Ms Amanda Lim, aged 45, is a Singaporean married with 2 children, aged 10 and 8 years old as of 31 December 2020. The children are looked after by a foreign maid with a monthly salary and levy of $850 and $60 respectively. Ms Lims mother, a 65-year-old physically handicapped homemaker with no income of her own, lives with Ms Lim and helps to look after her children. Ms Lim made a cash donation of $1,000 to the Singapore Cancer Society, an approved institution of public character as well as donation of toys and clothes worth $2,000 to the Singapore Childrens Society, also an approved institution of public character in 2020. Both her children and mother are Singaporeans. Ms Lims husband is an Australian and he had a total employment income of $200,000 for the year 2020.

Ms Lim received the following employment income and benefits in 2020:

(i) Monthly salary of $12,000 and contractual bonus of $50,000.

(ii) Company share option on 20 May 2020 to acquire 3000 shares with an exercise price of $15 per share. Ms Lim exercised the option on 10 June 2020 and acquired 2000 shares when the share price was $18 per share. She sold 500 shares at $19.50 per share on 17 August 2020 and 1500 shares at $20.50 per share on 30 October 2020.

(iii) Entertainment allowance of $1,000 per month, of which 65% is for business purposes.

(iv) Cash of $2,000 for long service award in recognition of her 20 years of service with the company.

(v) Car with a cost of $150,000 and a PARF value of $35,000. The running expenses of $20,000 are paid by the company.

(vi) Fully furnished accommodation with monthly rent of $6,000. Ms Lim contributed a total rent of $12,000 in the year 2020, with the rest paid for by the company.

Ms Lim also has the following income for year 2020:

• Singapore one-tier dividend of $5,500.
• Interest income from OCBC Singapore, an approved bank of $1,000
• Interest income of $500 from a loan to a private company, held by her relative.
• Rental income from two properties in Singapore wholly owned by Ms Lim. The properties have been rented out since 2016. During the year ended 31/12/2020, the income and expenses from the apartment are as follows:

	Property 1	Property 2
Gross monthly rental	$5,000	$2,000
Annual fire insurance and property tax	$5,500	$3,500
Monthly maintenance fee	$600	$280
Replacement of refrigerator	$1,500	Nil
Minor repairs for the year	$500	-
Monthly mortgage repayment	Capital repayment - $5,500 Interest repayment - $1,200	Capital repayment - $3,500 Interest repayment - $1,600

In addition, Ms Lim remitted interest income of $5,000 from her savings accounts in Australia to Singapore on 30 November 2020.

During one of her overseas trips in 2020, Ms Lim bought 500 pieces of pearl necklaces and brought them back to Singapore. She actively sought for potential buyers through social media and sold 400 pieces to buyers both in Singapore and overseas. She made a profit of $10,000. However, due to the economic downturn, she had difficulties selling the remaining 100 pieces. She decided to sell them below cost and incurred a loss of $1,000. All the sales were made within three months from her purchase.

Question 1 (24 marks)

Using the badges of trade, advise Ms Lim on the taxability and amount of profit (if applicable) made from the sale of the necklaces. In your answer, please explain the applicability of each badge of trade to Ms Lim.