Diploma in Taxation Brad Wilson Case Study - Accounting and Finance Assignment Help

Assignment Task:

Task:

Case study
Brad Wilson (aged 35 years) is married to Anna Quinn (aged 33 years). The couple moved to Ireland in January 2016 from Canada. Brad was born and raised in Canada, his parents are Canadian and he holds Canadian citizenship and a Canadian passport. Anna was born in Ireland and moved to Canada after college but she was always keen to return to Ireland to be near her parents and family who all live there.

Brad is self-employed and has operated a corporate catering business as a sole trader for the last 5 years. He recently emailed you a copy of a letter (dated 10 September 2021) that he received from the Revenue Commissioners advising him that Revenue are carrying out an audit of his VAT returns for the period from 1 January 2018 to 31 December 2018.

You meet with Brad on 15 September 2021 and he tells you the following:

• Brad’s bookkeeper has reviewed the VAT returns and payments for 2018 and all appears to be in order;

• Brad earns net rental profits of approximately €10,000 each year from the letting of an apartment that he owns in Toronto. The rent is lodged into his Canadian bank account and is used to fund the repayments of the mortgage on the apartment. Brad has not included these rental profits in any Irish tax return to date;

• Brad received a dividend of €10,000 in both 2020 and 2021 from a Canadian quoted company. No Canadian tax arose on these dividends which were paid into Brad’s Irish bank account. Brad presumes that no Irish tax arises on these dividends either given the fact that Canadian tax isn’t payable meaning he think he doesn’t need to include this income in his 2020 or 2021 Irish tax return; and

• A number of cash payments were made by Brad in 2018 to employees of the business. The cash payments related to bonuses and round sum expense payments. No PAYE was operated on these payments and Brad re-categorised the payments as miscellaneous expenses in the 2018 Statement of Profit or Loss. Brad assures you the approach he took in 2018 has not been repeated since and his accounts and PAYE payments for 2019 and 2020 are correct.

Requirements

1. Prepare a file note setting out, with explanations, whether each of the foreign income sources received by Brad is within the scope of Irish tax.

2. Write a letter to Brad advising how he should regularise his tax affairs in light of the information he gave you at the meeting and how to approach the Revenue audit.
 

3. Prepare Brad and Anna’s Tax Return for 2020 complete with supporting tax computations, schedules and calculations. This should include the following:
• Case I tax adjusted trading profit/(loss) for Brad’s business;
• Tax computation;
• Tax return; and
• A file note setting out the supporting technical basis of your calculations.
Note: a recalculation of Anna’s PRSI and USC in 2020 is not required.

4. Prepare a letter to Brad and Anna setting out their tax compliance obligations in respect of their 2020 income tax return.

5. Calculate, with supporting explanations, the total tax payable in respect of Anna’s severance package and set out how much Anna will receive overall net of taxation payable.

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