Mock Examination

: CAT Paper FTX

Foundations In Taxation
Session

: June 2014

Set by

: Ms Lee Yuet Lai

Your Contact Number : ______________________________________

I wish to have my script marked by the lecturer and

collect the marked script at the SAA-GE Reception Counter
email me the marked script to ____________________________
(Please submit your script latest by 9th May 2014 for marking)

SAA GLOBAL EDUCATION CENTRE PTE LTD

Company Registration No. 201001206N
111 Somerset Road, TripleOne Somerset #06-01/02
Singapore 238164
Tel: (65) 6733 5731 Fax: (65) 6733 5750
Website: www.saage.edu.sg

Email: studentservices@saage.edu.sg

Foundations In Accountancy
Foundations In Taxation (FTX)
(Singapore)
SAA Global Education
Mock Examination 2014

Time allowed
Writing

2 hours

This paper comprises TWO Sections.

Section A (Total 20 marks)
10 Multiple choice questions (MCQ)
ALL questions are COMPULSORY.
Section B (Total 80 marks)
ALL Nine questions are COMPULSORY and MUST be answered
Tax rates and allowances are attached.

Should any part of this paper be reproduced, the writer should be informed in writing, as a matter of courtesy.
Neither the writer nor SAA GE accepts any responsibility for any loss to any person as a result of the material
in this paper. SAA GE and the writer bear no responsibility for the contents of the paper, which is written for a
particular course.

All rights reserved. LYL/FTX 2014

Page 1

TAX RATES, RELIEFS AND REBATES

The following Tax Table is to be used in answering the questions
Selected reliefs/ rebates for year of assessment 2014

Earned Income Relief

Below 55 years
55 59 years old
60 years and above

Normal

Handicapped

$1,000
$6,000
$8,000

$4,000
$10,000
$12,000
$2,000

Spouse relief

$3,500

Handicapped Spouse relief

Parent relief

- Parents stay with taxpayer

- Parents do not stay with taxpayer

Normal

Handicapped

$7,000
$4,500

$11,000
$8,000
$3,000

Grandparent Caregiver Relief (GCR)

$3,500

Dependant handicapped sibling relief

Foreign maid levy relief

The relief is two times the amount of foreign maid levy paid in 2013 up to a maximum of
$6,360.
NSman relief

Key command and

staff appointment
holder

Active NSman
Non-active NSman
For wife/widow of operationally ready NSman
For each parent of operationally ready NSman

$5,000
$3,500
$750
$750

CPF cash top-up relief

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Non-key command
and staff
appointment
holder

$3,000
$1,500
$750
$750
$7,000

Page 2

Voluntary CPF contributions made by self-employed persons

36% of s10(1)(a) assessable trade income capped at $30,600 or actual
contribution whichever is lower.
Provident Fund
Compulsory contributions to CPF/approved pension or provident fund by
Singaporeans and Singapore permanent resident employees, subject to not
more than the statutory contributions under the CPF Act.
Course fees relief
Relief for course fees up to $5,500 for eligible fees incurred on courses,
seminars and conferences attended.
Life insurance premiums
Premiums paid on own life and wifes life insurance policies
If own CPF contribution is less than $5,000, claim is the lower of:
(1) 7% of the capital sum or amount of insurance premium paid,
whichever is lower
(2) The difference between $5,000 and own CPF contribution
No claim if own CPF contributions exceeds $5,000
Child Relief
Qualifying Child Relief (QCR)
Per child
Relief given to all qualifying children

$4,000

Handicapped Child Relief (HCR)

Per child

$5,500

Working Mother Child Relief (WMCR)

1st child
2nd child
3rd child and subsequent child

15% of Mothers Earned Income

20% of Mothers Earned Income
25% of Mothers Earned Income

Maximum child relief (QCR / HCR plus WMCR)

$50,000 each child

Maximum total WMCR is capped at 100% of

mothers earned income

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Page 3

Parenthood Tax Rebate

1st child

$5,000

2nd child

$10,000

3rd child and subsequent child

$20,000 per child

The child must be Singapore citizen babies born or legally adopted on or after 1 January
2008.
Singapore income tax corporate tax rates
Year of Assessment 2014

