4. Nadine Rambaran is a finance consultant who operates as an independent contractor and has a wide client base. She is
Posted: Thu May 05, 2022 6:44 am
4. Nadine Rambaran is a finance consultant who operates as an
independent contractor and has a wide client base. She is resident
in Trinidad and Tobago. She filed her Income Tax Return for the
2015 year of income on the 30th April, 2021, in which she declared
her chargeable income based on her income from her trade or
business as a finance consultant of $300,000. In arriving at her
chargeable income, she claimed as a deductible expense an amount of
$50,000 being the aggregate cost of designer suits she bought which
she wore when she attended meetings with high net worth clients.
Her Income Tax Return for the 2015 year of income was subsequently
selected for audit examination. The Board of Inland Revenue by
Notice of Assessment dated 30th December, 2021 which was served on
her on the 11th January, 2022, disallowed her claim for the costs
of the designer suits and as a result her chargeable profits
increased by $50,000 with additional tax thereon of $12,500. The
basis of the Board of Inland Revenue for its adjustment was that
the cost of such suits was not wholly and exclusively incurred
in the production of income of the taxpayer as it had a dual
purpose.
Nadine Rambaran has come to you for advice on the
following:
a. Comment on the importance of the distinction between
the times in which an assessment on a taxpayer is made from the
time in which the notice of assessment is served on a taxpayer. (5
marks)
b. Was the assessment made by the Board of Inland
Revenue statute barred? Clearly explain your reasoning. (2
marks)
c. Is there merit in the basis of the Board of Inland
Revenue’s assessment? Explain with reference to case law on duality
of purpose. (9 marks)
d. What recourse is available to Nadine Rambaran to
challenge the assessment; in addition, explain the procedure
detailing the Court process as well and indicating the various time
lines which have to be met? (9 marks)
independent contractor and has a wide client base. She is resident
in Trinidad and Tobago. She filed her Income Tax Return for the
2015 year of income on the 30th April, 2021, in which she declared
her chargeable income based on her income from her trade or
business as a finance consultant of $300,000. In arriving at her
chargeable income, she claimed as a deductible expense an amount of
$50,000 being the aggregate cost of designer suits she bought which
she wore when she attended meetings with high net worth clients.
Her Income Tax Return for the 2015 year of income was subsequently
selected for audit examination. The Board of Inland Revenue by
Notice of Assessment dated 30th December, 2021 which was served on
her on the 11th January, 2022, disallowed her claim for the costs
of the designer suits and as a result her chargeable profits
increased by $50,000 with additional tax thereon of $12,500. The
basis of the Board of Inland Revenue for its adjustment was that
the cost of such suits was not wholly and exclusively incurred
in the production of income of the taxpayer as it had a dual
purpose.
Nadine Rambaran has come to you for advice on the
following:
a. Comment on the importance of the distinction between
the times in which an assessment on a taxpayer is made from the
time in which the notice of assessment is served on a taxpayer. (5
marks)
b. Was the assessment made by the Board of Inland
Revenue statute barred? Clearly explain your reasoning. (2
marks)
c. Is there merit in the basis of the Board of Inland
Revenue’s assessment? Explain with reference to case law on duality
of purpose. (9 marks)
d. What recourse is available to Nadine Rambaran to
challenge the assessment; in addition, explain the procedure
detailing the Court process as well and indicating the various time
lines which have to be met? (9 marks)