Mohamed Akhtaruzzaman (Akhtar) aged 37 and Kathryn Aybar-Chiew (Kat) aged 34 are the directors of a logistics company in Singapore. The name of the company is AK Transport Pte Ltd (AKT). The shareholders are the company are private companies owned by Akhtar and Kat. Akhtar's private company owns 65% of the shares and Kat's private company owns 35%

The company has 35 staff and is located in an industrial estate near Changi Airport. The company has been in existence for 5 years.

The company as well as the director ands their immediate family are all clients of the firm.

The income sources for the company are from sales received from local customers as well as international customers. Two of their major customers from overseas are Amazon and a new company called Temu.

The company offers a transport solution and a storage facility for clients.

Being a logistics company it needs to maintain relationships with many overseas countries and staff are sometimes required to travel overseas to maintain contacts with existing customers and also find new customers.

Given the uncertainty in the global economy and the threat of global recession the company had had to had to undertake various steps to increase revenue as well as reduce costs.

Akhtar and Kat have requested a meeting with Jonathan to discuss various tax and accounting, corporate law issues.

Jonathan is away in Western Sumatra on business for another client of KT and cannot attend the meeting. He will not be back until Monday 14 March 2024. Therefore, he has requested the senior manager (Sunil) to organise the meeting with the clients. He has asked you:

2. to sit in on the meeting and
4. take notes on the issues raised

You will be expected to take notes of the meeting and then prepare a draft statement of advice for Sunil and Jonathan to review. You are to use the attached template form to prepare your draft statement of advice. Once Sunil is happy with the report, he will send to Jonathan for review.

During the year the company had to spend money on the following items:

It was aware that all businesses need to expand their activities to counter changes in the economy. During the basis period 31 December 2023, the company spent the following:

2. Review of potential to deliver goods using drones. The cost was $18,600
4. Management review carried out by Boston Consulting into the restructure of the back office functions of the company. The cost was $7,890
6. Payment of overseas travel cost for Kat to attend a logistics conference in Doha. The conference was 5 days. After the conference she spent 4 days visiting the Saudi Arabian investment company and 3 days on annual leave. The cost of the airfare was $15,780 and the hotel cost was $3,000.
8. The company also sponsored the local football team and paid the football club $5,000 to buy equipment and to put their company logo on the football ground.
10. The company needed two new 5 tonne trucks and a delivery van. The trucks cost $85,000 each and the delivery van cost $28,000.
12. The old delivery van was traded in for $5,000 on the purchase of the new van. The WDV at the date of the trade in was $3,800.
14. A new computer system was introduced and the cost of the new computers as

a result of the upgrade was $35,000.

Issues they seek advice on:

2. Advise the company if the above expenses are deductible or not under the Income Tax Act.
4. Where appropriate calculate the amount of the allowable deduction.

Answer rating: 100% (QA)

To provide advice on whether the mentioned expenses are deductible under the Income Tax Act for AK Transport Pte Ltd we need to analyze each expense a... View the full answer