Tax rate 17%

Partial tax exemption

First $10,000 of chargeable income
Next $290,000 of chargeable income

75% exemption
50% exemption

Tax exemption for new start-up companies

First $100,000 of chargeable income
Next $200,000 of chargeable income

100% exemption
50% exemption

Tax rebate for companies for Years of Assessment 2013 to 2015

Companies will be granted a 30% Corporate Income Tax (CIT) rebate capped at $30,000 for
each YA
Productivity and Innovation Credit (PIC) Year of Assessment 2013 to 2015
- Training (enhanced deduction)
- Prescribed automation equipment (enhanced capital allowance)
An enhanced deduction/allowance can be claimed at 300% on up to $400,000 of qualifying
expenditure, in addition to the usual deduction/allowance.
The annual expenditure cap of $400,000 can be pooled to give a combined cap $1,200,000
for the years of assessment 2013 to 2015

Goods and services tax

Standard rate
Registration threshold

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7%
$1 million

Page 4

TAX RATES

Personal income tax rates for resident individuals for the YA 2014

Tax
rate

Tax
payable

S$

On the first
On the next

20,000
10,000

0
2

Nil
200

On the first
On the next

30,000
10,000

3.5

200
350

On the first
On the next

40,000
40,000

550
2,800

On the first
On the next

80,000
40,000

11.5

3,350
4,600

On the first
On the next

120,000
40,000

15

7,950
6,000

On the first
On the next

160,000
40,000

17

13,950
6,800

On the first
On the next

200,000
120,000

18

20,750
21,600

On the first

320,000

Above

320,000

Chargeable
Income

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42,350
20

Page 5

Section A (20 marks)

All TEN questions are compulsory and MUST be attempted.
1.

By which date should Form B for the Year of Assessment (YA) 2014 be submitted to
the Comptroller of Income Tax (CIT) if the taxpayer filed the Form B electronically?
A.
B.

2.

18 April 2014
15 April 2014

1 mark

Peter Chin received the following bonus in the year 2014:

-

Non- contractual bonus declared by his employer on 1 January 2014 and paid to him
on 15 February 2014 - $30,000

Contractual bonus paid to him on 15 January 2014 in relation to his employment

service rendered in the year 2013 - $10,000
What is the amount of bonus assessable to tax in YA 2014?
A.
B.
C.
D.

3.

$0
$30,000
$10,000
$40,000

2 marks

Amelia is a widow and has two children (twin) both are 12 years old, schooling and
Singapore citizen. Her income during the year 2013 is as follows:
Salary and bonus
Free lance consultancy fee
Rental income

- $190,000
- $100,000
- $20,000

Compute the total child relief available to Amelia for the YA 2014.
A.
B.
C.
D.

$109,500
$97,500
$108,500
$116,500

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3 marks

Page 6

4.

Sophia is the sole proprietor of a beauty salon. Her assessable income derived from
the sole proprietorship business during the year 2013 was $60,000. She made
voluntary CPF contribution of $26,000 and compulsory medisave contribution of
$4,000 during the year 2013.
What is the amount of CPF relief claimable by Sophia for YA 2014?
A.
B.
C.
D.

5.

3 marks

Jonathan is an Australian and will be terminating his employment with Cambell Pte
Ltd, a Singapore company, on 31 December 2014. He will be leaving Singapore on
15 January 2015 back to Australia. His annual employment income for the year 2014
will be $150,000. By which date must Cambell Pte Ltd notify the CIT of the
cessation of employment of Jonathan?
A.
B.
C.
D.

6.

$30,000
$21,600
$30,600
$4,000

15 December 2014
31 January 2015
30 November 2014
15 January 2015

1 mark

Marbella Pte Ltd incurred the following renovation cost in the financial year ended 31
December 2013. Compute the amount of tax deductible expenses, including any
special deduction, claimable in YA 2014.
-

Replacement of doors and windows

Repair of air-conditioners
Installation of new lighting
Installation of new carpet
Replacement of floor tiles (with improvement)
Structural changes approved by Commissioner of Building Control

- $2,000
- $1,000
- $3,000
- $6,000
- $9,000
- $18,000

A.
B.
C.
D.

$33,000
$15,000
$9,000
$7,000

3 marks

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Page 7

7.

Compact Pte Ltd has unabsorbed capital allowances brought forward from financial
year ended 31 March 2012 (YA 2013) to be utilised against its adjusted profit in YA
2014.
State the relevant comparison dates for purposes of applying the shareholder test in
determining whether the company could utilise the brought forward capital
allowances.
A.
B.
C.
D.

8.

31 March 2012 and 1 January 2013

31 March 2012 and 1 January 2014
31 December 2013 and 1 January 2014
31 December 2012 and 1 January 2014

3 marks

Pan Asia Pte Ltd is a GST registered company. For the GST quarter ended 31
December 2013, the company has a net output GST payable to the Comptroller of
GST. By which date should the net output GST be paid to the Comptroller of GST?
A. 31 January 2014
B. 15 January 2014

9.

