Question 7

Income/Expense Sales Subcomponent Nature Trade Capital Trade, Revenue Trade, Revenue Trade, Revenue Non trade Treatment Taxable Non deductible Deductible Deductible Deductible Exempt Action No change Add back No change No change No change Deduct

Depreciation expenses (equipment) Raw material costs Cost of sales (Note 1) Rental of factory premises Salaries and CPF One-tier dividend Interest on loan stock ($1,000 was received every quarter since January 2009) Bad debts recovered Other income (Note 2) (included in the above is an amount of $30,000 recovered from the trade debtor of a company that was acquired by BSPL one year ago) Advertising: Media fees Advertising: Legal fees for drawing up new sales distributor agreements Selling expenses (Note 3) Delivery van expenses Depreciation expenses (vehicles) Entertainment Traffic fines CPF late payment interest Finance expenses (Note 4) Hire purchase

Trade, Revenue

Deductible

No change

Capital Trade, Revenue Non trade

Non deductible Deductible Non deductible

Add back No change Add back

Administration expenses (Note 5)

interest on vans Bank overdraft interest: To provide liquidity Bank overdraft interest: To pay dividends Bank overdraft interest: To pay overdue taxes and penalties Legal and professional fees: Debt collection Legal and professional fees: Drafting of new agreement Salaries and CPF Subscriptions Directors fees: Accrued Directors fees: Provision for retiring director Staff welfare Payment to competitor in return for not competing in a similar business for a period of ten years Cash donations to IPC on 2/12/2008 Karaoke set donations to IPC on 14/2/2009 Cheque donations to IPC on 17/5/2009

Trade

Deductible

No change

Capital Trade, Revenue Trade, Revenue Trade, Revenue

Non deductible Deductible Deductible Deductible Non deductible

Add back No change No change No change Add back No change

Trade, Revenue

Deductible

Capital

Non deductible

Add back

Miscellaneous expenses

Non trade

Deductible

Add back then deduct 2.5 times Add back Add back then deduct 2.5 times

Non trade

Non deductible

Non trade

Deductible

Date of purchase

Asset Cost of land and

Cost ($) 2,250,000

Section S19A 3 yrs

CA

related legal expenses Overdraft interest on loan to buy land Construction cost of factory building Architects fee for construction Staff canteen Staff quarters Staff clubhouse Office Fencing Landscaping Three mobile phones of different brands for management staff Electrical installation General lighting Painting the walls of the office Fixed partitions Floorings False ceilings and cornices Fees to feng shui master to advice on geomancy for the office Vans (<3 tonnes) Private cars Motor car in Malaysia representative office Total

225,000

S19A 3 yrs

1,350,000 135,000 225,000 450,000 270,000 30,000 150,000 180,000

S19A 1 yrs

1,002

46,500 12,500 7,300 2,500 23,000 40,000

30,000 60,000 77,000 33,000