Benson Canali, an American, was offered employment in Singapore with Liberty Pte Ltd (LPL), a Singapore incorporated company. His two-year employment period in Singapore commenced on 1 October 2015. As part of his remuneration package, Benson was offered the following alternatives for benefits-in-kind by the company:
- Accommodation
- Accommodation in an apartment with an annual value of $48,000 owned by LPL; OR
- A housing allowance of $5,000 per month.
- Relocation
- Relocation passage of $6,000 for one-way business class air-ticket to Singapore from USA; OR
- A relocation allowance of $6,000.
- Transport
- Use of a car inclusive of all running expenses. The cost of the car was $100,000 and its residual value was $10,000. Benson’s private mileage was 7,000 km per month;
OR
- A transport allowance of $4,000 per month.
- Holiday subsidy
- Reimbursement of Benson’s holiday expenses of up to a maximum of $1,000 per annum; OR
- A fixed holiday allowance of $1,000 per annum regardless of the actual cost of his holiday.
Required:
- For each of the above benefits-in-kind, advise which alternative Benson should choose, to minimise his Singapore tax exposure. Consider only from the Singapore individual tax perspective, and show your workings (if applicable) to support your explanation. (8 marks)
- Assuming that Benson will leave Singapore on 1 November 2017, explain for which years of assessment he will be regarded as tax resident in Singapore. (6 marks)
- Advise LPL of its employer’s obligations in view of Benson’s impending departure from Singapore on 1 November 2017. (5 marks)
(Total: 19 marks)
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