Full Tax Co. is incorporated and tax resident in Barbados.

The audited financial statements for Full Tax Co. for year-end December 31, 2022, show an accounting profit after tax of $5,500,000 after charging the following:

Depreciation $1,500,000

Tax for the year $500,000

Property Tax $1,000,000

Interest expense $15,000

Preference dividends of $40,000

Legal fees $1,110,000

Insurance of $750,000

Bad debts $40,000

Foreign Travel $20,000

Repairs and Maintenance $1,500,000

General expenses $600,000

Other Information

1. Property Tax of $600,000 was paid for the property on which the companys factory is located; $300,000 for the office premises and $100,000 for the directors home.

2. The insurance was paid for the factory and office premises.

3. The bad debt expense includes a general provision of $10,000 and a specific provision of $30,000.

4. The company paid interim ordinarily dividends totaling $100,000.

5. Repairs and Maintenance include for $500,000 removing the office ceramic floor titles and replacing it with wooden flooring.

6. Included in the companys total assessable income is exempt income of $50,000. $16,500 relates to expenses incurred in earning this exempt income.

7. Legal fees include:

- $40,0000 in respect of recovery of commercial debts for Full Tax Co.

- $10,000 in respect of recovery of commercial debts for Half Tax Co.

The company was reimbursed this amount.

- $15,000 in respect of recovery of commercial debts for One-Third Tax Co. The company was not reimbursed this amount.

- $50,000 relating to the purchase of new subsidiary

- $400,000 to increase the share capital of the company

8. General expenses include $72,000 for the school fees of the directors son.

9. The capital allowances have been calculated at $130,550. Based on the items included in the fixed asset schedule.

10. There was an increase in wages of $1,000,000 which qualifies for Employment Tax Credit (all other conditions to qualify for this credit was met).

11. The tax rates for general Barbados is as follows:

Income Tax Bracket

Taxable Income up to 1 million - 5.5

Taxable Income exceeding BBD 1 million and 20 million - 3.0

Taxable Income Exceeding BBD 20 million but not exceeding BBD 30 million - 2.5

Taxable Income Exceeding BBD 30 million - 1.0

12. Assume capital allowance rate of 5 % p. A for building/ leasehold improvements.

13. All amounts are in Barbadian currency.

14. As at the 31 December 2020, the company has prior years tax losses as follows:

2013 - $300,000

2015 - $5,000,000

2020 - $4,000,000

Tax losses can be carried forward for a maximum of 7 years and is restricted to 50% of the tax income in the current year.

Required

Calculate the Corporation Tax Payable for Full Tax Co. for Y/A: 2022. Using the Barbados Income Tax Act or any other relevant document explain the treatment of the items included or omitted from the income tax computation.

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