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Singapore Concept of Income & Tax Deductions

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  • Singapore Concept of Income & Tax Deductions

    Everblue Pte Ltd (EPL) is a manufacturing company incorporated and tax resident in Singapore. For the year ended 30 September 2008, it achieves a net profit before tax of $1,678,000 after taking into account the following relevant income:-

    1.1 Recovery of a non-trade bad debts written off previously in 2007 $20,000
    1.2 Compensation received from customer for cancelling trade contract 15,800
    1.3 Sundry income from forgiveness of shareholder loan made in 2006 25,000
    1.4 (a) Interest income from $300,000 fixed deposit placed with OCBC 8,000
    - $6,000 matured on 31 December 2007
    - $3,750 matured on 30 June 2008
    - $2,700 matured on 31 December 2008

    The company placed the $300,000 on 6-month fixed deposit with OCBC on 1 Jul 2007 which is renewable every 6 months. The amount of interest accrued as at 30 September 2008 was $1,800.

    (b) Interest on deposit with HSBC in Hong Kong - not remitted 12,000
    (c) Interest on an outstanding trade debt not remitted 37,450

    1.5 Dividend income
    - 1-tier dividend received from Singapore resident company 7,680
    - Malaysia dividend from Amir Sdn Bhd (net of 26% tax) remitted 3,700

    1.6 Profit on sale of Van 15,000
    The van (under 3 tonnes) with a tax life of 6 years was purchased in March 2004 for
    $50,000 and sold for $18,000.

    1.7 A capital gain of $80,000 was made from the disposal of an investment in the equity
    of a Mauritian company.

    1.8 Unrealised gain of $50,000 from fair valuation of trading in the shares of the
    Singapore resident company. The company has opted to remain in pre-FRS 39 tax treatment.

    Discuss the taxability of each of the above sources of income for the Year of Assessment
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