Understanding Taxation And Retirement Planning

Identifying taxable incomes for Amanda Li

(a) Identify and explain to Amanda Li which of her following incomes will be subjected to tax in Year of Assessment 2017.

Director’s fees are taxable under the law. Amanda li was paid $100,000 in September of 2016. Under statutory laws, a financial year ends in June of every year. She was paid in September 2016 which means that she must pay for the tax in the financial year 2017.  In 2017, the financial year starts from July 2016 and that means that every income that Amanda receives between the months of July 2016 to end of June 2017 will be taxed in the FY 2017. The reason why the director’s fee is taxed in 2017 is because it was paid in September of 2016. Withholding tax and pay as you earn are the taxes that usually subject to director’s fee (Doyle & Doyle, 2009).

Model assignment income of $85,000 from Hong Kong was paid in the month of May 2016. This income should have been taxed in the year 2016 since it is paid in the month of May. As earlier stated, a financial year ends in the month of June 2016. She bought a bracelet in Hong Kong worth as much as the income she receives from the modelling assignment. This means that she has not paid any tax for that period. Therefore the income received in the runway model assignment will be charged in the following year. It will be assessed in the financial year 2017 subject to penalties and interest that are imposed for non-disclosure of tax.  

Lecture income will be taxed in the year 2017. Although it is taken directly to her third sister in London, it is income received and therefore must be taxed regardless of the location. This is because she must disclose her income. Since she was paid in September 2016, the amount will be viable for taxation in the year 2017 (Census, 2012).

Like any other income, winnings and lotteries are viable for taxation like any other tax assessment package. The winnings of $ 150,000 earned in 2016 will be taxed in 2016 and not 2017. This is because the taxation of these winnings are taxed in the specific year where it was won. 

(b) Compute Amanda Li’s tax liabilities for the Royalty income.

Item	Amount($)	Amount ($)
Royalty Income		$52,520
Less: Expenses incurred
Printing and Stationary	$15,500
Advertisement and Publicity	8,600
Legal Fees	2,480
Total Expenses incurred		(26,580)
Tax liability		25,940

(c) Determine Amanda Li’s income from the two properties for the Year of Assessment 2017

Property 1

Item	Amount($)	Amount($)
Rental Income (4,500*12)		54,000
Less;
Maintenance fees(190*12)	2280
Major repairs	–
Repairs	1600
Wall painting	2800	(6680)
Gross income		47,320
Less; Property Tax(330*12)		(3960)
Rental income		43360

Calculating Amanda Li’s tax liabilities for Royalty income

 Property 2

Item	Amount($)	Amount($)
Rental Income (3600*9)		32,400
Less;
Maintenance fees(130*9)	1170
Major repairs	15000
Repairs	–
Wall painting	–	(16170)
Gross income		16230
Less; Property Tax(280*9)		(2520)
Rental income		13,710

 (d) Calculate the amount of Share Option benefit assessable on Amanda Li.

Date	Details	Share price	Amount($)
5 October 2015	100,000	2.30	230000
12 july 2016		3.50	350,000
Total buy option			580,000
Sale option	200,000	5.00	1,000,000
Less; Buy option			(580,000)
Total income			420,000

Question 2 – WEALTH ACCUMULATION – RETIREMENT PLANNING

(a)(i) What is an Advance Medical Directive and how does it work?   

 The advance directives. Advance directives are a voluntary document that contains instructions made by a person in full use of their mental faculties, with the purpose that it takes effect when they cannot express their will. In other words, it is a declaration of will that an individual makes so that his will is respected when he is deprived of capacity due to the supervening cause.

It consists, then, of an informed consent in advance. Thus, these documents should be understood as an informed consent made prior to the assumption or assumptions in which it should take effect (Jarvis & Mandell, 2003).

Also called “vital declaration”, “vital testament” and “testament of life”, these manifestations find their essential foundation in the right to decision-making autonomy over one’s own body and in the right to count a reserve area, to the extent that the private actions of men do not harm third parties. Also, these provisions are under the protection of a set of precepts on human rights and very personal of individuals, which arise from the international pacts incorporated into our law

On the other hand, the case “D., M. A. s / Declaration of Disability”, referring to a person who remained in a persistent vegetative state for more than twenty years, constitutes a sample of the need to make the use of these documents effective.

In that case, the sisters and curators of the patient asked for the cessation and abstention of all measures of vital support, with the endorsement of at least three prestigious Bioethics Committees that affirmed that their condition was irreversible. Some members of the medical team and religious institutions that called to “defend life” were opposed to such measures. The order aimed at ensuring the dignified death of the patient, was rejected in lower judicial instances and was later accepted by the Superior Court of Justice , who stated that these issues should not be judicial zed, which were already under the scope of the Law of Rights of the Patient , modified by the Law of Dignified Death. This criterion was endorsed by the Procurator General of the Nation, which added that given the circumstances, it was necessary to adopt the measures and actions for the adequate control and relief of the suffering of the patient, and in protection of their constitutional rights (Engdahl, 2011).

