Taxation of Business Assets and Losses

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What is the tax treatment of gains arising from the sale of business assets on which depreciation has been allowed?

Taxed at a higher rate

Taxed at a lower rate

Exempt from tax

Taxed at the normal rates (correct)

For how many years can tax losses be carried forward for approved mining companies?

Ten years

Three years

Five years

Seven years (correct)

Is the carryback of losses permitted?

Yes, with conditions

Only for primary production ventures

Yes, without conditions

No, it is not permitted (correct)

How is income derived from sources outside the Solomon Islands taxed?

At the same rate as domestic income Signup and view all the answers

What is the limit of the foreign tax credit allowed?

The lesser of the foreign tax paid or the Solomon Islands tax payable Signup and view all the answers

What is the withholding tax rate on technical service fees paid to a nonresident?

20% Signup and view all the answers

What is the withholding tax rate on lease income paid to residents?

10% Signup and view all the answers

What is the withholding tax rate on dividend payments to nonresident companies?

30% Signup and view all the answers

What is the purpose of the dividend imputation system?

To avoid double taxation of dividend income Signup and view all the answers

What is the withholding tax rate on contracting income paid to nonresidents?

7.5% Signup and view all the answers

What is the withholding tax rate on management services paid to nonresident companies?

35% Signup and view all the answers

When must the foreign tax credit be utilized?

In the same fiscal period Signup and view all the answers

How can tax payers deduct improvements to plantation?

Either in the year the improvements are made or ratably over several years Signup and view all the answers

What is the duration for deducting mining expenditure?

Five years Signup and view all the answers

What is the entitlement for an approved mining company that has incurred expenditure in constructing approved infrastructure?

A credit against the income tax payable in the same year Signup and view all the answers

What is the general tax year for companies?

The calendar year Signup and view all the answers

What is the deadline for filing an income tax return for a 31 December year end?

31 March of each year Signup and view all the answers

When are payments of the estimated tax liability for the current year due?

20 March, 20 June, 20 September, and 20 December Signup and view all the answers

What is the withholding tax rate for dividends paid to a non-resident?

30% Signup and view all the answers

What is the withholding tax rate for interest paid to a resident?

10% Signup and view all the answers

What is the withholding tax rate for royalties paid to a non-resident?

15% Signup and view all the answers

Who can issue public rulings on the interpretation of the Income Tax Act?

The IRD Signup and view all the answers

What is the penalty for non-compliance with income tax filing or payment?

Penalties apply Signup and view all the answers

What is the purpose of the Dividend Imputation System?

To provide a tax offset to company members who receive dividends Signup and view all the answers

How is the franking credit calculated?

Dividend paid x company tax rate ÷ (1 - company tax rate) Signup and view all the answers

What happens to excess franking credits?

They are refunded to the shareholder Signup and view all the answers

What is the total assessable income for a shareholder receiving a fully franked dividend of $7,000 and having other income of $75,000?

$85,000 Signup and view all the answers

What is the imputation credit (gross-up amount) for a fully franked dividend of $7,000 with a company tax rate of 30%?

$3,000 Signup and view all the answers

What type of dividend is received by an individual shareholder in Example 2?

50% franked dividend Signup and view all the answers