Student Name: __________________________

Student ID Number:_______________________

NATIONAL UNIVERSITY OF SAMOA

FACULTY OF BUSINESS AND ENTREPRENEURSHIP
HAC 315: TAXATION – TEST 2
SEMESTER 2, 2023

TIME ALLOWED: 2 hours, 10 minutes (including reading time)

INSTRUCTIONS:
1. PRINT (in CAPITALS) your Name and Student ID Number above
2. Closed book test: no reading materials, notes, etc permitted
3. You may use a standard calculator
4. There are eight sections. You must answer each part of every question,
including sub-questions
5. Answer all questions on the test paper. Raise your hand if you need extra
paper
6. Write all words and numbers CLEARLY
7. Show all calculations where needed
8. Answers must be rounded off to the nearest two decimal points (ie nearest
sene)
9. NO talking and mobiles must all be switched off during test
10. Noone may leave in the first 40 minutes or in the last 10 minutes. Raise your
hand if you finish and want to leave between these times.

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Section A: Income Tax Theory (12 marks)

1. What are the due dates for the following?

i. Payment of salary & wage tax deducted by an employer (1 mark)

15th of the following month (monthly)

ii. Payment of final income tax for a standard income tax year (1 mark)

31 March following the tax period

iii. Payment of each instalment of provisional tax for a standard income tax year (1 mark)

31st March, 31st July, 31st October

2. What are two differences between withholding taxes for residents and non-residents? (2 marks)

 WHT for residents can be refunded whereas non-residents cannot claim refund
 WHT rate 10% for residents; 15% for non-residents

3. Describe how income tax liability is determined for the following; please clarify the rate(s) applied
and the tax base:

i. Sole Trader (2 marks)

Based on profit and uses same schedule as PAYE:

0- 15,000 not taxed

15001- 25000 taxed @ 20%

25,000 + taxed @ 27%

ii. Partnership (2 marks)

Each partner files their own income tax return to declare their share of profit from partnership and
taxed same way as individuals

iii. Company (2 marks)

Any profit is taxed @ 27%

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4. True or False: “All contracts are taken to be subject to tax unless they are part of an international
agreement that explicitly exempts income or the income is listed as exempt in the legislation? (1
mark)

True

Section B: Salary and Wage Tax (20 marks)

Use the table of rates provided to calculate the fortnightly salary and wage tax payable for the two
paydays in August 2023 (8th and 22nd August 2023), for each of the following resident individuals

1. Anita is paid an annual salary of $32,500. She is given accommodation that is owned by her
employer with a taxable value of $600 per fortnight. Every fortnight, her employer gives her
$300 in cash for the high costs of living (being $250 for food and $50 for electricity). (4 marks)

Total income = $1,250 + $600 + $300 = $2,150

Tax = $397.96 for both fortnights

2. Enele has a big family and is paid an annual salary of $18,200. Every fortnight, he is also paid a
cash meaalofa that is equivalent to 20% of his fortnightly salary. Additionally, he is given a “large
family subsidy” of $200 every fortnight. Finally, he was given a bonus of $200 on the second
fortnight only. (4 marks)

1st F/N – Total income = $700 + $140 + $200 = $1040; tax = $98.26

2nd F/N- Total income + $1040 + $200 = $1,240; tax = $152.26

3. Iose, an office worker, is paid $600 a fortnight. He works overtime and received $60 overtime
pay for both pay periods. He was also given a bonus of $100 on the second fortnight (4 marks)

1st F/N – total income = $600 + $60 = $660; tax = $16.80

2nd F/N – total income = $660 + 100 = $760; tax = $36.80

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 4. Olioli, a casual tradesman employee, is paid at a rate of $13.50 per hour, or $1080 for a 80-hour
(10 days x 8 hours per day) fortnight. He is also paid $6 for each day he works, to cover travel
costs. He took two days leave (without pay) during the first fortnight. (4 marks)

1st F/N – total income = $864 + $48 = $912; tax = $67.20

2nd F/N – total income = $1,080 + $60 = $1,140 ; tax = $125.26

5. William is also a casual employee and is paid at a rate of $10.50 per hour, or $840 per fortnight
(10 days x 8 hours per day). He is also paid $7.50 for each day that he works, to cover his travel
costs. He also received a bonus of $200 during the second fortnight only. He took three days
leave (without pay) during the first fortnight. (4 marks)

1st F/N – total income = $588 + $52.50 = $640.50; tax = $13

2nd F/N – total income = $840 + $75 + $200 = $1,115; tax = $118.51

Section C: Salary and Wage Tax Plus Other Income (5 marks)

1. If Lilly’s salary was $1,600 per fortnight, calculate how much salary and wage tax should’ve been
paid for the whole year? (2 marks)

$249.46 x 26 = $6,485.96

2. If Lilly’s other taxable income was $7000, how much income tax must’ve been paid on such
other taxable income? Show all calculations (3 marks)

A: salary $41,600 + other income $7,000 = $48,600; tax $8372

B: $6,485.96

Income tax to be paid = $8,372 - $6,485.96 = $1,886.04

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Section D: Depreciation (10 marks)

A local company, Coin Save Ltd, which is registered for VAGST in Samoa, purchased a new plant from
Auckland on 30th September 2019 for NZD $57,000. The Company paid $102,600 Samoan Tala. The plant
was shipped to Apia for a cost of NZD $2,500 ($4,500 Samoan tala), being NZD $2000 for freight plus
NZD $500 for shipping insurance. The equipment arrived in Apia on 31 st October 2019. After clearance
by Customs, the plant was delivered to the company for $690 (inclusive of VAGST) and was then
installed on 1 November 2019 at a cost of $1,500 plus VAGST. The company also paid the following
costs, to clear the plant from Customs:

