Mr T has been operating a small consultancy business as a sole proprietor for the past 2 years. He has been deriving profits but has not paid any tax on this income. He estimates the income tax payable for the 2 years of assessment to be $5,000 and $6,000 respectively. Mr T, a Singaporean, is employed as a finance director. He is given an annual leave passage allowance of $9,000 and his annual salary is $120,000. Mr Ts employer decided to provide Mr T with 2 return passages to UK costing $11,000 instead of annual leave passage allowance of $9,000. Mr T wrote a book for which he received a Royalty income in 2017. A breakdown of Royalty income and expenses is shown below:

Royalty Income Related Expenses Incurred S$52,520

Printing and Stationary S$15,500

Advertisement and Publicity S$8,600

Legal Fees S$2,480

Mr T has 2 other properties in his name, which have been rented out. Property 2 was vacant for 3 months. The details of the properties are as follows:

Description Property 1 Property 2

Rental Income S$4,500 per month S$3,600 per month

Property Tax S$330 per month S$280 per month

Maintenance Fees S$190 per month S$130 per month

Major Renovation Nil S$15,000

Repairs S$1,600 Nil

Wall Painting S$2,800 Nil

Mr T was given an Option to purchase 100,000 shares at S$2.30 each of his company under the Staff Share Option Scheme. He exercised the option and later sold the shares. The details of the share prices and the relevant dates are given below:

Date Description Market Price

5 October 2016 Option Exercise Price S$2.30

12 July 2017 Option Exercised S$3.50

19 August 2017 Sold the Shares S$5.00

(a) Describe to Mr T the relevant tax requirements and the possible penalties that the Comptroller of Income Tax can impose on him. Advise him whether he has any recourse. (4 marks)

(b)(i) Calculate for Mr Ts Section 10(1)(b) income based on annual leave passage of $9,000. (4 marks)

(b)(ii) Calculate Mr Ts new Section 10(1)(b) income based on 2 return passage to UK of $11,000. (6 marks)

(c)(i) Compute Mr Ts tax liabilities for the Royalty income. (6 marks)

(c)(ii) Determine Mr Ts income from the two properties for the Year of Assessment 2017. (8 marks)

(d) Calculate the amount of Share Option benefit assessable on Mr T. (6 marks)