $2,000,000.

Details Cost

As at 31 Dec 2021

NBV

As at 31 Dec 2021

Tax Written Down

Value as at 1 Jan 2021

Motor Vehicles 10,00,000 7,200,000 7,000,000

Equipment 15,000,00 12,00,000 6,713,335

Office buildings 45,000,000 36,000,000 36,450,000

18. Included in the income statement interest relating $800,000 relating to a VAT refund in 2020.

19. Each partner paid quarterly estimated tax of $600,000.

20. The business is within the first 3 years of trade.

21. The partners each contribute to 5% of their taxable income to an approved pension funds.

22. All currencies are in TT$.

Required

Compute each person’s income tax payable/ refundable e for year of assessment 2021 for each partner on

the assumption that the business and the tax partners are tax resident in Trinidad and Tobago. (Ignore all

other statutory taxes, except National Insurance)

Part B

Apart from pension contribution state two other expenses that an individual may use to reduce his/her

tax liability in Trinidad. (Ensure to include the maximum allowed).

Part C

Ebanks received a Notice of Assessment from the Inland Revenue Division in Trinidad and Tobago.

Ebanks was assessed for an additional TT$100,565. The explanation provided by IRD is that Ebanks filed

to report taxes on salaries paid by EBT Surveyors in his income tax returns.

(a) Write a letter of Objection to the IRD on behalf of Ebanks

(b) Ebanks is of the view that he may submit the above letter to IRD anytime as there is no timeline

for submission. Advice Ebanks accordingly including whether there may be an exception.

Part D Advice, Mr. Ebanks whether EBT surveyors should be registered for VAT and the benefit of beingregistered, if any

Answer rating: 100% (QA)

ACCT3050 Principles of Caribbean Tax and Tax Management Part A Compute each persons income tax payablerefundable e for a year of assessment 2021 for each partner on the assumption that the business an... View the full answer