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SECTION B Question 3 (30 marks) Samantha Khoo, an Australian citizen who is also a Singapore permanent resident, has been the chief perfumer at Senses House Limited for the last 15 years. She is 45 years old and is married to Khoo En Lai, a freelance financial consultant. The couple have three children, 18-year old twins Sara and Rebecca and a 20-year old son, David. The twins are studying at University of New South Wales. David completed his National Service duties in June 2019 and took on ad hoc temporary work for the rest of the year while waiting to enter the National University of Singapore. David's income for the year was $5,500. For the year ended 31 December 2019, she derived the following benefits from her employer: 1. Monthly salary of $15,000 (see Note 3 below as well). 2. A two-months contractual bonus relating to employment year 2018, which was paid on 15 January 2019. 3. Samantha tendered her resignation on 1 September 2019 and her last day of work was 31 October 2019. In view of her intimate knowledge of the company's fragrance recipes and customer relationships, the company paid Samantha a lump sum of $400,000 and, in return, she agreed not to join any competitor nor take on any position in the fragrance industry for the next 18 months. 4. Samantha was awarded 10,000 stock options priced at $4.00 per share on 15 January 2019; the market price was $6.00 per share on the day of the award. She exercised the options on 30 April 2019 and bought 8,000 shares on 30 April 2019 when the market price of the shares was $8.00 each. 5. For her many years of service with the company and good performance, Samantha received a gratuity payment equivalent to 3-months' salary. 6. Reimbursement of business entertainment expenses of $5,400. 7. Reimbursement of family medical expenses of $8,400 under a company medical scheme. 8. Samantha and the company made contributions to the Central Provident Fund scheme within the statutory limits. Samantha has a share in Bakers' Inc, a limited liability partnership (LLP) business that supplies cakes and other baked goods to restaurants, cafes, private functions and walk-in customers. Her initial capital contribution to the LLP was $50,000 and on 1 March 2019, she put in additional capital of $50,000 as Baker's Inc needed fresh capital injection from its partners to embark on business expansion. The LLP has been profitable until financial year ended 30 September 2019. Samantha's allocated capital allowances and losses for the year ended 30 September 2019 were $30,000 and $80,000 respectively. Samantha spent $8,000 in the year 2019, to obtain a diploma in baking at Artistiq as she intends to take on a more active role at Bakers' Inc. Samantha's mother is 65 years old and living in Australia. Samantha sends her $2,000 every month for her living expenses. Her mother had no income during the year apart from interest income of S$2,800. Samantha made a cash donation of $2,000 in the year 2019 to the Community Chest of Singapore, an Institution of Public Character. En Lai was perusing a doctorate programme with the Harvard University in the year 2019 and his only source of income was $3,500 profit made from the sale of shares in the Singapore Stock Exchange. He was a key appointment holder while serving his National Service duties. He did not carry out reservist training in the Year of Assessment 2020. 8. Samantha and the company made contributions to the Central Provident Fund scheme within the statutory limits. Samantha has a share in Bakers' Inc, a limited liability partnership (LLP) business that supplies cakes and other baked goods to restaurants, cafes, private functions and walk-in customers. Her initial capital contribution to the LLP was $50,000 and on 1 March 2019, she put in additional capital of $50,000 as Baker's Inc needed fresh capital injection from its partners to embark on business expansion. The LLP has been profitable until financial year ended 30 September 2019. Samantha's allocated capital allowances and losses for the year ended 30 September 2019 were $30,000 and $80,000 respectively. Samantha spent $8,000 in the year 2019, to obtain a diploma in baking at Artistiq as she intends to take on a more active role at Bakers' Inc. Samantha's mother is 65 years old and living in Australia. Samantha sends her $2,000 every month for her living expenses. Her mother had no income during the year apart from interest income of S$2,800. Samantha made a cash donation of $2,000 in the year 2019 to the Community Chest of Singapore, an Institution of Public Character. En Lai was perusing a doctorate programme with the Harvard University in the year 2019 and his only source of income was $3,500 profit made from the sale of shares in the Singapore Stock Exchange. He was a key appointment holder while serving his National Service duties. He did not carry out reservist training in the Year of Assessment 2020. Required: (a) Compute the minimum tax payable by Samantha for the Year of Assessment 2020. All items of income and expenses are to be accounted for. Where the receipt is not taxable/tax exempt or the expense is not deductible, please insert "O". All relevant reliefs for self and dependents given in the question are to be accounted for under personal reliefs and, where the relief is not available, please write 0. For the limited liability partnership income, show all workings in respect of any deemed gain/loss, if applicable, as well as show any unabsorbed trade loss or capital allowances to be carried forward. All answers up to Chargeable Income should be rounded off to the nearest dollar. The calculations to arrive at net tax payable should be rounded off to two decimal places. (25 marks) (b) Samantha's best friend, Josephine, a resident of Australia has approached her for a short-term loan of A$50,000. The loan will be made to Josephine's business in Australia and interest at 3% per annum will be charged. Explain how the interest income will be treated according to Singapore taxation. (5 marks) SECTION B Question 3 (30 marks) Samantha Khoo, an Australian citizen who is also a Singapore permanent resident, has been the chief perfumer at Senses House Limited for the last 15 years. She is 45 years old and is married to Khoo En Lai, a freelance financial consultant. The couple have three children, 18-year old twins Sara and Rebecca and a 20-year old son, David. The twins are studying at University of New South Wales. David completed his National Service duties in June 2019 and took on ad hoc temporary work for the rest of the year while waiting to enter the National University of Singapore. David's income for the year was $5,500. For the year ended 31 December 2019, she derived the following benefits from her employer: 1. Monthly salary of $15,000 (see Note 3 below as well). 