Shepherd Enterprises Limited (“the Company”) is a limited liability company incorporated in Trinidad and Tobago in March
Posted: Wed May 04, 2022 4:30 pm
Shepherd Enterprises Limited (“the Company”) is a limited
liability company incorporated in Trinidad and Tobago in March 2015
and controlled within Trinidad and Tobago. It is engaged in the
business of the retail of electrical appliances. Its income
statement for the 12-month period ended 31st December, 2021 is as
follows: INCOME STATEMENT $ $ Gross Sales 3,000,000 Cost of Sales
1,350,000 Gross Profit 1,650,000 Other Income 450,000 2,100,000
Expenses: Salaries and Wages 500,000 Entertainment 60,000
Advertising 200,000 Depreciation 150,000 Legal and Professional
Fees 90,000 Interest 50,000 Donations 50,000 Royalty 50,000
Sponsorships 100,000 Bad Debts 50,000 Foreign Travel 100,000 Total
Expenses 1,400,000 Net Profit 700,000 page The following notes are
given to its income statement: a. Other income comprises dividends
it receives from an investment in a company resident in Jamaica of
$150,000 and a company resident in Bahamas of $120,000. The balance
relates to the gain on the disposal of fixed assets which were
acquired on 1st March, 2020 and disposed on the 1st May, 2021. The
disposal proceeds were $200,000 b. The opening wear and tear pool
balances: Class A $250,000 Class B $500,000 Class C $300,000 There
were no additions of any qualifying fixed assets during the year
and the disposals of fixed assets referred to in (a) above relates
to class B assets. c. Legal and Professional Fees include the sum
of $40,000 which relates to the fees paid to an accounting firm for
representation at a matter before objections at the Board of Inland
Revenue; the remainder relates to the legal fees incurred in
relation to debt collection on outstanding trade receivables. d.
Advertising was all business related and all done locally. e.
Interest comprises the sum of $20,000 relating to the occurrence of
interest and penalty on late payment of PAYE. The balance relates
to accrued interest on a loan used to acquire additional stock. The
amount of interest actually paid on the loan was $25,000. f.
Donations relate to various donations to approved charities under
deed of covenant. The stamp duty associated with these deeds of
covenant was paid and the deeds duly stamped on the 20th December,
2021. g. Sponsorships refer to the sponsorship of a local football
club of $75,000 and the remainder relates to the sponsorship of a
local fashion show highlighting local designers during fashion week
in April 2021. h. Bad Debts include the amount of $15,000 which
relates to a specific debt where efforts have been made to recover
the sum and the age of the debt is 2 years. The balance relates to
a general provision. i. Foreign Travel all relate to the
expenditure incurred by the Managing Director, Scott Shepherd on
his annual vacation with his family. j. Entertainment relates to
expenses incurred in hosting client appreciation events throughout
the year. k. The company has made quarterly payments for the year
of income 2021 of $40,000 per quarter for Corporation Tax and
$3,000 per quarter with respect to Green Fund Levy. Required: i)
For the 2021 year of income calculate the company’s Corporation
Tax, Business Levy and Green Fund Levy Liabilities specifying what
amounts are payable/ refundable for the respective tax
types. ii) There is a proposal by Director Bobby Shepherd for
the Company to change its year end to the 31st September. This he
has indicated is to seek harmonisation of the year end for all
companies within the Shepherd Group. You are required to prepare a
note to Bobby Shepherd in which you are to indicate the tax
considerations relating to a change in the accounting year end
date.
liability company incorporated in Trinidad and Tobago in March 2015
and controlled within Trinidad and Tobago. It is engaged in the
business of the retail of electrical appliances. Its income
statement for the 12-month period ended 31st December, 2021 is as
follows: INCOME STATEMENT $ $ Gross Sales 3,000,000 Cost of Sales
1,350,000 Gross Profit 1,650,000 Other Income 450,000 2,100,000
Expenses: Salaries and Wages 500,000 Entertainment 60,000
Advertising 200,000 Depreciation 150,000 Legal and Professional
Fees 90,000 Interest 50,000 Donations 50,000 Royalty 50,000
Sponsorships 100,000 Bad Debts 50,000 Foreign Travel 100,000 Total
Expenses 1,400,000 Net Profit 700,000 page The following notes are
given to its income statement: a. Other income comprises dividends
it receives from an investment in a company resident in Jamaica of
$150,000 and a company resident in Bahamas of $120,000. The balance
relates to the gain on the disposal of fixed assets which were
acquired on 1st March, 2020 and disposed on the 1st May, 2021. The
disposal proceeds were $200,000 b. The opening wear and tear pool
balances: Class A $250,000 Class B $500,000 Class C $300,000 There
were no additions of any qualifying fixed assets during the year
and the disposals of fixed assets referred to in (a) above relates
to class B assets. c. Legal and Professional Fees include the sum
of $40,000 which relates to the fees paid to an accounting firm for
representation at a matter before objections at the Board of Inland
Revenue; the remainder relates to the legal fees incurred in
relation to debt collection on outstanding trade receivables. d.
Advertising was all business related and all done locally. e.
Interest comprises the sum of $20,000 relating to the occurrence of
interest and penalty on late payment of PAYE. The balance relates
to accrued interest on a loan used to acquire additional stock. The
amount of interest actually paid on the loan was $25,000. f.
Donations relate to various donations to approved charities under
deed of covenant. The stamp duty associated with these deeds of
covenant was paid and the deeds duly stamped on the 20th December,
2021. g. Sponsorships refer to the sponsorship of a local football
club of $75,000 and the remainder relates to the sponsorship of a
local fashion show highlighting local designers during fashion week
in April 2021. h. Bad Debts include the amount of $15,000 which
relates to a specific debt where efforts have been made to recover
the sum and the age of the debt is 2 years. The balance relates to
a general provision. i. Foreign Travel all relate to the
expenditure incurred by the Managing Director, Scott Shepherd on
his annual vacation with his family. j. Entertainment relates to
expenses incurred in hosting client appreciation events throughout
the year. k. The company has made quarterly payments for the year
of income 2021 of $40,000 per quarter for Corporation Tax and
$3,000 per quarter with respect to Green Fund Levy. Required: i)
For the 2021 year of income calculate the company’s Corporation
Tax, Business Levy and Green Fund Levy Liabilities specifying what
amounts are payable/ refundable for the respective tax
types. ii) There is a proposal by Director Bobby Shepherd for
the Company to change its year end to the 31st September. This he
has indicated is to seek harmonisation of the year end for all
companies within the Shepherd Group. You are required to prepare a
note to Bobby Shepherd in which you are to indicate the tax
considerations relating to a change in the accounting year end
date.