Tax Report

Objective: The rationale that Group Relief must be used before Carry-back Relief is allow (if both are elected) may be that the tax rates in past years are usually higher than current year, so the tax authority would not want the manipulation of the order of GR and CBR to be tax motivated. However, by carefully selecting the numbers of claimant within the group, and the order of the Group Relief, one would be able to fully utilize the carry-back relief, while still employ some the group relief, so as to utilize the loss items to the fullest and minimize Group tax. This project tries to discover the factors that affect the effectiveness of the two tax strategies: to fully utilize Group Relief, and to fully utilize Carry-Back Relief. Background Information The following are the Assessable income for the respective companies as at the end of their respective Basis Period Year 2009: Assessable Income 600,000 350,000 0 150,000 250,000 100,000 80,000

Parent Ltd Child Ltd Happy Ltd Slow Ltd Foreign Ltd Sad Ltd Quick Ltd

Forecasted CI for YA 11 of Poor Ltd (assume making profit) Poor Ltd 300,000

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R&R is listed separately and Loss is exclusive of R&R. The amount of R&R claimed for YA09 is $100,000. YA07 Capital Allowance Trade Loss - R&R Donations AI 140,000 YA08 60,000 YA09 150,000 YA10 200,000 50,000 70,000 20,000 0

Below are the ultimate shareholders for Poor Ltd: Shareholders A B C D E Total 31/12/06 to 1/1/07 20 30 30 20 100 31/12/07 to 1/1/08 40 10 30 20 100 31/12/08 to 1/1/09 31/12/09 to 1/1/10 50 5 45 100 31/12/10 to 1/1/11 45 50 5

30 40 30 100

100

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The percentage shareholdings of Parent Ltd group as at 1 January 2009 are as in the graph. The country of incorporation for all companies is Singapore except for Foreign Ltd. Their respective year-ends are also indicated below.

During the year, Happy Ltd sells 2% share of Poor Ltd on 1 July 2009 and buys back 3% share on 1 September 2009. There were no further acquisitions made...