Determining Amanda Li’s income from two properties

(a)(ii) List the circumstances under which a doctor will certify that the person is terminally ill. 

When someone cannot be able to do anything for themselves and only termed as incapacitated.

There are several circumstances where a doctor may declare someone terminally ill. In the national order, even before the entry into force of the new Code, the law received them in article, in the following terms. Any person capable of legal age may have advance directives on their health, being able to consent or reject Certain medical, preventive or palliative treatments and decisions related to their health The directives must be accepted by the doctor in charge, except those that imply developing euthanasia practices, which will be considered non-existent The declaration of will must be formalized in writing before public notary or courts of first instance, for which the presence of two witnesses will be required, which declaration may be revoked at any time by the person who said it “. 

As it was said, the new Code regulates a hard core in the matter and does not repeal this law, so that in case of existing differences or incompatibilities between both texts, the Code and the law, it is necessary to look for, then, the most protective norm of the rights at stake. 

(a)(iii) How can Amanda revoke her AMD when she is unable to write?

The law regulates them in articles that establishes: Advanced medical directives. The fully capable person can anticipate directives and confer mandates regarding their health and in anticipation of their own disability. It may also designate the person or persons who must express consent for medical acts and to exercise their curatorship. The directives that imply developing euthanasia practices are considered unwritten. This declaration of will can be freely revoked at all times.

In jurisprudential matters, respect for advance directives is reflected, among others, in the case  Precautionary Measures resolved by the Supreme Court of Justice. In this case, the highest national court does not place the request of the father of the patient to have a blood transfusion performed because the latter was rejected in an advance directive(Engdahl, 2011). 

(b)(i) Determine the amount Amanda can contribute to her own Supplementary Retirement Scheme Account and state the eligibility criteria

Retirement age for Amanda 62 years.

Cash value= $9,600

Whole life =$ 300,000

Contribution= 300,000- 9,600

                       =$291,400

(b)(ii) What is the amount Amanda can use to top up Sandra’s CPF Account? State the reason.

Details-Assets	Amount ($)
Savings account	$ 30,000
FDA	$ 200,000
Equities-Singapore	$ 280,000
CFP-OA	$ 75,000
Total Amount	585,000

Calculating amount of Share Option benefit assessable on Amanda Li

 Amandas = 500,000

Retirement

 (c) List FIVE (5) options available for Amanda to bridge the retirement shortfall 

1. Ramp up your retirement savings.
2. Work on the budget. .
3. Move to a smaller home..
4. Refinance your current home.
5. Do not quit for good.   

Question 3 – WEALTH GIVING – ESTATE PLANNING 

• Explain the accuracy of the following statement. Trust is the disposition of assets upon death of grantor while Will helps the settlor with the disposition of assets before his death.

Trust is when upon a specified event like death of the estate trustor or better yet a beneficiary before attaining a certain age, the trustee will be entirely responsible for distribution and accounting of trust assets to the beneficiaries. A will is a written document that determines the asset distribution when the estate owner dies.

The statement above is accurate, while trust is disposition of assets to the grantor, the will helps in distribution of assets in case of death. 

 (b)(i) Is Amanda’s Will valid after her marriage? Explain.

Amanda s will is valid after her marriage. A will is considered accurate if it is certified and signed by the estate owner in presence of a witness such as a lawyer, a friend or family member. After her marriage, demographics will have changed, there will be assets of her husband which he personally owns as an individual and the others shared as joint assets. The demographics has changed since they will be willing to look at other people in the situation.

(ii) When should Amanda review her Will?

She should review her will since she has increased her assets and the number of people will need to be considered.

1. b) Upon her Death, Amanda wishes to give her assets shown below to the stated beneficiaries. You are to advise her about the most effective way of planning her estates

The most effective way of planning her assets is to put the pine grove property in a will stating that her parents are to get the property or the proceeds that theroff comes from the property. A will is good as it makes clear who is to be given what and in what proportion. She may decide to allote the property income according to a percentage. It may be a split on a 50-50 basis or any other proportion for them to share the income. 

The most effective way of managing this is maybe through a will or a trust. The whole life beneficiary nominated in this case is brad her husband and Sandra her sister. The sum assured is $ 300,000, the premium per annum is $ 9600 while the cash value is $ 960. The only way to manage this is by using a trust so as to distribute money to both Brad and Sandra.

This can be given to a trust or an administrator to manage the savings and fixed deposit amount. As we all know, a charity is a continuous and structured entity while a svings and fixed deposit account has interest to the amount each year. To ensure that the money, interest plus principle goes to the right place, the charity, a trust should be given the mandate to take charge.  

References

Census, U. (2012). Wealth, debt, and taxation. [Place of publication not identified]: Rarebooksclub Com.

Doyle, K., & Doyle, K. (2009). Asset & wealth protection. Markham, Ont.: LexisNexis.

Engdahl, S. (2011). Taxation. Farmington Hills, MI: Greenhaven Press.

Jarvis, C., & Mandell, D. (2003). Wealth protection. Hoboken, N.J.: John Wiley & Sons.