Zeng Pte Ltd ("ZPL") carries on a mobile phone manufacturing business in Singapore. It was incorporated in Singapore on 1 October 2012 and its first set of accounts was prepared for the year ended 30 September 2013. The business was started by four university friends, Zackary, Emma, Nat and Gareth. Unfortunately, Zackary had to return to Perth on 1 September 2019 as his mother was very ill. Nevertheless, the business continued. The directors hold their directors' meetings in Singapore. ZPL's net profit before tax for the accounting year ended 30 September 2019 was $8,500,000 after taking into account the following: $ 7,500 8,000 9,000 50,000 267,000 550,000 Income: Interest income from UOB Bank, an approved financial institution in Singapore. Exchange gain on the purchase of phone microchips from India. Interest income from a company resident in Country A. The interest income, was subject to 10% withholding tax in Country A. The highest corporate tax rate in Country A is 20%. The interest was used to purchase a sculpture in Italy. The sculpture arrived in Singapore on 1 November 2019. Recovery of trade debts written off in previous year. Expenses: Rental of factory and office. Depreciation. Legal fees: - Settlement of complaints from customers for defective phones. - Income Tax appeal for Year of Assessment 2019. - Tenancy agreement for new retail space. Annual audit fees. 5 identical display cabinets for new retail space. Staff salaries, bonus and CPF. Directors' remuneration. Directors' fees. Certification fees paid to an external consultant for quality check for its new mobile phone model. Snacks and beverages at the pantry. Medical expenses 11,000 10,000 5,000 20,000 30,000 2,300,000 250,000 100,000 50,000 5,600 49,000 7,000 The company implemented the Portable Medical Benefits Scheme (PMBS) since its incorporation. Reimbursement of private car expenses to employees for business travels. Renovation expenses for new retail space: Electrical installation and wiring. Laminated flooring. Automated roller shutters. Interior designer fees. (see further information in note 1 under "additional information") Cash donations made to Salvation Army, an Institution of Public Character. Interest expense incurred on hire purchase for vans (see note 2 under "additional information") 45,000 20,000 7,000 5,000 5,000 4,000 Additional information: 1. ZPL incurred its first renovation expenditure qualifying for S14Q of the Income Tax Act amounting to $150,000 in the Year of Assessment 2018. There was no such renovation for the Year of Assessment 2019. 2. The vans were bought under hire purchase. The total purchase price of the vans is $450,000, including an interest component of $144,000. The capital and interest payment are to be settled in thirty six (36) fixed monthly instalments, payable on the last day of each month. The first payment was due on 31 October 2018. 3. Non-Current Assets Account The following were capitalised in the non-current assets account: $ Cutting machine Assembly equipment 100 laptops at $1,000 each Purchased on 1 May 2016 2 February 2017 3 March 2019 2,400,000 45,000 100,000 4. It is the company's policy to claim maximum capital allowances on its eligible plant and machinery, where applicable. 5. For the Year of Assessment 2020, ZPL has unabsorbed trade losses brought forward from year ended 30 September 2017 amounting to $60,000. Details of ZPL's shareholders and their shareholdings are as follow: 1 October 2012 30 September 2018 1 September 2019 30 September 2019 and beyond Shareholders and their shareholdings as at Zackary Emma Nat Gareth Jonathan 60% 15% 15% 10% 0% 60% 15% 15% 10% 0% 0% 20% 20% 10% 50% 0% 20% 20% 10% 50% Required: (a) Compute the minimum net tax payable of Zeng Pte Ltd for the Year of Assessment 2020. All items of income/expenseson-current asset additions should be accounted for. Where no adjustment is required, please indicate with a "O". Where any income is not taxable or tax exempt in the Year of Assessment 2020, please indicate accordingly. 