1 mark

Island Pte Ltds financial year end is 31 March. State the deadline for the submission
of estimated chargeable income for the YA 2014.
A. 30 June 2014
B. 30 June 2013

10.

1 mark

State the time of supply for GST purpose in respect of the following transactions:
Customer placed order
Goods delivered to customer
Tax invoice issued to customer
Payment received from customer
A.
B.
C.
D.

30 June 2013
3 July 2013
10 July 2013
28 July 2013

-30 June 2013

- 3 July 2013
-10 July 2013
-28 July 2013

2 marks
(Total 20 marks)

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Page 8

Section B (80 Marks)

All NINE questions are compulsory and must be attempted.
1. Jeremy Smith is a 33 years old American. He commenced his employment in
Singapore on 1 May 2013 under a two year employment contract.
He arrived in Singapore with his wife, Janet, a home-maker and his two children age
3 and 7 years old, who are attending school in Singapore. Janet did not derive any
income in the year 2013.
Jeremy derived the following income/benefit in Singapore for the period from 1 May
2013 to 31 December 2013:
Salary and bonus

$
84,000

Entertainment allowance

8,000

Children school fee reimbursed by the employer

16,350

Reimbursement of car expenses by employer (70%

of the expenses were incurred for business travelling)

5,000

Overseas pension fund contribution by employer

10,000

Airfare borne by employer to bring Jeremy and

family into Singapore

20,000

Airfare borne by employer to return to USA with his

family for Christmas

25,000

Jeremy derived interest income of $100 from a fixed deposit placed with an approved
bank in Singapore. He also derived one-tier dividend of $200 in 2013.
Jeremy made a cash donation of $200 to Red Cross Society which is an approved
institution of public character in the year 2013.
Required:
Compute the minimum tax liability for Jeremy for the Year of Assessment (YA)
2014. (15 Marks)

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Page 9

2. Toyago Pte Ltd, a manufacturer of plastic molds was incorporated in Singapore in

December 2005. It makes up its accounts to 30 September annually. Results for the
financial year ended 30 September 2013 are as follows :
Revenue
Cost of goods sold
Gross profit
Interest income (received on 30.7.13 on a 6
month fixed deposit)
Less :
Administrative expenses
Distribution expenses
Other expenses
Profit before tax
Notes:
1. Administrative expenses include:
Depreciation
Entrance fee to a golf club
Realised exchange loss on loan
Loan to ex-staff written off
Interest expense on loan to fund working
capital
2. Distribution expenses include:
Upkeep of van and lorry
Reimbursement of motor car expenses to staff
for business travelling
3. Other expenses include:
Legal fee for renewal of tenancy agreement
Cash donation to National Kidney Foundation
(an approved institution of public character)
Training expenses
Installation of blinds
Installation of new floor tiles

Note

S$
4,200,000
(2,80,000)
1,400,000
5,000
1,405,000

1
2
3

(300,000)
(150,000)
(70,000)
885,000
=========
$100,000
20,000
3,000
14,000
8,000

9,000
7,000

3,000
1,000
6,000
9,000
12,000

Required:
Compute the chargeable income and minimum tax liability of Toyago Pte Ltd for
the Year of Assessment 2014.
Note: You should start your computation with net profit before tax, and also list
all the items referred to in Note 1 to 3, indicating with a 0 for those items which
no adjustment is necessary.
(15 marks)

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Page 10

3. Childplay Pte Ltd is in the business of manufacturing of educational toys.

The company incurred the following capital expenditure in the financial year ended 31
March 2013:
Motor vehicle
SDF 2022G
Van

$
130,000
120,000

Furniture and Equipment

Carpet
Office furniture :
-less than $5,000 each
-more than $5,000 each
Fixed partition

12,000
2,000
24,000
10,000

During the year, the company disposed of some old equipment purchased
in the financial year 2011, details of which are as follows:
Cost
Written down value brought forward at 1 April 2012
Sale proceed
$

$9,000
$3,000
$1,000

The written down values of the companys assets as at 31 March 2012

(excluding the assets disposed of) as agreed with the Comptroller of
Income Tax were as follow. Capital allowance under S.19A has been
claimed previously.
Remaining years
2 years
1 year

TWDV
$8,000
$3,000

Required:
Calculate the maximum capital allowances for Year of Assessment 2014 and indicate
the items of expenditure which do not qualify for capital allowance.
(10 marks)

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Page 11

4 (a) Tanny Pte Ltd is a goods and services tax (GST) registered trader. The following
information relates to the companys transactions for the quarter ended 31 December
2013. The amounts are exclusive of GST:
Sales to local customers
Sales to overseas customers
Purchase of stocks*
Purchase of office equipment*
Purchase of office supplies
(purchased from non-GST registered suppliers)
Motor car expenses for sales manager*

$300,000
100,000
200,000
9,000
1,000
500

*Purchased from GST registered suppliers.

