Good afternoon Please help with question. Thanks in advance Full Tax Co. is incorporated and tax resident in Barbados. The audited financial statements for Full Tax Co. for year-end December 31, 2021, show an accounting profit after tax of $5,500,000 after charging the following: Depreciation $1,500,000 Tax $500,000 Property Tax $900,000 Interest expense $15,000 Preference dividends of $40,000 Legal fees $1,110,000 Insurance of $750,000 Bad debts $40,000 Foreign Travel $20,000 Repairs and Maintenance $1,500,000 General expenses $600,000 Other Information Property Tax of $500,000 was paid for the property on which the company’s factory is located; $300,000 for the office premises and $100,000 for the director’s home. The insurance was paid for the factory and office premises. The bad debt expense includes a general provision of $10,000 and a specific provision of $30,000. The company paid interim ordinarily dividends totaling $100,000 Repairs and Maintenance include for $500,000 removing the office ceramic floor titles and replacing it with wooden flooring. Included in the company’s total assessable income is exempt income of $50,000. $16,500 relates to expenses incurred in earning this exempt income. Legal fees include:- $40,0000 in respect of recovery of commercial debts for Full Tax Co. - $10,000 in respect of recovery of commercial debts for Half Tax Co. The company was reimbursed this amount. - $15,000 000 in respect of recovery of commercial debts for One-Third Tax Co. The company was not reimbursed this amount - $50,000 relating to the purchase of new subsidiary - $400,000 to increase the share capital of the company General expenses include $72,000 for the school fees of the director’s son. The capital allowances have been calculated at $130,550 There was an increase in wages of $1,000,000 which qualifies for Employment Tax Credit (all other conditions to qualify for this credit was met). The tax rates for general business in Barbados applies. Assume capital allowance rate of 5 % p.a for building/ leasehold improvements. All amounts are in Barbadian currency. As at the 31 December 2020, the company has prior years tax losses as follows: 2013 - $30,000 2015 - $50,000 2020 - $40,000 Required Explain the difference between tax reliefs and tax credits Calculate the Corporation Tax Liability of Full Tax Co. for Y/A: 2021. Using the Barbados Income Tax Act or any other relevant document explains the treatment of the items included or omitted from the income tax computation.

Good afternoon Please help with question. Thanks in advance Full Tax Co. is incorporated and tax resident in Barbados. The audited financial statements for Full Tax Co. for year-end December 31, 2021, show an accounting profit after tax of $5,500,000 after charging the following: Depreciation $1,500,000 Tax $500,000 Property Tax $900,000 Interest expense $15,000 Preference dividends of $40,000 Legal fees $1,110,000 Insurance of $750,000 Bad debts $40,000 Foreign Travel $20,000 Repairs and Maintenance $1,500,000 General expenses $600,000 Other Information Property Tax of $500,000 was paid for the property on which the company’s factory is located; $300,000 for the office premises and $100,000 for the director’s home. The insurance was paid for the factory and office premises. The bad debt expense includes a general provision of $10,000 and a specific provision of $30,000. The company paid interim ordinarily dividends totaling $100,000 Repairs and Maintenance include for $500,000 removing the office ceramic floor titles and replacing it with wooden flooring. Included in the company’s total assessable income is exempt income of $50,000. $16,500 relates to expenses incurred in earning this exempt income. Legal fees include:- $40,0000 in respect of recovery of commercial debts for Full Tax Co. - $10,000 in respect of recovery of commercial debts for Half Tax Co. The company was reimbursed this amount. - $15,000 000 in respect of recovery of commercial debts for One-Third Tax Co. The company was not reimbursed this amount - $50,000 relating to the purchase of new subsidiary - $400,000 to increase the share capital of the company General expenses include $72,000 for the school fees of the director’s son. The capital allowances have been calculated at $130,550 There was an increase in wages of $1,000,000 which qualifies for Employment Tax Credit (all other conditions to qualify for this credit was met). The tax rates for general business in Barbados applies. Assume capital allowance rate of 5 % p.a for building/ leasehold improvements. All amounts are in Barbadian currency. As at the 31 December 2020, the company has prior years tax losses as follows: 2013 - $30,000 2015 - $50,000 2020 - $40,000 Required Explain the difference between tax reliefs and tax credits Calculate the Corporation Tax Liability of Full Tax Co. for Y/A: 2021. Using the Barbados Income Tax Act or any other relevant document explains the treatment of the items included or omitted from the income tax computation.

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter7: Losses—deductions And Limitations

Section: Chapter Questions

Problem 70IIP

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Good afternoon

Please help with question.

Thanks in advance

Full Tax Co. is incorporated and tax resident in Barbados. The audited financial statements for Full Tax

Co. for year-end December 31, 2021, show an accounting profit after tax of $5,500,000 after charging the following:

Depreciation $1,500,000
Tax $500,000
Property Tax $900,000
Interest expense $15,000
Preference dividends of $40,000
Legal fees $1,110,000
Insurance of $750,000
Bad debts $40,000
Foreign Travel $20,000
Repairs and Maintenance $1,500,000
General expenses $600,000

Other Information

Property Tax of $500,000 was paid for the property on which the company’s factory is located; $300,000 for the office premises and $100,000 for the director’s home.
The insurance was paid for the factory and office premises.
The bad debt expense includes a general provision of $10,000 and a specific provision of $30,000.
The company paid interim ordinarily dividends totaling $100,000
Repairs and Maintenance include for $500,000 removing the office ceramic floor titles and replacing it with wooden flooring.
Included in the company’s total assessable income is exempt income of $50,000. $16,500 relates to expenses incurred in earning this exempt income.

Legal fees include:- $40,0000 in respect of recovery of commercial debts for Full Tax Co. - $10,000 in respect of recovery of commercial debts for Half Tax Co. The company was reimbursed this amount. - $15,000 000 in respect of recovery of commercial debts for One-Third Tax Co.

The company was not reimbursed this amount

- $50,000 relating to the purchase of new subsidiary

- $400,000 to increase the share capital of the company

General expenses include $72,000 for the school fees of the director’s son.
The capital allowances have been calculated at $130,550
There was an increase in wages of $1,000,000 which qualifies for Employment Tax Credit (all other conditions to qualify for this credit was met).
The tax rates for general business in Barbados applies.
Assume capital allowance rate of 5 % p.a for building/ leasehold improvements.
All amounts are in Barbadian currency.
As at the 31 December 2020, the company has prior years tax losses as follows:

2013 - $30,000

2015 - $50,000

2020 - $40,000

Required

Explain the difference between tax reliefs and tax credits

Calculate the Corporation Tax Liability of Full Tax Co. for Y/A: 2021. Using the Barbados

Income Tax Act or any other relevant document explains the treatment of the items included or omitted from the income tax computation.

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