Question 1Part 1A company resident in Trinidad and Tobago purchased the following assets in 2022: Asset Cost $ USDHonda Motor car purchased in May 2022 38,000Heavy Equipment 50,000Computer (CPU) 4,000Factory Buildings 72,000i. What would be the difference in capital allowances for 2023 if this company was resident in Jamaica instead of Trinidad and Tobago. (16 marks)ii. State two reasons for the difference. ( 2 marks)iii. Explain two circumstances in which obtaining capital allowances on the reducing balance basis may be more beneficial than on the straight-line basis. (2 marks).20 marks Part BOMG is in a country which has a capital gains tax, conducted the following transactions: a. Purchased a building in February 2018 for $26,000,000. In March 2019, the companyspent $2,000,000 to install solar panels for electricity in the building. The building was sold for $28,500,000 in 2021. The annual maintenance cost was $500,000. The cost of advertising the sale of the building and the legal fees amounted to $1,500,000. b. A motor vehicle was purchased for $5 million on January 1, 2018. The vehicle was sold in 2021 for $4.5 million. c. Bought an antique painting for $3.5 million in 2019. The painting was sold in 2021 for $10 million. d. Purchased a government bond for $5,000,000 in 2018 and sold it for $7,500,000 in 2021.The company is entitled to an Annual Exemption of $500,000. Capital losses as of 1 January 2021 were $1,500,000. Calculate the capital gains tax in 2021, assuming a capital gains tax of 15%.14 marks Part CJohn Peter is aware that there is no Capital Gains tax in Jamaica. He decided to buy a large piece of land. The land was hilly, so he blasted it to make it flatter, installed a soak away so the water does not settle on the land and made several roadways for ease of access. Six months after he purchased the land, he subdivided the area and sold it in lots to 30 separate persons, thereby making a large gain. RequiredAdvise Mr. Peter how these gains would be treated for tax purposes in Jamaica. Appropriate case laws should be included in your answer.
Question 1
Part 1
A company resident in Trinidad and Tobago purchased the following assets in 2022:
Asset Cost $ USD
Honda Motor car purchased in May 2022 38,000
Heavy Equipment 50,000
Computer (CPU) 4,000
Factory Buildings 72,000
i. What would be the difference in capital allowances for 2023 if this company was
resident in Jamaica instead of Trinidad and Tobago. (16 marks)
ii. State two reasons for the difference. ( 2 marks)
iii. Explain two circumstances in which obtaining capital allowances on the reducing balance
basis may be more beneficial than on the straight-line basis. (2 marks).
20 marks
Part B
OMG is in a country which has a
a. Purchased a building in February 2018 for $26,000,000. In March 2019, the company
spent $2,000,000 to install solar panels for electricity in the building. The building was
sold for $28,500,000 in 2021. The annual maintenance cost was $500,000. The cost of
advertising the sale of the building and the legal fees amounted to $1,500,000.
b. A motor vehicle was purchased for $5 million on January 1, 2018. The vehicle was sold
in 2021 for $4.5 million.
c. Bought an antique painting for $3.5 million in 2019. The painting was sold in 2021 for
$10 million.
d. Purchased a government bond for $5,000,000 in 2018 and sold it for $7,500,000 in 2021.
The company is entitled to an Annual Exemption of $500,000. Capital losses as of 1 January
2021 were $1,500,000.
Calculate the capital gains tax in 2021, assuming a capital gains tax of 15%.
14 marks
Part C
John Peter is aware that there is no Capital Gains tax in Jamaica. He decided to buy a large piece
of land. The land was hilly, so he blasted it to make it flatter, installed a soak away so the water
does not settle on the land and made several roadways for ease of access. Six months after he
purchased the land, he subdivided the area and sold it in lots to 30 separate persons, thereby
making a large gain.
Required
Advise Mr. Peter how these gains would be treated for tax purposes in Jamaica. Appropriate case
laws should be included in your answer.
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