In October 2019 Sheldon Anthony was considering setting up a business in either Trinidad & Tobago or Jamaica.   Income Statement Projection for 2020 is as follows:                                                                         USD Income   Sales  100,000 Interest Income 1,500 Dividend Income                                                 5,500     Expenses   Depreciation  20,000 Interest Expenses (1)    7,000 Repairs & Maintenance    1,500 Legal & professional fees (2)   8,000 Salaries    30,000 Bad debts (3)       3,000 Other Expenses (4)     20,000     Notes All Interest was paid and as such there was no accrued interest at year end Professional fees consist of: Audit and accountancy fees                                                               $3,600 Legal fees for collection of bad debts                                                  $2,000 Cost of setting up business in the selected location                             $900 Architect’s fee for designing a new Warehouse which was not used $1,500   The Bad debts represent a debt that was outstanding for 180 days. Other expenses include $1,000 for expenses paid for another company owned by Sheldon and $600 for fines and penalties. The following assets were acquired in 2020: Asset Cost $ 1 Honda Motor car purchased in March 2020 38,000 Equipment 50,000 Computes    4,000 Office Building 72,000   Based on your research the capital allowance rates in Trinidad & Tobago is  calculated on the reducing balance and the rates are as follows: -      Building and improvements – 10% -      Motor vehicles - 30% -      Equipment and Computer equipment 33.33% The Capital Allowance Rate Sheet for Jamaica is attached. Estimated Tax of $700 was paid to the relevant Tax Authority. Assume Exchange Rates:  J$ 140: 1 USD and TT$ 6 :1 USD Corporation Tax Rate in Jamaica is 25%. The Corporation Tax rate in Trinidad is 25%on the first TTD 1 million of chargeable income, and 30% on chargeable income in excess of TTD 1 million. Required Assuming the projection represents actual amounts, calculate the Corporation Tax payable/ refundable for 2020 if the business operates in Jamaica or Trinidad

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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In October 2019 Sheldon Anthony was considering setting up a business in either Trinidad & Tobago or Jamaica.   Income Statement Projection for 2020 is as follows:

                                                                        USD

Income

 

Sales

 100,000

Interest Income

1,500

Dividend Income                                                

5,500

   

Expenses

 

Depreciation

 20,000

Interest Expenses (1)

   7,000

Repairs & Maintenance

   1,500

Legal & professional fees (2)

  8,000

Salaries

   30,000

Bad debts (3)

      3,000

Other Expenses (4)

    20,000

 

 

Notes

  1. All Interest was paid and as such there was no accrued interest at year end
  2. Professional fees consist of:
  • Audit and accountancy fees                                                               $3,600
  • Legal fees for collection of bad debts                                                  $2,000
  • Cost of setting up business in the selected location                             $900
  • Architect’s fee for designing a new Warehouse which was not used $1,500

 

  1. The Bad debts represent a debt that was outstanding for 180 days.
  2. Other expenses include $1,000 for expenses paid for another company owned by Sheldon and $600 for fines and penalties.

The following assets were acquired in 2020:

Asset

Cost $

1 Honda Motor car purchased in March 2020

38,000

Equipment

50,000

Computes

   4,000

Office Building

72,000

 

  1. Based on your research the capital allowance rates in Trinidad & Tobago is  calculated on the reducing balance and the rates are as follows:

-      Building and improvements – 10%

-      Motor vehicles - 30%

-      Equipment and Computer equipment 33.33%

  1. The Capital Allowance Rate Sheet for Jamaica is attached.
  2. Estimated Tax of $700 was paid to the relevant Tax Authority.
  3. Assume Exchange Rates:  J$ 140: 1 USD and TT$ 6 :1 USD
  4. Corporation Tax Rate in Jamaica is 25%. The Corporation Tax rate in Trinidad is 25%on the first TTD 1 million of chargeable income, and 30% on chargeable income in excess of TTD 1 million.

Required

Assuming the projection represents actual amounts, calculate the Corporation Tax payable/ refundable for 2020 if the business operates in Jamaica or Trinidad

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