Required:
Calculate the net amount of GST payable or receivable by the company for the
quarter ended 31 December 2013. (3 marks)
4(b) The following is an extract of the GST return (F5) for Tanny Pte Ltd for the quarter
ended 31 December 2013.
Name
Tax Reference No.
GST Registration No.
Due Date
Period covered by this return
Supplies
Total value of standard-rated supplies
Total value of zero-rated supplies
Total value of exempt supplies
Total value of supplies
Purchases
Total value of taxable purchases
Taxes
Output tax due
Less: Input tax and refunds claimed
Equals:
Net GST to be paid to IRAS
Revenue
Revenue for the accounting period

Tanny Pte Ltd

2008 07777A
2008 07777A
31/1/2014
i
S$
ii
iii

iv
v
vi
vii
viii

Required: In your answer booklet, state the entries that should be entered in
boxes (i) to (viii). (4 marks)
4(c)

State the conditions to be satisfied for input GST claim. (3 marks)

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(10marks)
Page 12

April Pte Ltd incurred the following in the Year of Assessment (YA) 2014:
- Trade loss
- $300,000
- Capital allowance
- $10,000
- Approved donation (cash amount)
- $2,000
It derived the following assessable income in the YA 2012 and 2013:
Assessable income for YA 2012 - $70,000
Assessable income for YA 2013 - $150,000
The company would like to elect for carry back relief to carry back the qualifying
deduction incurred in YA 2014. Assume that the conditions for carry back relief are
satisfied.
Required:
Compute the companys assessable income in all the relevant year of assessment
indicating any amount available for carry forward. State clearly the order of setoff.
(6 marks)

Meiji Pte Ltd is a Singapore incorporated company. It incurred the following

expenditure for the financial year ended 30 June 2013.
Automated equipment
Fee for external trainer
Rental of external training premises
Refreshment for training
Training material
Transport for staff to attend training

$1,300,000
10,000
3,000
1,000
500
300

Required:
Compute the total capital allowance and tax deduction, including amount of
enhance allowance and enhanced deduction claimable by the company under the
Productivity and Innovation Credit (PIC) scheme for the Year of Assessment
2014.
(6 marks)
7 Mr Chan received a Notice of Assessment for Year of Assessment 2013 from the
Comptroller of Income Tax (CIT). The notice was issued on 15 January 2014
indicating tax payable of $5,000. He is not agreeable to the assessment.
Required:
Advise Mr Chan on the course of action which he should take and the
consequence if the appropriate action is not taken on a timely basis.
(6 marks)

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Page 13

8 State whether or not the following business expenses are deductible for tax
purposes:
a)
b)
c)
d)
e)
f)

Interest expense to fund the purchase of a non-income producing investment

Salary paid by a sole proprietor to himself
Legal and professional fee incurred in the setting up of an overseas subsidiary
Keyman insurance premium
Professional fee paid to tax consultant for tax appeal
Income tax of employee borne by the employer
Note: You are not required to give a reason for your decision.
(6 marks)

9 State whether the following statements are true or false:

a) Any receipt received by an employee which is not taxable will not be tax
deductible in the hands of the employer.
b) A GST-registered trader will not need to file any GST return if the traders annual
turnover of taxable supply is below the $1millon threshold in a particular GST
quarter.
c) Foreign sourced income derived by individuals (except through a partnership in
Singapore) in the YA 2014 will be tax exempt only if the individuals are tax
resident of Singapore in the year 2013.
d) A taxpayer can appeal to the Comptroller of Income (CIT) to amend his
assessment if he made a mistake/error in his tax returns. The application to the
CIT must be made within 4 years after the end of the year of assessment (YA) in
which the assessment was made in respect of assessment made from YA 2008
onwards.
e) Industrial building allowance (IBA) has been phased out with effect from 22
February 2010. Hence a taxpayer which acquired an industrial building on or
before 22 February 2010 will no longer be entitled to claim IBA on the qualifying
cost incurred of such industrial building in YA 2014 notwithstanding the building
is still being used for qualifying activities in the financial year ended 31 December
2013.
f) Janet is a Singaporean. She was seconded to work for her employers subsidiary
company in Shanghai from January to August 2013. Janet is considered to be a
non-resident in the YA 2014 since she was away from Singapore for more than
183 days in the year 2013.
Note: You are not required to give a reason for your decision.
(6 marks)

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