Managing Financial For Employment Share

Explanation of tax liabilities on various sources of Leonard Ong’s income

Describe about the Managing Financial for Employment Share.

1.a:- i) Leonard, a Singaporean by birth and having a permanent resident in Singapore, earned S$230,000 as employment income for the service, provided in Vietnam. Generally, income, earned from foreign sources, is exempted for taxation purpose. However, the foreign employment was related with his Singapore employments. Hence, it cannot treated as his foreign income and has to be assessed as fully taxable income (“Singapore Personal Income Tax – 2015 Guide | Individual Tax in Singapore”, 2016).

ii) The rental income, received by Leonard, from his Australian property is an income from overseas income property. Hence, it is not be included in the taxable income of Leonard.

iii) Leonard had earned income from his part-time employment as part-time lecturer in a private educational institution. The institution is situated in Singapore. Therefore, the income from part-time employment should also be considered as taxable income of Leonard.

iv)Winning from any kind of betting, such as lottery, horse racing, Singapore Sweep etc. are not taxable under Singapore taxation law. Therefore, the income of Leonard from winning in Big Sweep will not be taxable (“Winnings (Toto, 4D, etc.) – IRAS”, 2016).

If, Leonard has to pay tax only on his royalty income, then he has not to pay any tax, as the taxable amount of royalty income is lesser than S$20000 (“Income Tax Rates – IRAS”, 2016).

Leonard can claim tax relief for the alimonies, paid to his two previous wives. He paid S$2400 and S$1800 annually to his first and second wife respectively. Therefore, under the Singapore taxation rule, he can claim tax relief amounted to S$2000 for his first wife and S$1800 for his second wife (“Spouse Relief/ Handicapped Spouse Relief – IRAS”, 2016).

2.a:- (100)

i) If Leonard contract any major illness, then he will be entitled to receive coverage amounted to S$90000 from 5-year limited-pay whole life plan. However, if he contracts cancer, then he will receive S$800000 under the Term Insurance Plan also (Tan et al., 2014). From the following case study, it is evident that Leonard despite suffering several lumps around his neck bought up an insurance plan, which covered the critical illness benefit unless he dies of cancer. The insurable term plan stated further that such insurable sum is only payable on the event of Leonard contracting cancer however; the plan stipulated that such sum would be received by the successor only because of death. It is worth mentioning that such insurable coverage would not be receivable by Leonard unless he suffers any other form of critical illness. On the other hand, due to Leonard’s sudden death the mortgage loan taken by Leonard will provide as an additional coverage for the remaining balance of such loan.

Calculation of tax liability on Royalty Income

ii) The successor of Leonard will receive S$800000 under Term Insurance plan, if Leonard dies from cancer within one year and the insurance coverage would not received within the year for the treatment purposes. If, Leonard dies from any other critical illness, then his successor will not receive any insurance coverage from any of the insurance (Tan, 2015).

However, due to Leonard’s death, the Mortgage-Reducing Term Insurance Plan will cover the outstanding balance of the loan, taken for purchasing the condominium.

Wife’s duty of maintenance towards husband:

For number of years it was apparent that the law in Singapore was such that it required husband to provide for maintenance for his ex-wife where it was necessary. However, in the recent amendments made to the women’s charter, it is observed that women’s also holds “duty of maintenance” towards husbands, which subsequently allows husbands to apply for maintenance (Fu, 2016). It is the responsibility of wife towards their husband who is ill or incapacitated husbands or ex-husbands for maintenance on the grounds that if he is;

Incapacitated due to mental or physical disability, before or during the course of marriage

Wife’s also owe a duty of maintenance if the husband is unable to earn a living on account of disability

If the husband is unable to support himself

Thus, maintenance should be originally based on the reasonableness and fairness, which suggest that men assuming that the initial role in care giving or household labour is also accountable for maintenance.

3 a (II):

As stated under “Section 113 of the Women’s Charter” provides the court with the authority to order husband to pay for maintenance to his wife or former wife, either during the marital proceedings or after the divorce, “judicial separation or nullity of the marriage” has been finalized by the court. The court orders that the husband who is bound to maintain his wife either by supporting financially by paying the sum in lump sum or through periodic payment of the sum assured. The court also states that substantial division of matrimonial assets may be made in order to justify the maintenance for the wife.

According to “Subsection 2 of the Women’s Charter” a husband is required to maintain his wife on the grounds that

Where the child has not attained the age of 21 years or any siblings who has attained the age of 21 years

any person who is a guardian or has original custody of the child,

Calculation of taxable rental income

It is worth mentioning that the court during the time of maintenance for a wife or child under the section have regard to all the circumstances surrounding the situations (Downs, 2016). This concerns the financial needs of the wife and children, the earning capacity of the wife or any other financial resources relating to wife.  As stated under the legal regulations of Singapore at general degree it sets out that the context for the following discussion is specifically aimed at marital duties of wives towards their husband. “Section 46 (1) of the Women’s Charter” lays down the rights and duties for maintenance of both husband and wife. The charter encourages the ideals and cajoles of wives towards their husband only to the extent, which is practicable. As mentioned under the association of women it is said that maintenance of husband should be based on the fairness and also provided further suggestions that men should assume their original role in the form of providing care or household labour is also eligible for maintenance. 

