SA Construction Limited currently operates in Trinidad. The company is considering setting up another location in either Barbados or Jamaica. The Projected Income Statement for 2023 is as follows: USD Income Sales 90,000 Interest Income 2,500 Dividend Income 6,000 Other Income (exempt) 2,000 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 Taxation 2,250 Notes 1. All Interest was paid. There was no accrued interest at year end. 2. Professional fees consist of: • Audit and accountancy fees $3,600 • Legal fees re collection of bad debts $2,000 • Cost of setting up business in the selected location $900 • Architect’s fee for designing a warehouse that has not yet been constructed $1,500 3. The Bad Debts expense represents a debt which was outstanding for 270 days. 4. Other expenses include $1,000 for expenses paid on behalf of another company owned by SA Construction Limited, $600 for fines and penalties, $1,500 for course fees of the directors, and expenses relating to exempt income. 5. Capital Allowances of $15,000 was projected. 6. Estimated Tax of $700 was paid to the relevant Tax Authority. 7. Assume Exchange Rates: J$ 150: 1 USD and TT$ 6 :1 USD i. From a corporate tax perspective, in which country would it be more tax beneficial to operate? Ignore Employment Tax Credits, Corporate tax Credits available in Jamaica and other similar credits in Barbados) ii. Explain two main reasons why expenses may not be deductible for income tax/corporation tax purposes. iii. What other factors, if any, should be considered when setting up operations in these countries? iv. Discuss the two (2) other taxes that should be considered when setting up operations in either Jamaica or Trinidad. (answer for one country only) v. Identify two (2) documents that must accompany the Corporation Tax return when it is filed.
SA Construction Limited currently operates in Trinidad. The company is considering setting
up another location in either Barbados or Jamaica.
The
USD
Income
Sales 90,000
Interest Income 2,500
Dividend Income 6,000
Other Income (exempt) 2,000
Expenses
Interest Expenses (1) 7,000
Repairs & Maintenance 1,500
Legal & professional fees (2) 8,000
Salaries 30,000
Other Expenses (4) 20,000
Notes
1. All Interest was paid. There was no accrued interest at year end.
2. Professional fees consist of:
• Audit and accountancy fees $3,600
• Legal fees re collection of bad debts $2,000
• Cost of setting up business in the selected location $900
• Architect’s fee for designing a warehouse that has not yet been constructed $1,500
3. The Bad Debts expense represents a debt which was outstanding for 270 days.
4. Other expenses include $1,000 for expenses paid on behalf of another company
owned by SA Construction Limited, $600 for fines and penalties, $1,500 for course
fees of the directors, and expenses relating to exempt income.
5. Capital Allowances of $15,000 was projected.
6. Estimated Tax of $700 was paid to the relevant Tax Authority.
7. Assume Exchange Rates: J$ 150: 1 USD and TT$ 6 :1 USD
i. From a corporate tax perspective, in which country would it be more tax beneficial to
operate? Ignore Employment Tax Credits, Corporate tax Credits available in Jamaica
and other similar credits in Barbados)
ii. Explain two main reasons why expenses may not be deductible for income
tax/corporation tax purposes.
iii. What other factors, if any, should be considered when setting up operations in these
countries?
iv. Discuss the two (2) other taxes that should be considered when setting up operations in
either Jamaica or Trinidad. (answer for one country only)
v. Identify two (2) documents that must accompany the Corporation Tax return when it is
filed.
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