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tequired A. Explain the difference between tax reliefs and tax credits

tequired A. Explain the difference between tax reliefs and tax credits

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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- $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 8. General expenses include $72,000 for the school fees of the director's son The capital allowances have been calculated at $130,550 10. There was an increase in wages of $1,000,000 which qualifies for Employment Tax Credit (all 9. 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 other conditions to qualify for this credit was met). 11. The tax rates for general business in Barbados applies. the 12. Assume capital allowance rate of 5 % p.a for building/ leasehold improvements. following: 13. All amounts are in Barbadian currency. 14. As at the 31 December 2020, the company has prior years tax losses as follows: • Depreciation $1,500,000 2013 - $30,000 2015 - $50,000 2020 - $40,000 • Tax $500,000 • Property Tax $900,000 • Interest expense $15,000 Required • Preference dividends of $40,000 A. Explain the difference between tax reliefs and tax credits B. Calculate the Corporation Tax Liability of Full Tax Co. for Y/A: 2021. Using the Barbados • Legal fees $1,110,000 Income Tax Act or any other relevant document explain the treatment of the items included or omitted from the income tax computation. • Insurance of $750,000 • Bad debts $40,000 • Foreign Travel $20,000 • Repairs and Maintenance $1,500,000 • General expenses $600,000 Other Information 1. Property Tax of $600,000 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. 2. The insurance was paid for the factory and office premises. 3. The bad debt expense includes a general provision of $10,000 and a specific provision of $30,000. 4. The company paid interim ordinarily dividends totaling $100,000 5. 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 6. relates to expenses incurred in earning this exempt income. 7. 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.
Transcribed Image Text:- $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 8. General expenses include $72,000 for the school fees of the director's son The capital allowances have been calculated at $130,550 10. There was an increase in wages of $1,000,000 which qualifies for Employment Tax Credit (all 9. 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 other conditions to qualify for this credit was met). 11. The tax rates for general business in Barbados applies. the 12. Assume capital allowance rate of 5 % p.a for building/ leasehold improvements. following: 13. All amounts are in Barbadian currency. 14. As at the 31 December 2020, the company has prior years tax losses as follows: • Depreciation $1,500,000 2013 - $30,000 2015 - $50,000 2020 - $40,000 • Tax $500,000 • Property Tax $900,000 • Interest expense $15,000 Required • Preference dividends of $40,000 A. Explain the difference between tax reliefs and tax credits B. Calculate the Corporation Tax Liability of Full Tax Co. for Y/A: 2021. Using the Barbados • Legal fees $1,110,000 Income Tax Act or any other relevant document explain the treatment of the items included or omitted from the income tax computation. • Insurance of $750,000 • Bad debts $40,000 • Foreign Travel $20,000 • Repairs and Maintenance $1,500,000 • General expenses $600,000 Other Information 1. Property Tax of $600,000 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. 2. The insurance was paid for the factory and office premises. 3. The bad debt expense includes a general provision of $10,000 and a specific provision of $30,000. 4. The company paid interim ordinarily dividends totaling $100,000 5. 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 6. relates to expenses incurred in earning this exempt income. 7. 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.
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