According to the trust draft settler, trustee and beneficiary are mentioned below

“Settlor”: Leonard Ong

“Trustee”: Her two wives

“Beneficiaries”: Lynette Ong and Bridget Ong

“Intestate Succession Rules” is applicable in the case of Leonard Ong. The rule states that any decedents who fail to prepare a will or did not make any complete distribution of their estate then in such case the state’s defaulting statutory scheme or intestate succession rules will be used as basis for disposition of their assets (Downs, 2016). In the current case study Leonard failed to distribute the trust draft and dies, leaving the properties undistributed among his probable beneficiaries. Thus, it could be possible under the Intestate Succession Act distribution of Leonard estate can be made regardless of where the property is located.

As stated under the “Intestate Succession Rules” and given the circumstances of concerning the mobility of the current society it is perhaps possible for the laws concerning of more than one state is applicable to another estate. For example, it could be viewed that law relating to the law of decedent governing the location of the property. Usually, intestacy statutes preserve the preference for near relatives in determining the order of preference for dolling out the assets. A common statutory pattern provides for the line of succession who are surviving spouse, children or next of kin are covered under the decedent’s statutory schemes however a common law is applicable where spouse is not an heir. Accordingly it can be concluded that Leonard property would be vested in the interest of his children including the illegitimate child.

Calculation of taxable Share Option Benefit

It would be inappropriate to extend the scope of the “IFP (S) Act” to provide the illegitimate child concerning of deceased person from invoking it. However, it is the legislative call of the policy since “section 68” has already imposed a duty on the natural parent to maintain the illegitimate child. The law further describes that the duty concerning the natural parenting regarding the maintenance of an illegitimate child should not be terminated with the death of Leonard. The child estate would continue to be held liable to discharge that duty. The original issue should be viewed in the court of law that the illegitimate child is entitled to claim for support under the IFP (S) Act. It should not be disputed on the fact that deceased was the biological father of “Daphne” and the two other children since his name appeared on both their certificates. It should be noted that it is also not considered as challenge that prior to the death of Leonard, the deceased was providing financial support to his probable third wife and his earlier two children. 

Persons who are entitled to receive the property of Leonard estate are “Daphne, Lynette and Bridget”. As it was stated in the case of “AAG v Estate of AAH, deceased 2009 SGCA 56” it was argued that no society of self-respecting nature can put blame on the shoulders of innocent children in order to encourage the better behavior of their parents of having children during the marriage. The arguments under this case is however compelling in nature. The court ruled that it would be unfair to punish the innocent children by denying the illegitimate child the maintenance, which a legitimate child is entitled to receive upon the death of his father (Jennings, 2013). It is worth mentioning that in the current case the father was supporting the child until his death.

References & Bibliography :

Downs, R. (2016). Legal views: property law. Without Prejudice, 16(3), 22-23.

Fu, C. S. (2016). Promising a Happy Future: The Outcome-based Learning of” Marriage and Family”. Jiaoyu Yanjiu Yuekan= Journal of Education Research, (266), 60.

Guthrie, G. C., & Lemon, L. D. (2014). Mathematics of interest rates and finance. Pearson Higher Ed.

Harper, M., & Ablett, M. (2016). Why it pays for the wealthy to divorce in Singapore (and not Hong Kong). Trusts & Trustees, ttw027.

Income Tax Rates – IRAS. (2016). Iras.gov.sg. Retrieved 16 October 2016, from https://www.iras.gov.sg/irashome/Individuals/Locals/Working-Out-Your-Taxes/Income-Tax-Rates/

Jennings, M. M. (2013). Real estate law. Cengage Learning.

Singapore Personal Income Tax – 2015 Guide | Individual Tax in Singapore. (2016).Guidemesingapore.com. Retrieved 16 October 2016, from https://www.guidemesingapore.com/taxation/personal-tax/singapore-personal-tax-guide

Spouse Relief/ Handicapped Spouse Relief – IRAS. (2016). Iras.gov.sg. Retrieved 16 October 2016, from https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/Deductions-for-Individuals/Spouse-Relief/-Handicapped-Spouse-Relief/

Tan, B. S. (2015). Mandatory annuitisation, wealth transfer and utility enhancing policy: Singapore’s CPF Life scheme. International Journal of Public Policy, 11(4-6), 143-151.

Tan, K. B., Tan, W. S., Bilger, M., & Ho, C. W. (2014). Monitoring and evaluating progress towards universal health coverage in Singapore. PLoS Med, 11(9), e1001695

Winnings (Toto, 4D, etc.) – IRAS. (2016). Iras.gov.sg. Retrieved 16 October 2016, from https://www.iras.gov.sg/IRASHome/Individuals/Locals/Working-Out-Your-Taxes/What-is-Taxable-What-is-Not/Winnings–Toto–4D–etc–/#title1

www.iras.gov.sg/irashome/uploadedFiles/IRASHome/e-Tax_Guides/etaxguides_IIT_ESOP_2013-6-24.pdf. (2016). www.iras.gov.sg. Retrieved 16 October 2016, from https://www.iras.gov.sg/irashome/uploadedFiles/IRASHome/e-Tax_Guides/etaxguides_IIT_ESOP_2013-6-24.pdf

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