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.

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.

Information about Jamaica

Financial Information Your review of the company's balance sheet indicates the following: 2019 ($) 100,000,000 8,000,000 1,000,000 200,000 2020 ($) 112,000,000 11,000,000 950,000 250,000 Building (hotel) Furnitures Computers (laptops and CPUs) Computers (printers and monitors) Stoves and Kitchen equipment Motor Cars Bus and Vans Software s__ 550,000 5,000,000 8,00,0000 11,000,000 800,000 14,000,000 17,000,000 20,000,000 Buildings Initial Allowance Years Annual Allowance Rates 20% See Below 0% See Below 25 4% Industrial Buildings Non- Industrial Buildings Building & structures primarily constructed of concrete, steel, brick, stone cement or similar materials. Building & structures primarily constructed of other inorganic materials such as galvanized iron, corrugated metal or similar materials Building & structures primarily constructed of wood or other inorganic materials. 10 10 % 10 12.5% 8 years 12.5% 5 years 20% 2. PLANT & MACHINERY (a) Machinery directly used in the production of primary products 25% or in the manufacture or automated packaging of goods (6) Automatic data processing equipment, calculators, cash regis- 25% ters and other equipment falling within (Tariff Headings 84.70 and 84.71) as well as parts/accessories thereof (c) Equipment falling within Tariff Headings 84.69, 84.72 as well 0% as parts/accessories thereof. (d) Telephones and other equipment falling within Tariff Heading 85.17 as well as parts and accessories thereof (e) Other plant & machinery 0% 5 years 20% 8 years 12.5% 12.5% Motor Vehicles Private motor vehicle based 8 years on a cap of US$35,000 Trade Vehicle 5 years @0% Prior to 2014 Private motor vehicles was capped at JMD 3,200 5 years 20% Intangibles Scientific research & Development Intellectual Property Rights 20% Cost less than USD 10,000 Cost more than USD 10,000 5 years 14 years 7.14% Financial Information Your review of the company's balance sheet indicates the following: 2019 ($) 100,000,000 8,000,000 1,000,000 200,000 2020 ($) 112,000,000 11,000,000 950,000 250,000 Building (hotel) Furnitures Computers (laptops and CPUs) Computers (printers and monitors) Stoves and Kitchen equipment Motor Cars Bus and Vans Software s__ 550,000 5,000,000 8,00,0000 11,000,000 800,000 14,000,000 17,000,000 20,000,000 Buildings Initial Allowance Years Annual Allowance Rates 20% See Below 0% See Below 25 4% Industrial Buildings Non- Industrial Buildings Building & structures primarily constructed of concrete, steel, brick, stone cement or similar materials. Building & structures primarily constructed of other inorganic materials such as galvanized iron, corrugated metal or similar materials Building & structures primarily constructed of wood or other inorganic materials. 10 10 % 10 12.5% 8 years 12.5% 5 years 20% 2. PLANT & MACHINERY (a) Machinery directly used in the production of primary products 25% or in the manufacture or automated packaging of goods (6) Automatic data processing equipment, calculators, cash regis- 25% ters and other equipment falling within (Tariff Headings 84.70 and 84.71) as well as parts/accessories thereof (c) Equipment falling within Tariff Headings 84.69, 84.72 as well 0% as parts/accessories thereof. (d) Telephones and other equipment falling within Tariff Heading 85.17 as well as parts and accessories thereof (e) Other plant & machinery 0% 5 years 20% 8 years 12.5% 12.5% Motor Vehicles Private motor vehicle based 8 years on a cap of US$35,000 Trade Vehicle 5 years @0% Prior to 2014 Private motor vehicles was capped at JMD 3,200 5 years 20% Intangibles Scientific research & Development Intellectual Property Rights 20% Cost less than USD 10,000 Cost more than USD 10,000 5 years 14 years 7.14%