Congratulations on your appointment as a Tax Trainee at a recognized audit firm in Jamaica. On your first assignment your supervisor asked you to assist him with the income tax computation of a small business in the tourism sector. You have been provided with the following: Introduction to the company Allens Rest Well Resort is a resort cottage located in Portland, Jamaica. The company is registered with the Companies Office of Jamaica. The company is a registered tourism operator under the Tourist Board Act . The hotel commenced operations on the 1 January 2019.

Financial Information

Your review of the companys balance sheet indicates the following:

2019 ($) 2020 ($)

Building (hotel). 100,000,000 112,000,000

Furnitures 8,000,000 11,000,000

Computers (laptops & CPUs) 1,000,000 950,000 Computers (printers & monitors) 200,000 250,000 Stoves &Kitchen equipment 550,000 800,000 Motor Cars 5,000,000 14,000,000

Bus and Vans 8,00,0000. 17,000,000

Software 11,000,000 20,000,000

Notes:

Related to the company:

1. Motor car purchased were Honda Accord for $3,000,000 and a BMW for $6,000,000.

2. During your review of the Repair & Maintenance account the following expenditure were noted: - An air-conditioner was purchased and installed in 2020 total cost inclusive of installation was $170,000. - In 2020, a new metal gate was built for the pedestrian entrance costing $300,000. - Purchase of a new telephone for $95,000.

3. During your review of the professional fees account for 2019 the following expenditures were noted: - Lawyers fee for registering a trademark was $15,000. Designing the trademark and cost of registering the trademark was $45,000.

4. Computer costing $50,000 was deemed defective and sold to a third party for $40,000.

Information relating to the Director:

1. Mr. Richard Allen, the director of the hotel, has also requested that your firm assist with the preparation of his 2020 income tax computation. He provided you with the following information:

a) Gross salary $7,000,000 per year.

b) He was provided with a company car on 1 January 2019. Cost $3,000,000.

c) As part of his compensation, he receives a meal allowance of $5,000 per week.

d) The company also pays his son school fees for $80,000 per term. (assume 3 terms)

e) Rest Well did not deduct any NIS, NHT, Education Tax or PAYE at source.

f) Income from the rental of his personal investment property was $500,000. Expenses was $450,000. Capital allowance for this property was $80,000.

Required

i. Prepare the capital allowance computation for Allens Rest Well Resort. {8 marks}

ii. Prepare the income tax computation for Richard Allen. Advise him of his statutory obligations (NIS, NHT, Education Tax & PAYE). {5 marks}

iii. Explain to Mr. Allen what the term emoluments means. {2 marks}