ACC214 Tutor-Marked Assignment (TMA) SUSS January 2025 : Introduction to Taxation, Singapore

ACC214
Introduction to Taxation
Tutor-Marked Assignment
January 2025 Semester
ACC214 Tutor-Marked Assignment
SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS) Page 2 of 6
TUTOR-MARKED ASSIGNMENT (TMA)

This assignment is worth 20% of the final mark for ACC214 Introduction to Taxation.
The cut-off date for this assignment is 12 February 2025, 2355 hrs.
Note to Students:
Compose your report using Microsoft Office Word, and save either as .doc or .docx (preferred).
You are to include the following particulars in your submission: Course Code, Title of the TMA, SUSS PI No., Your Name, and Submission Date.
Take note of the following format and writing requirements. Marks will be penalised for failure to follow requirements.
Format requirements:
• A properly formatted cover page: To include course code, course title, assessment title, student name(s), student PI Number(s).
• For text, Font style: Times New Roman; Font size: 12; Line spacing: 1.5 lines.
• Include the page number on each page.
• Reference or bibliography at the end (use APA referencing guidelines).
Writing requirements:
• Develop your points in a clear, logical and succinct manner.
• Be mindful of the target audience/reader. Use language appropriate to the reader’s expected level of knowledge
• Free from grammatical and typographical errors.
• Provide in-text citations when referencing (use APA referencing guidelines).
• Include less relevant details as an appendix if necessary.
• Good overall presentation of the report.

Use of Generative AI Tools (Allowed)

The use of generative AI tools is allowed for this assignment.
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• To take note of section 3, paragraph 3.2 and section 5.2, paragraph 2A.1 (Viva Voce) of the Student Handbook;
• The University has the right to exercise the viva voce option to determine the authorship of a student’s submission should there be reasonable grounds to suspect that the submission may not be fully the student’s own work.
• For more details on academic integrity and guidance on responsible use of generative AI tools in assignments, please refer to the TLC website for more details;
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The case study of Mr ABC

Professional background

(1) Mr ABC was an entrepreneur. He retired after his daughter took over his business (as a full-time sole proprietor), and his wife passed away. Mr ABC is now a part-time advisor employed by Bain & Company, a global management consulting firm.
(2) Mr ABC was entitled to a monthly salary of $5,000 from 1 January 2023. He was also entitled to an annual contractual bonus of $7,500 from 1 January 2024. Mr ABC was verbally informed of a one-time discretionary bonus of $10,000 on 4 July 2023.
(3) Mr ABC referred an ex-business contact for employment with Bain & Company – this was not within his scope of employment duties. He was rewarded with a finder’s introduction fee of $1,000 in return on 1 August 2023.
(4) Mr ABC incurred public transportation fees of $657.30 to discharge his employment duties – only 80% of which was reimbursed by the firm on 29 December 2023. He pursued further reimbursements on the next working day in vain.
(5) Mr ABC received his monies from Bain & Company net of any and all mandatory contributions to the Central Provident Fund (“CPF”), and the Mosque Building and Mendaki Fund, where applicable.

Personal background

(6) Mr ABC is a Singaporean, who was born and bred in Singapore. He has never left the country for an extended period of time. Mr ABC served as a key appointment holder in the Singapore Civil Defence Force during his national service days.
(7) Mr ABC stays with his daughter. He rented out his residential property two years ago. Mr ABC bought a commercial property for long-term investment. He also rented out his commercial property one year ago.
(8) Mr ABC made quarterly anonymous donations of $100 to the Association of Muslim Professionals (UEN: 199105100D) in the calendar year ended 31 December 2023 – in connection thereto, no personal details were (or would be) disclosed.
(9) Mr ABC also donated his 14-inch MacBook Pro worth $2,199 to his neighbour on 2 November 2023. He hoped that this would help their children with their tertiary education in Singapore Polytechnic, an exempt charity listed in the Charity Portal.
(10) Mr ABC started receiving CPF payouts two years ago, when he reached the payout eligibility age. He used these monies to fund the following expenses incurred during the calendar year ended 31 December 2023 for his properties that were rented out.
Residential Property~
Advertising fees* : $8,332
Commission* : $17,000
Fire insurance, annual payment : $581
Legal fees* : $1,500
Maintenance fees^ : $61,280
Property tax, annual payment : $10,290
Repair works^ : $24,661
Stamp duty* : $1,224
Upkeep of property^ : $34,745
~Unless otherwise stated, the expenses listed above were wholly and exclusively incurred to derive rental related income from the residential property – to avoid doubt, no capital expenditure was included therein.
*The expenses above were incurred to scout for and secure a new tenant, after the previous tenant vacated the premises without notice on 31 July 2023 and forfeited his rental deposits amounting to two months of rental.
^The expenses above were incurred between 4 and 26 September 2023 to reinstate the property for a new tenant, who moved in on 1 October 2023 for three years. Similar to the previous tenant, she paid a monthly rental of $8,500.

Commercial Property

PRISM+ Zero Smart Air Conditioner : $2,499
Cleaning fees, monthly payment** : $130

**The expenses above were wholly and exclusively incurred to derive monthly
maintenance fees of $100, on top of the monthly rental of $10,800 – to avoid doubt, no capital expenditure was included therein.
(11) Mr ABC read the following article on the website of the Inland Revenue Authority of Singapore (“IRAS”): “Pilot jailed 6 months for evading Income Tax by failing to declare rental income and providing false reply to IRAS”.

(12) Mr ABC found himself to be in the same position as Mr Andrew Soo Cheng Ai. He is an employed person and owns two properties which were rented out. Mr ABC is puzzled as to why he is required to declare rental income when he paid property tax.

Question 1

Explain and outline why Mr ABC is required to declare rental income to the IRAS in his Form B1 for the relevant year of assessment in no more than two (2) pages (excluding references). Support your arguments with research and provide a list of references, where applicable.
(20 marks)

Question 2

Apply the principles of income tax and compute Mr ABC’s chargeable income and net income tax payable, for the relevant year of assessment, in a way that would minimise his income tax exposure in Singapore. Show all workings and account for all income and deductions – for example, if an income is not taxable or is exempted from income tax, or if a deduction is disallowed or is applicable but not claimable, that income or deduction must be indicated as “$0” in the income tax computation. State reasonable assumption(s) if any of the facts presented is/are unclear – to avoid doubt, new fact(s) may not be introduced.
(80 marks)