2. A two-months contractual bonus relating to employment year 2018, which was paid on 15 January 2019. 3. Samantha tendered her resignation on 1 September 2019 and her last day of work was 31 October 2019. In view of her intimate knowledge of the company's fragrance recipes and customer relationships, the company paid Samantha a lump sum of $400,000 and, in return, she agreed not to join any competitor nor take on any position in the fragrance industry for the next 18 months. 4. Samantha was awarded 10,000 stock options priced at $4.00 per share on 15 January 2019; the market price was $6.00 per share on the day of the award. She exercised the options on 30 April 2019 and bought 8,000 shares on 30 April 2019 when the market price of the shares was $8.00 each. 5. For her many years of service with the company and good performance, Samantha received a gratuity payment equivalent to 3-months' salary. 6. Reimbursement of business entertainment expenses of $5,400. 7. Reimbursement of family medical expenses of $8,400 under a company medical scheme. 8. Samantha and the company made contributions to the Central Provident Fund scheme within the statutory limits. Samantha has a share in Bakers' Inc, a limited liability partnership (LLP) business that supplies cakes and other baked goods to restaurants, cafes, private functions and walk-in customers. Her initial capital contribution to the LLP was $50,000 and on 1 March 2019, she put in additional capital of $50,000 as Baker's Inc needed fresh capital injection from its partners to embark on business expansion. The LLP has been profitable until financial year ended 30 September 2019. Samantha's allocated capital allowances and losses for the year ended 30 September 2019 were $30,000 and $80,000 respectively. Samantha spent $8,000 in the year 2019, to obtain a diploma in baking at Artistiq as she intends to take on a more active role at Bakers' Inc. Samantha's mother is 65 years old and living in Australia. Samantha sends her $2,000 every month for her living expenses. Her mother had no income during the year apart from interest income of S$2,800. Samantha made a cash donation of $2,000 in the year 2019 to the Community Chest of Singapore, an Institution of Public Character. En Lai was perusing a doctorate programme with the Harvard University in the year 2019 and his only source of income was $3,500 profit made from the sale of shares in the Singapore Stock Exchange. He was a key appointment holder while serving his National Service duties. He did not carry out reservist training in the Year of Assessment 2020. 8. Samantha and the company made contributions to the Central Provident Fund scheme within the statutory limits. Samantha has a share in Bakers' Inc, a limited liability partnership (LLP) business that supplies cakes and other baked goods to restaurants, cafes, private functions and walk-in customers. Her initial capital contribution to the LLP was $50,000 and on 1 March 2019, she put in additional capital of $50,000 as Baker's Inc needed fresh capital injection from its partners to embark on business expansion. The LLP has been profitable until financial year ended 30 September 2019. Samantha's allocated capital allowances and losses for the year ended 30 September 2019 were $30,000 and $80,000 respectively. Samantha spent $8,000 in the year 2019, to obtain a diploma in baking at Artistiq as she intends to take on a more active role at Bakers' Inc. Samantha's mother is 65 years old and living in Australia. Samantha sends her $2,000 every month for her living expenses. Her mother had no income during the year apart from interest income of S$2,800. Samantha made a cash donation of $2,000 in the year 2019 to the Community Chest of Singapore, an Institution of Public Character. En Lai was perusing a doctorate programme with the Harvard University in the year 2019 and his only source of income was $3,500 profit made from the sale of shares in the Singapore Stock Exchange. He was a key appointment holder while serving his National Service duties. He did not carry out reservist training in the Year of Assessment 2020. Required: (a) Compute the minimum tax payable by Samantha for the Year of Assessment 2020. All items of income and expenses are to be accounted for. Where the receipt is not taxable/tax exempt or the expense is not deductible, please insert "O". All relevant reliefs for self and dependents given in the question are to be accounted for under personal reliefs and, where the relief is not available, please write 0. For the limited liability partnership income, show all workings in respect of any deemed gain/loss, if applicable, as well as show any unabsorbed trade loss or capital allowances to be carried forward. All answers up to Chargeable Income should be rounded off to the nearest dollar. The calculations to arrive at net tax payable should be rounded off to two decimal places. (25 marks) (b) Samantha's best friend, Josephine, a resident of Australia has approached her for a short-term loan of A$50,000. The loan will be made to Josephine's business in Australia and interest at 3% per annum will be charged. Explain how the interest income will be treated according to Singapore taxation