Singapore Tax Question

Goreach Pte Ltd (GPL) was incorporated since 2012. The net profit before tax of GPL for its year ended 31 December 2021 is $980,000 after accounting for the following:

Income:

Recovery of a non-trade debt previously written off- 5,000

Rental income of a property located in Singapore- 8,000

Gain on disposal of all the ordinary shares in its subsidiary, Fareach Pte Ltd- 150,000

Expenses:

Depreciation- 25,000

Directors fee- 10,000

Unrealised exchange loss on an approved designated trade bank account- 1,000

Interest on loan obtained to purchase office premises- 100,000

Legal fee on the sales of Fareach Pte Ltd shares- 2,000

Tax preparation fee- 1,000

Staff remuneration and CPF- 500,000

Staff medical expenses (GPL has implemented a portable medical benefits scheme for its staff)- 15,000

Write off obsolete stock- 25,000

Donation to an approved institution of a public character (IPC) of 5,000 shares of DDL Limited, a company listed on the Singapore Exchange. The book value of the shares at the date of donation was $5,000 and the open market value $7,000- 5,000

Penalty for late payment of CPF contributions for June 2021- 500

Non-current asset additions in the year:

New computer systems- 8,000

Renewal of certificate of entitlement (COE) of a commercial van- 90,000

New carpets for GPLs offices- 5,000

(a) State the conditions which must be met by a company for the gains on the disposal of ordinary shares to be automatically exempted from Singapore tax.

(b) Compute the tax liability of Goreach Pte Ltd for the year of assessment 2022, claiming the maximum capital allowance. Note: You should start your computation with net accounting profit before tax of $980,000 and indicate by the use of zero (0) any items which do not require adjustment.