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The Case Study of Di
Employment Information
Di, 47 years old, is a Singapore citizen. She was employed by a large corporation in Singapore (“S Co”), which is listed on Singapore Exchange since 2010.
In 2018, she accepted a secondment offer to work as Vice President, Marketing Communication, for S Co’s wholly owned subsidiary in Canada (“C Co”) for 3 years with effect from August 1, 2018. Di decided not to extend her overseas secondment and returned to Singapore to continue her employment with S Co in 2021.
She arrived in Singapore on July 28, 2021 and re-commenced her employment with S Co on August 1, 2021. Her employment terms and benefits were as follows:
C Co
(January 1, 2021 – July 31.
2021)
S Co
(August 1, 2021 – December
31, 2021)
Monthly salary
S$10,000
S$12,000
Special bonus for
completion of secondment
S$8,000
N.A.
13th month contractual
bonus
N.A.
S$12,000
Performance bonus
S$1,500 was received in April 2021 in respect of service year ended December 2020.
S$2,000 was received in April 2022 in respect of service period ended December 2021.
Share option
NIL.
The stock option to purchase 20,000 shares in S Co was awarded to Di on November 30, 2021 at an exercise price of S$1.55 per share. Di exercised the share option to purchase 20,000 shares in S Co on December 20, 2021 on meeting all the conditions of the award. S Co’s share price on December 20, 2021 was S$2.10 per share.
Di sold the 20,000 shares purchased at S$2.50 per share on December 30, 2021 and made a gain of S$17,500.
Monthly entertainment allowance (70% was spent
on business entertainment)
S$1,000
S$1,200
Car benefits
NIL.
A new car was provided with effect from August 1, 2021. The cost of the car is S$250,000 (inclusive of COE of S$60,000) and its PARF rebate is S$50,000. Total running expenses of S$3,000 for the period ended December 31, 2021 was borne by S Co.
Medical and dental benefits (these benefits are available to all employees (including spouse and children) of the
Co)
N.A.
Di and her children required dental cares and was reimbursed for charges incurred amounting to
S$420 in November 2021.
Single air ticket from
Canada to Singapore
S$3,500
N.A.
One-off relocation
allowance
NIL.
S$2,000
Additional information
Di is a divorcee and has custody of 2 sons, aged 18 and 14 Her ex-husband, who was not living with (and not supported by) Di, agreed not to claim any reliefs on their children, where applicable. Elder son studied in a Singapore junior college and took a temporary job after sitting his GCE “A” level examination in November 2021. He earned S$800 (gross) from December 10 – 31, 2021 and was enlisted into national service on 10 March 2022. Younger son studies at Singapore Sports School for its sports and academic programme in school year 2021. He receives dedicated training to charge towards his goal to represent Singapore to compete at SEA games 2025.
Di’s parents are above 65 years old and have retired. They have no income in the past few years and Di has been giving her parents a monthly allowance of S$1,000 each to support them. While Di was working overseas, her children stayed with grandparents and were taken care by them.
In 2019, Di spent 2 weeks in Singapore to celebrate Luner new year with family and did not visit Singapore in 2020 and 2021 in view of covid-19 travel restrictions.
Di maintained an account with UOB, Vancouver branch and all her remuneration related income from C Co was credited to this bank account. Before she returned to Singapore, she closed this bank account and transferred its bank balances amounting to S$50,500 to her bank account maintained with UOB, Singapore.
Upon return, Di stays with the parents to look after one
Di’s dad has a windfall of S$8,000 from TOTO lottery in
Di owns a residential property and a commercial property in Singapore and had rented them out since her secondment to Canada in 2018.
The relevant income and expenses of the units for the year ended December 31, 2021 are as follows:
Residential Property
Commercial property
Rental
income
Related expenses
Rental
income
Related expenses
Period
Jan 1 – May 31
(Tenancy ended without renewal)
Jan 1 –
Dec 31
S$2,000 /
month
S$3,000 /
month
Oct 1 – Dec 31,
(New tenant)
S$3,800 /
month
Agency fee (for securing the new tenant)
S$2,000
S$0
Property tax
(annual)
S$3,600
S$4,200
Fire insurance
(annual)
S$500
S$700
Estate maintenance
fee (annual)
S$5,880
S$13,200
Repayment of mortgage loan
– Principle
– Interest
S$3,900 S$ 900
NIL.
S$4,800 per month
New sofa bed for the new tenant (as
requested)
S$1,200
S$0
Repairs of the master room’s air
conditioner unit
S$250
S$0
Replacement of
floor tiles and air- conditioner units
S$0
S$5,000
Repairs of the
electric door lock
S$0
S$200
Internet subscription
(annual)
S$720
S$720
Utilities (Average per month)
$210
(paid on behalf of tenant and 50% was reimbursed by tenant)
$200
(paid on behalf of tenant and not reimbursed by tenant)
Di provided a loan of S$30,000 to her brother in Singapore in Her brother repaid half of the loan amount with an interest of S$500 in September 2021.
Di received a one-tier dividend of S$7,000 from a Singapore resident listed company on April 28, 2021.
Di placed a 3-month fixed deposit with UOB, Singapore and earned an interest of S$800 upon maturity on October 30, 2021.
In December 2021, Di made a cash donation of S$300 to an overseas relief funds managed by Singapore Red Cross, an approved Institution of a Public Character. The fund was raised to help flood victims in Country X.
Di needed some cash urgently. In addition to the disposal of her shareholding in S Co (re above share option), she sold two vintage watches which she had collected as investment for more than 10 years and made a gain of S$30,000 in December 2021.
Question 1
Briefly describe Singapore’s income tax system and apply the relevant source rules to explain the taxability of Di’s employment income earned from C Co from the Singapore’s income tax perspective.
Question 2
Apply and explain the tax residency rule for an individual to be defined as a tax resident or non-tax resident in Singapore. Based on this principle, advise Di on her Singapore income tax residency status for the year of assessment 2022 and the basis of the tax position you have taken.
Question 3
Apply the principles of income tax to Di and compute her net taxable employment income for the relevant Year of assessment.
Question 4
Compute the minimum income tax payable by Di for the relevant year of assessment, indicating “S$0” on items which are tax exempt or are not taxable / deductible. For personal reliefs, all relevant reliefs based on information given, should be accounted for in the tax computation and where it is not available/applicable, please insert “S$0”.
Question 5
Based on your answer in Question 3, apply and explain the tax implication of contractual and non-contractual bonuses
The post ACC213: Di, 47 years old, is a Singapore citizen. She was employed by a large corporation in Singapore (“S Co”), which is listed on Singapore Exchange since 2010: Introduction to Singapore Taxation Assignment, SUSS appeared first on Singapore Assignment Help.
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