TX4305MS09-10..doc

University of Limerick OLLSCOIL LUIMNIGH DEPARTMENT OF ACCOUNTING FINANCE KEMMY BUSINESS SCHOOL END OF SEMESTER EXAMINATION MODULE TITLE: Taxation Theory and Practice MODULE CODE: TX4305 SEMESTER: Autumn ACADEMIC YEAR: 2009-2010 PERCENTAGE OF TOTAL MARKS: 75% DURATION OF EXAM: 2?Hours LECTURER(S): Margery Stapleton EXTERNAL EXAMINER: Dr Emer Mulligan INSTRUCTIONS TO CANDIDATES: Answer question 1 and two other questions All questions carry equal marks. Marks will be awarded for neatness and clarity. Tax tables are set out at the end of the paper. Question 1 – compulsory Philip O’ Dwyer and his wife Mary have been married for a number of years and are jointly assessed for income tax purposes. The following information relates to the tax year 2009: Philip Philip (aged 49) ceased to practice as a self-employed accountant on 31 March 2009. His tax adjusted profit for the 9 month period ending 31 March 2009 amounted to €85,060. Philip’s tax adjusted profit for the year ended 30 June 2008 amounted to €96,000. Philip secured employment on 1 May 2009 with ABC accountants. His salary to 31 December 2009 was €35,000. PAYE deducted was €8,500. Philip received dividends of €3,750 (net of dividend withholding tax) on 1 March 2009. Mary Mary (aged 45) is a full time director with Cutting Edge Ltd, an unquoted trading company. Mary’s gross salary for 2009 was €94,100. PAYE deducted amounted to €17,600. As Cutting Edge Ltd does not have a pension scheme Mary paid a retirement annuity premium of €8,000 into a Revenue approved pension scheme. Mary is provided with a company car. The original market value of the car was €30,000 (after allowing 10% cash discount).The total annual kilometres are estimated at 46,400 kilometres of which 8,000 are private. In 2007 Mary took out a loan of €50,000 to acquire shares in Cutting Edge Ltd. In 2009 Mary paid interest of €2,500 on this loan. Mary received bank interest of €5