Ebanks, Brown, and Thomas are partners. They carry on a business jointly as EBT surveyors and share
profits and losses in the ratio 25:45: 30.
The trading account profit as at 31 December 2021 was $6,500,000 after charging a nominal tax of
$750,000.
Notes:
1. The partners receive interest on their capital accounts at 9.5 % on the balance of their partner
capital at the end of the budget year. The interest on the capital account was not included in the
income statement.
2. Include in the income statement is $80,000 salary per month for each partner.
3. The partnership paid motor vehicle expenses for vehicles owned by the partners as follows:
- Ebanks -$ 50,000
- Brown - $80,000
- Thomas - $130,000
The partners did not use the vehicles for the partnership business.
4. Profit on disposal was $180,000.
5. Depreciation on plant and machinery for the year was $900,000.
6. In recognition of the new IFRS 9 standard, a provision for bad debt of $75,000 was made. This
represents a % of the business year end receivable balance.
7. A portion of bad debt written off in 2020 for a debtor who was experiencing cashflow issues was
paid. This amount was $270,000. This was not recognized in the 2021 income statement.
8. The business has a policy to write off small equipment valuing under $100,000 in the income
statement. For the year 2021, the total for small equipment written off in the income statement
was $325,000.
9. The income incurred fines of $70,000 for breaching the Surveyor's Board polices and rules.
10. As at 31, December 2021, the partners' capital was Ebanks -$5,000,000, Brown $3,000,000 and
Thomas $2,000,000.
11. PAYE of $200,000 was deducted from the salaries of each partner.
12. It is estimated that drawings by each partner was $500,000 per annum.
13. The business donated $450,000 to an entity on CTA 's approved list and $600,000 to a political
party.
14. Brown received gross interest income on a fixed deposit at the bank accounting to $250,000. The
tax deducted at source was $ 6,250.
15. Ebanks receives Net Rental income of $3,000,000 per annum.
16. Thomas received $7,000,000 for consultation services.
17. Details of fixed Assets:
Details |
Cost
As at 31 Dec 2021
|
NBV
As at 31 Dec 2021
|
Tax Written Down Value as at 1 Jan 2021 |
Motor Vehicles |
10,00,000 |
7,200,000 |
7,000,000 |
Equipment |
15,000,00 |
12,00,000 |
6,713,335 |
Office Buildings |
45,000,000 |
36,000,000 |
36,450,000 |
- Included in the cost of motor vehicle is a lorry purchased on 1 April 2021 for $2,000,000.
18. Included in the income statement interest relating $800,000 relating to a VAT refund in 2020.
19. Each partner paid quarterly estimated tax of $600,000.
20. The business is within the first 3 years of trade.
21. The partners each contribute to 5% of their taxable income to an approved pension funds.
22. All currencies are in TT$.
Required: With formulas
Compute each person's income tax payable/ refundable e for year of assessment 2021 for each partner on
the assumption that the business and the tax partners are tax resident in Trinidad and Tobago. (Ignore all
other statutory taxes, except National Insurance)