Question
Jamaican Taxation Deir Ltd , an unregulated company has the following profit and loss account. For year-end 31 December 2020, Deir Ltd made a profit
Jamaican Taxation
Deir Ltd , an unregulated company has the following profit and loss account. For year-end 31 December 2020, Deir Ltd made a profit before tax of $8.5 million after charging/(crediting) the following: $ Depreciation 240,000.00 Interest expense 1,200,000.00 Legal fees 900,000.00 Audit fees 600,000.00 Interest income 150,000.00 Foreign Travel 350,000.00 Bad debts 630,000.00 Donations 200,000.00
Additional information: i. Legal fees are as follows: Expenses related to the cost of acquiring fixed assets - $400,000 Expenses in respect of the recovery of debts - $500,000 ii. Bad debts are advances totalling $150,000 to a salesman who had left Deir Ltd.; Marjory’s Enterprise, a debtor $85,000 and $395,000 being a percentage of sales deemed to be bad. iii. Included in revenue is franked income (net) of $5,000. iv. Interest payable at 31 December 2020 was $350,000 and at the end of the current year $280,000. v. Gross interest of $400,000 receivable at 31 December 2019 was received in 2020 and at the end of the current year interest receivable is $850,000. vi. Profit on the disposal of fixed assets during the year was $75,000 and included in income. vii. Capital allowances are as follows: Initial Allowance $ 90,000 Annual Allowance 470,000 Balancing charge 60,000 viii. Zore Ltd paid estimated tax of $900,000 for the year 2020. ix. Tax deducted at source from interest income during the year was $280,000. x. Included in foreign travel is $200,000 for the managing director’s family. Required:
Compute Deir’s tax liability for year of assessment 2020 with notes where possible.
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