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Question $1$

Part $1$

A company resident in Trinidad and Tobago purchased the following assets in $2022$:

Asset Cost $ USD

Honda Motor car purchased in May $202238,000$

Heavy Equipment $50,000$

Computer $($CPU$)4,000$

Factory Buildings $72,000$

i$.$ What would be the difference in capital allowances for $2023$ if this company was

resident in Jamaica instead of Trinidad and Tobago. $(16$ marks$)$

ii$.$ State two reasons for the difference. $(2$ marks$)$

iii. Explain two circumstances in which obtaining capital allowances on the reducing balance

basis may be more beneficial than on the straight$-$line basis. $(2$ marks$).$

$20$ marks

Part B

OMG is in a country which has a capital gains tax, conducted the following transactions:

a$.$ Purchased a building in February $2018$ for $$26,000,000.$ In March $2019,$ the company

spent $$2,000,000$ to install solar panels for electricity in the building. The building was

sold for $$28,500,000$ in $2021.$ The annual maintenance cost was $$500,000.$ The cost of

advertising the sale of the building and the legal fees amounted to $$1,500,000.$

b$.$ A motor vehicle was purchased for $$5$ million on January $1,2018.$ The vehicle was sold

in $2021$ for $$4\mathrm{.}5$ million.

c$.$ Bought an antique painting for $$3\mathrm{.}5$ million in $2019.$ The painting was sold in $2021$ for

$$10$ million.

d$.$ Purchased a government bond for $$5,000,000$ in $2018$ and sold it for $$7,500,000$ in $2021.$

The company is entitled to an Annual Exemption of $$500,000.$ Capital losses as of $1$ January

$2021$ were $$1,500,000.$

Calculate the capital gains tax in $2021,$ assuming a capital gains tax of $15\%.$

$14$ marks

Part C

John Peter is aware that there is no Capital Gains tax in Jamaica. He decided to buy a large piece

of land. The land was hilly, so he blasted it to make it flatter, installed a soak away so the water

does not settle on the land and made several roadways for ease of access. Six months after he

purchased the land, he subdivided the area and sold it in lots to $30$ separate persons, thereby

making a large gain.

Required

Advise Mr$.$ Peter how these gains would be treated for tax purposes in Jamaica. Appropriate case

laws should be included in your answer.

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