ACC307
Taxation of Companies and Partnerships
Tutor-Marked Assignment
January 2023 Presentation
ACC307
Tutor-Marked Assignment
TUTOR-MARKED ASSIGNMENT (TMA)
This assignment is worth 14% of the final mark for ACC307 Taxation of Companies and
Partnerships.
The cut-off date for this assignment is 5 February 2023, 2355 hrs.
Note to Students:
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.
SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS)
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ACC307
Tutor-Marked Assignment
Question 1
Glory Foods Pte Ltd, a Singapore incorporated company, is in the food catering business in
addition to running a canteen at one of the autonomous universities in Singapore. It was
incorporated on 15 October 2019 and its first set of accounts was for
PCthe period ended 31 July
2023-01-31
00:35:41
2020. Its shares were held equally by cousins, Glory and Joy who are
also the
directors of the
-------------------------------------------company until 28 February 2021. From 1 March 2021 onwards, Glory and Joy sold some of
A/C period end
their shareholdings to Food Haven Pte Ltd (“FHPL”), a company incorporated and tax resident
in Singapore. Glory and Joy transferred 20% of their shareholdings to FHPL. The directors
hold their directors’ meetings in Singapore.
For the financial year ended 31 July 2021, the company made a net profit before tax of
$620,000 on turnover of $5,000,000. The profit was arrived at after taking into account the
following income and expenses:
$
Income:
Rental income from renting out excess office space at $3,000 per month for 10
months from October 2020. The space was left idle previously.
Interest accrued on a 6-month fixed deposit maturing on 30 August 2021. The
fixed deposit was placed with OCBC Bank, an approved bank in Singapore.
Dividend income from shares held in Big Onion Catering Limited, a company
tax resident in Country X which has a headline tax rate of 10%. Country X
does not impose dividend withholding tax. The proceeds from the dividend,
paid out of after-tax profits in Country X, were used to settle the first
instalment payment on 15 July 2021 for a catering equipment purchased from
Country X. The equipment arrived in Singapore on 3 August 2021.
Glory Foods is not entitled to relief for any foreign tax suffered on the
dividend.
Payout under Wage Credit Scheme
Expenses:
Annual direct expenses related to excess office space rented out.
Depreciation
Legal fees for:
 Vetting tenancy agreement for additional kitchen space
 Debt recovery from customers
Accountancy fees for preparation of tax return for expatriate general manager.
Income tax borne on behalf of the company’s expatriate general manager per
the terms of the employment contract.
Staff salaries, bonus and CPF.
Medical insurance premium; the company has not implemented the Portable
Medical Benefits Scheme (PMBS).
Cash allowance for staff medical consultation
Hire purchase interest on new company van.
Reimbursement to employees for use of their personal cars for business
purposes.
Reimbursement of staff transport claims due to overtime work as follows:
 Taxi fares: $1,800
 Grab cars (including driver): $1,300
SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS)
30,000
50,000
15,000
7,800
24,000
170,000
5,000
3,000
3,000
13,000
1,300,000
10,000
5,000
15,000
7,000
4,000
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ACC307
Tutor-Marked Assignment
 Car hire on carsharing apps like GetGo: $900
Donation made to Tan Ah Moi Home for the Aged, an Institution of Public
Character on 15 January 2021 as follows:
 Cash donation of $10,000
 Food supplies costing $4,000
14,000
Notes:
(1)
The company incurred non-structural renovation expenses of $185,000 during
the year and which were capitalized to the Balance Sheet. The costs incurred
was for flooring, tiling works, fixed partition and plumbing works. The
company will be electing to claim maximum deduction, where applicable.
(2)
The company is entitled to capital allowances claim of $205,000 for Year of
Assessment 2022.
(3)
The company made its first sale in financial year ended 31 July 2021. In its first
financial year ended 31 July 2020, it incurred the following set-up expenses:

Incorporation expenses: $20,000

Professional fees in respect of applying for food catering licence: $4,000

Salaries and statutory CPF contributions of cooks, kitchen helpers and
accounts personnel: $90,000

Food supplies for menu tasting: $55,000

Demolition and hacking works in respect of renovation to kitchen and
office premises (non-structural in nature): $10,000

Flooring and tiling works: $60,000

Interior designer fees: $15,000
Mr Christopher Toh, the accountant, has prepared the following tax computation for your
review. He has included a brief explanation of each receipt and expense line item given above
where adjustments or none were made.
Glory Foods Pte Ltd
Income Tax computation for Year of Assessment 2022
Basis period: 1/8/2020 to 31/7/2021
Net profit before tax
Less:
Rental income (non-trade)
Interest accrued (non-trade)
Dividend income (non-trade)
Wage credit payout (trade)
620,000
(30,000)
(50,000)
(15,000)
0
(95,000)
525,000
SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS)
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ACC307
Tutor-Marked Assignment
Add/(Less):
Annual property tax and maintenance charges (income producing)
Depreciation (capital)
Legal fees (all trade in nature)
Income tax borne on behalf of employee (S15)
Staff salaries, bonus and CPF
Medical expense restriction ($10,000 – [1%*$1,300,000+$5,000])
Cash allowance (staff remuneration)
Hire purchase interest (capital)
Reimbursement of employees’ car expenses
Reimbursement of staff transport claims (private car expenses)
Donation
Section 14N deduction
0
170,000
0
13,000
0
0
0
15,000
7,000
2,200
14,000
(185,000)
36,200
561,200
(205,000)
356,200
Adjusted profit
Less: Capital allowances
Add: Non-trade income taxable in YA 2022
Rental income
Interest on fixed deposit
Dividend income (not remitted as equipment arrived after year
end)
Statutory income
Less: Unabsorbed loss brought forward (Section 14R)
 Incorporation expense (capital)
 Application of food catering licence (statutory compliance
costs)
 Salaries, etc.
 Supplies for menu tasting
 Section 14N ($10,000+$60,000)
Less: Approved donations ($14,000 x 2.5)
Assessable/Chargeable income
Less: Start-up tax exemption
75% of 1st $100,000
50% of balance $82,200
Chargeable income (CI)
Tax @ 17%
30,000
50,000
0
80,000
436,200
0
(4,000)
(90,000)
(55,000)
(70,000)
(219,000)
(35,000)
182,200
(75,000)
(41,100)
(116,100)
66,100
11,237.00
Required:
(a)
Examine and analyse the tax computation prepared by Christopher and prepare a report
(include proper salutation, opening and closing address) to explain where his errors
are. In your report, you should:
SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS)
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ACC307
Tutor-Marked Assignment

Explain why the adjustment was incorrect; and

Explain clearly the correct basis of taxation or claim for deduction.
You may wish to highlight the errors in the following format:
Description of item in tax computation
where error adjustment made
Explanation
(60 marks)
(b)
Apply the relevant exemptions and deduction rules and construct the correct tax
computation for the Year of Assessment 2022. Every line item of income and expense
given must be accounted for in the tax computation. Where no adjustment is required,
please insert “0”. In arriving at statutory income, all items of income from the non-trade
source must be accounted for. All related expenses should also be accounted for. If the
expense is not deductible, please insert “0”.
Show all workings clearly as application marks will be awarded even if the answer is
incorrect.
(30 marks)
(c)
On 1 March 2022, Food Haven Pte Ltd approached Joy and Glory about buying over
their shareholdings. Glory Foods Pte Ltd is forecasted to be highly profitable in the
financial year ended 31 July 2022 and thereafter after winning various catering
contracts. Please advise when the share transfer should take place, stating clearly the
reasons for your recommendation.
(10 marks)
---- END OF ASSIGNMENT ----
SINGAPORE UNIVERSITY OF SOCIAL SCIENCES (SUSS)
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