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) Explain if unabsorbed trade losses brought forward from year ended 30 September 2017 amounting to $60,000 can be utilised in the Year of Assessment 2020. (5 marks) Zeng Pte Ltd ("ZPL") carries on a mobile phone manufacturing business in Singapore. It was incorporated in Singapore on 1 October 2012 and its first set of accounts was prepared for the year ended 30 September 2013. The business was started by four university friends, Zackary, Emma, Nat and Gareth. Unfortunately, Zackary had to return to Perth on 1 September 2019 as his mother was very ill. Nevertheless, the business continued. The directors hold their directors' meetings in Singapore. ZPL's net profit before tax for the accounting year ended 30 September 2019 was $8,500,000 after taking into account the following: $ 7,500 8,000 9,000 50,000 267,000 550,000 Income: Interest income from UOB Bank, an approved financial institution in Singapore. Exchange gain on the purchase of phone microchips from India. Interest income from a company resident in Country A. The interest income, was subject to 10% withholding tax in Country A. The highest corporate tax rate in Country A is 20%. The interest was used to purchase a sculpture in Italy. The sculpture arrived in Singapore on 1 November 2019. Recovery of trade debts written off in previous year. Expenses: Rental of factory and office. Depreciation. Legal fees: - Settlement of complaints from customers for defective phones. - Income Tax appeal for Year of Assessment 2019. - Tenancy agreement for new retail space. Annual audit fees. 5 identical display cabinets for new retail space. Staff salaries, bonus and CPF. Directors' remuneration. Directors' fees. Certification fees paid to an external consultant for quality check for its new mobile phone model. Snacks and beverages at the pantry. Medical expenses 11,000 10,000 5,000 20,000 30,000 2,300,000 250,000 100,000 50,000 5,600 49,000 7,000 The company implemented the Portable Medical Benefits Scheme (PMBS) since its incorporation. Reimbursement of private car expenses to employees for business travels. Renovation expenses for new retail space: Electrical installation and wiring. Laminated flooring. Automated roller shutters. Interior designer fees. (see further information in note 1 under "additional information") Cash donations made to Salvation Army, an Institution of Public Character. Interest expense incurred on hire purchase for vans (see note 2 under "additional information") 45,000 20,000 7,000 5,000 5,000 4,000 Additional information: 1. ZPL incurred its first renovation expenditure qualifying for S14Q of the Income Tax Act amounting to $150,000 in the Year of Assessment 2018. There was no such renovation for the Year of Assessment 2019. 2. The vans were bought under hire purchase. The total purchase price of the vans is $450,000, including an interest component of $144,000. The capital and interest payment are to be settled in thirty six (36) fixed monthly instalments, payable on the last day of each month. The first payment was due on 31 October 2018. 3. Non-Current Assets Account The following were capitalised in the non-current assets account: $ Cutting machine Assembly equipment 100 laptops at $1,000 each Purchased on 1 May 2016 2 February 2017 3 March 2019 2,400,000 45,000 100,000 4. It is the company's policy to claim maximum capital allowances on its eligible plant and machinery, where applicable. 5. For the Year of Assessment 2020, ZPL has unabsorbed trade losses brought forward from year ended 30 September 2017 amounting to $60,000. Details of ZPL's shareholders and their shareholdings are as follow: 1 October 2012 30 September 2018 1 September 2019 30 September 2019 and beyond Shareholders and their shareholdings as at Zackary Emma Nat Gareth Jonathan 60% 15% 15% 10% 0% 60% 15% 15% 10% 0% 0% 20% 20% 10% 50% 0% 20% 20% 10% 50% Required: (a) Compute the minimum net tax payable of Zeng Pte Ltd for the Year of Assessment 2020. All items of income/expenseson-current asset additions should be accounted for. Where no adjustment is required, please indicate with a "O". Where any income is not taxable or tax exempt in the Year of Assessment 2020, please indicate accordingly. 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) Explain if unabsorbed trade losses brought forward from year ended 30 September 2017 amounting to $60,000 can be utilised in the Year of Assessment 2020