SOLUTION AT Australian Expert Writers
Benson, an Australian citizen aged 49, owns a vineyard in Australia for more than 10 years.
He is also a freelance advisor in Food and Beverage (“F&B”) sector and had worked in
Singapore as a consultant for 10 weeks between September and November 2018.
A tax resident company, Dine and Wine Pte Ltd (“DWPL”), in Singapore which owns a
restaurant at Esplanade Singapore, offered Benson an employment contract to be its operations
vice president (“VP”) for 2 years commencing from September 1, 2019.
Besides managing the operations of the restaurant and ensuring business goals are achieved,
the job responsibilities include assessing the feasibility to set up a restaurant in Kuala Lumpur,
Malaysia and / or Bangkok, Thailand for DWPL’s expansion plan in the next 2 years. It is
expected that 10% of his time will be spent overseas to discharge his employment duty. The
VP is expected to report the preliminary findings and recommendation to the Management of
DWPL by first quarter of 2020 and this is one of the key performance indicators (“KPIs”) for
a discretionary performance bonus.
Benson accepted the offer with the following employment terms and conditions:
A lump sum non-refundable inducement fee of $20,000 to entice Benson to join DWPL. It was paid the next working day after his arrival in Singapore on August 27, 2019. As requested by Benson, this amount was credited to a bank account which he maintains with DBS Bank Ltd, Australia Branch in Sydney.
An advance bonus of $16,000 conditional on Benson staying on the employment till August 31, 2020 and this was credited together with the one off inducement fee to the same bank account. This advance bonus will be clawed-back if the condition cannot be fulfilled.
A one-time relocation allowance of $4,000.
Monthly remuneration of $16,000.
A non-contractual performance bonus which is conditional to the meeting of certain KPIs by end of each calendar year. It is payable in the first quarter of subsequent year.
Benson was provided with a fully furnished apartment with effect from September 1, 2019. The monthly rental (inclusive of rental for furniture and fittings) paid by DWPL is $4,000. Out of it, monthly rental of $1,200 is borne and paid by Benson.
Monthly education allowance of $200 for each child aged below 18 and studying full time at education institutions.
For business travelling to Thailand and Malaysia, a per diem allowance of $160 per day will be payable. In addition, local business travelling expenses incurred will be fully reimbursed.
An entertainment allowance of $700/month and he spent about 70% of this allowance to entertain business associates.
With effect from October 1, 2019, a new “S” plate car provided by DWPL with the company bearing all the petrol and maintenance fees. The cost of the car is $110,000 with a PARF rebate of $18,000 and the total upkeep expenses borne by DWPL was $2,000.
Before a car was provided, Benson was reimbursed with the taxi fares incurred between home and restaurant and all local business trips. The amount reimbursed was $750 and $300 respectively.
An annual leave passages for Benson and his family.
Additional information are as follows:
(1) Benson is married to Catherine, an Australian citizen, and they have 2 teenage sons aged 15 and 17. Catherine earned a monthly salary of A$2,000 as a parttime baker before she came to Singapore.
(2) The couple arrived in Singapore on August 27, 2019. Their sons joined them on January 3, 2020 to start the January 2020 semester at International School, Singapore. The 2 teenagers have no other income and studying full time in Australia in 2019. Benson’s parents (in Sydney) help looking after the 2 teenagers before they left for Singapore.
(3) Upon arrival on August 27, 2019, Benson paid $1,800 for their temporary stays at hotel before moving to the apartment provided by DWPL on September 1,2019.
(4) Benson paid $1,500 to a logistic company to transport his personal belongings from Australia to Singapore in 2019.
(5) Benson’s parents are both above 70 years old and they have no other income except a monthly pension of A$500 (approx. S$475). To support his aged parents and children (before their arrival to Singapore), Benson sends monthly income remittance of S$2,500 to his mother’s bank account maintained with a bank in Sydney since his arrival in Singapore.
(6) Benson travelled for business and was away from Singapore for an aggregate period of 10 days in 2019. He spent equal days in Bangkok and Kuala Lumpur and was reimbursed with a total of $680 taxi fares incurred for business in these 2 places.
(7) DWPL paid a 2-way flight (costs $5,000) for Catherine to spend Christmas with her 2 sons and parents in-law in Sydney in December 2019.
(8) Before arrival in Singapore, Benson earned a total consultancy fee of A$30,000 in 2019 as a freelance consultant with clients in Sydney and Melbourne. The amount was deposited with DBS Bank Ltd, Australia Branch in Sydney.
(9) Benson sold his vineyard in July 2019 for a consideration of A$1,800,000 and the gain from the divestment is A$400,000 (approx. S$380,000).
(10) On February 20, 2020, Benson received a prorated performance bonus of $25,000 from DWPL for achieving 80% of the KPIs set for 2H 2019.
(a) Determine Benson’s tax residency in Singapore for Year of Assessment 2020 and
indicate the basis of your findings.
(b) Compute the minimum tax liability for Benson for YA2020 using an appropriate format
for tax computation and indicating “0” on items stated in the question which do not
require tax adjustments or are not taxable.
(c) Explain the tax treatment you have adopted in part (b) for the following items:
(i) Payment to Benson’s mother for the support of his aged parents and 2 teenage sons; and
(ii) Gain of S$380,000 for the divestment of vineyard.
(d) Determine and explain the tax implication(s) (if any) in the scenario where Benson must terminate his employment service with DWPL on February 28, 2020 and leave Singapore on March 5, 2020 for personal reasons.
XY Pte Ltd (“XY”) is a property investment company and tax resident in Singapore. It owns
and manages a shopping mall in Clementi, Singapore. To bring Christmas spirit into the
neighbourhood, it invited a popular pianist from Philippines to perform on the foyer of the mall
for 5 days from December 22 – 26, 2020. The pianist took the opportunity to extend his stay
for 2 days to visit friends in Singapore.
The agreed terms and conditions for the appearance are as follows:
December 22 to 26, 2020 (5 days)
Singapore Income Tax (if any), is borne by the pianist
At the end of the engagement, XY Pte Ltd presented a crystal piano music box as a souvenir to
the pianist. The music box has a market value of $150.
The pianist incurred the following for the engagement in Singapore:
Hotel accommodation paid by the pianist for his 7 days in Singapore ($320/day)
Airfare paid by the pianist
Suits tailored specifically for performance purposes
Amount spent by pianist for the meals during his stay
Amount spent by pianist for the taxi fares from hotel to the shopping mall for performance
Amount spent by pianist for the transport to and from airport
Compute the tax liability of the pianist for the engagement using an appropriate format for tax
computation and indicating “0” for items stated in the question which do not require tax
adjustments or are not taxable.
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