| |
How to determine the 50% rule?
How to determine
the 50% rule?
Working Example:
Income and
Expenditure Account of MCST ABC
|
|
$
|
|
$
|
|
Expenses:
|
|
Revenue:
|
|
|
Cleaning
expenses
|
80,000
|
Maintenance
fund contribution
|
2,000,000
|
|
Adminstrative
expenses
|
150,000
|
License
fees
|
130,000
|
|
Utilities
|
1,500,000
|
Rental
of concourse
|
35,000
|
|
Repair
& Maintenance
|
200,000
|
Gross
car park income
|
800,000
|
|
Management
Fees
|
500,000
|
Interest
income
|
6,000
|
|
Security
contract expenses
|
200,000
|
|
|
| |
2,630,000 |
|
|
| |
|
|
|
| Net
Surplus |
341,000
|
|
|
| |
|
|
|
| |
2,971,000 |
|
2,971,000 |
In order to
determine if the MCST ABC satisfies the 50% requirement, we need
to make a comparison of receipts between members and non-members.
Comparison
of Receipts from Members and Non-Members
| Receipts |
Members |
Non-Members |
| |
$
|
$
|
| Maintenance
fund contribution |
2,000,000
|
-
|
| Licence
Fees |
-
|
130,000
|
| Rental
of concourse |
-
|
35,000
|
| Gross
car park income |
-
|
800,000
|
| Interest
income |
-
|
6,000
|
| |
|
|
| |
2,000,000
|
971,000
|
| Percentage |
67.32%
|
32.68%
|
As more than
50% of the receipts are from members, the MCST is not deemed to
be carrying on a business. However, it will be taxed on the other
sources of income derived from dealings with non-members. Thus,
tax is payable on the following income: -
| |
$ |
| License
fees |
130,000 |
| Rental
of concourse |
35,000 |
| Interest
income |
6,000 |
| |
171,000 |
Please refer
to IRAS website for details about tax rates and computation:
Updated
January 2006
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|