Customs duty $2,000

Handling fees and charges $100

VAGST $7,500

Using the declining balance method at a depreciation rate of 20% you are required to prepare a detailed
depreciation schedule, showing the actual taxation depreciation allowances the company may claim
each year, as well as the taxation closing written down values each year for:

a) Year ended December 2019;

b) Year ended December 2020;
c) Year ended December 2021; and
d) Year ended December 2022

Show all calculations with your answers:

Cost: Plant $102,600 + freight $4,500 + delivery $600 + installation $1,500 + duty $2,000 + handling fees
$100

Total cost = $111,300

Year Opening Value Depreciation Closing Value

2019 111300 3710 107590
2020 107590 22260 85330
2021 85330 22260 63070
2022 63070 22260 40810

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Use this page for calculations

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Section E: Trading Stock (8 marks)

Best Value Ltd (“BV”) commenced operations in Samoa in April 2021. In the year ended
31/12/2021, it purchased stocks of building materials costing $371,800. At the end of the
financial year, BV has $97,600 worth of building materials (at cost) on hand. How should the
costs of all such materials be reflected in the Taxation Accounts for the financial year? In the
next financial year (Y/E 31/12/2022), BV purchased stocks of building materials costing
$530,500. At the end of that financial year, the company had $72,640 worth of building
materials (at cost) on hand.
What trading stock entries would appear in the normal Tax Trading Accounts each year?

2021 2022
Opening stock - 97,600
Plus Purchases 371,800 530,500
COGAFS 371,800 628,100
Less Closing Stock (97,600) (72,640)
COGS 274,200 555,460

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Section F: Capital Gains Tax (10 marks)

Tara bought land in Samoa on 1 st June 2019 for $272,000. She also paid stamp duty $1,500 and
legal fees $500 at that time. In 2021, she got married and moved to Sydney with her husband.
She decided to sell her land through a real estate agent. The land was sold on 31 st March 2022
for $510,000 from which the estate agent deducted $7,500 for commission and associated
disposal costs. You are required to:
i. Prepare a table showing any change in the value of the property over the years Tara
owned it;
ii. Calculate the amount (if any) of capital gains tax upon sale of this property.

Show all calculations

Year Cost NRV 5% cost adjst.

2019 274,000
2020 287,700 13,700
2021 302,085 14,385
2022 305,861.06 3,776.06

Capital Gain = Sale price $510,000 – Fees ($7,500) – Cost ($305,861.06) = $196,638.94
Capital gains tax = $196,638.94 x 10% = $19,663.89

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Section G: Individual Income Tax (10 marks)
Tavita is a builder who runs a small private business of repairing and renovating buildings on a
part time basis. He is also employed, full time, on a fortnightly wage of $750 each fortnight. For
the year ended 31 December 2020, he receives a total wage of $19,500 from which his
employer correctly deducts (and paid to MCR) salary and wage tax amounting to $905 as well
as correctly deducting all NPF and ACC contributions (of 10% and 1% respectively). As his small
business is small, he did not have to register for VAGST. During the year, his part time business
records, plus all his bank records, show the following transaction totals:

Receipts
Net salary banked into his bank account 16,450
Total income from building jobs 65,500
gifts received on his 60th birthday 2,500
bank term deposit interest credited 460
dividend received 340

Payments
building materials * 20,250
business license 282
donations: church ($2,000); others ($850) 2,850
fares and costs to visit family in Australia 4,650
stationery & general expenses - all for business * 950
withholding tax deducted by bank on interest 54
wages for domestic house staff 3,700
food and all other private expenses ** 9,775

Notes:
*The building material costs included VAGST (15%). All were consumed during the year, but the
total includes $850 (including VAGST) for materials he used for his own house. Stationery &
general expenses costs also included 15% VAGST

** the private expenses also include VAGST of 15% on those items that are subject to VAGST.
The amount also includes all his motor vehicle expenses for the year, a total of $1,500. His
records of the actual mileage traveled, for his part time business for the year, shows that 20%
of total travel was wholly for such business.

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Based on all the information given, you are required to:
i. Calculate the amount of residual income and income tax liability that must be paid
by Tavita
ii. Calculate the amount of any provisional tax payable by him for 2021 and due date of
each instalment
Show all calculations.
Residual Income:

Assessable income $65,500

Less:
Materials $19,400
Business License $282
Stationery & General $950
Motor Vehicle $300

Total expenses ($20,932)

Profit $44,568

A: salary$19,500 + other income $64,568 = $64,068; tax $12,548.36

B: $905 (given in question)
Income tax payable = $12,548.36 - $905 = $11,643.36

Provisional taxes = $11,643.36/ 3 = $3,881.12 due 31 st March, 31st July & 31st October 2021

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Section H: Provisional Taxes (5 marks)
The tax liability for ABC Ltd for tax year 2020 was $15,000. Throughout 2021, a total of $9,000
in provisional taxes was paid to Ministry of Customs and Revenue. Total tax liability for
performance in tax year 2021 was assessed to be $18,000. Calculate the amount of any tax that
ABC Ltd is expected to pay on 31st March 2022 (including any final and provisional taxes).
Show all calculations

Total tax for 2021 $18,000

Less Provisional taxes paid ($9,000)
Final tax $9,000
Add: Provisional tax $6,000
Tax to be paid 31 March 2022 $15,000

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