ADVANCED TAXATION PROFESSIONAL 2 EXAMINATION - AUGUST 2008 NOTES: You are required to answer any 5 Questions. (If you provide answers to all questions, you must draw a clearly distinguishable line through the answer not to be marked. Otherwise, only the first five answers to hand will be marked.) TAX TABLES ARE PROVIDED NOTE IF YOU MAKE AN ASSUMPTION IN ANY QUESTION PLEASE STATE YOUR ASSUMPTION CLEARLY TIME ALLOWED: 3.5 hours, plus 10 minutes to read the paper. INSTRUCTIONS: During the reading time you may write notes on the examination paper but you may not commence writing in your answer book. Marks for each question are shown. The pass mark required is 50% in total over the whole paper. Start your answer to each question on a new page. You are reminded that candidates are expected to pay particular attention to their communication skills and care must be taken regarding the format and literacy of the solutions. The marking system will take into account the content of the candidates' answers and the extent to which answers are supported with relevant legislation, case law or examples where appropriate. List on the cover of each answer booklet, in the space provided, the number of each question(s) attempted. The Institute of Certified Public Accountants in Ireland, 17 Harcourt Street, Dublin 2.
THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IN IRELAND ADVANCED TAXATION PROFESSIONAL 2 EXAMINATION - AUGUST 2008 Time Allowed: 3.5 hours, plus 10 minutes to read the paper. You are required to answer any 5 questions. All questions carry equal marks. If you make an assumption in any question, please state your assumption clearly. 1. Johnny Somers is an engineer with Konstructit Ltd., a civil engineering company in Carlow. He is married to Yvette and they have three young children. Yvette currently has a part time job in a retail outlet and has rental income of 35,000 per annum from a property in Spain left to her 10 years ago. Johnny has dividend income from shares in a publicly quoted company. He also has deposit interest from Bank of Ireland. Both Johnny and Yvetteʼs parents are Irish. Johnnyʼs employers are setting up a subsidiary in Dubai, Konstructit (Dubai) Ltd. They need Johnny to move to Dubai for five years and have offered him a salary of 180,000 for the first two years and 200,000 for the remaining three years of his contract. This salary will be paid by the subsidiary company. Johnny will be expected to move on 1 January 2009. Yvette will not work outside the home in Dubai. Johnny and Yvette are feeling positive about the move and believe that given the Income Tax position in Dubai, they will be able to accumulate substantial savings. They will let their house in Carlow during their absence and will stay in an apartment, provided by the company in Dubai. Yvette and Johnny inform you that, before their return to Ireland, their intention is to instruct an auctioneer to sell their house in Carlow. They will then use the proceeds plus their savings to buy a larger house. Yvette proposes to sell her property in Spain in 2 years as her sister has told her she will be in a position to buy it at that time. REQUIREMENT: (a) Johnny and Yvette are unsure of their tax position in Ireland and have asked you to explain some of the following concepts. i) Domicile. ii) Residence. iii) Ordinary Residence. iv) Fiscal Domicile. (6 marks) (b) (c) Advise Johnny and Yvetteʼs how their Irish, Spanish and Dubai income will be assessed to Irish tax. (10 marks) State how any gain arising on the sale of their house will be computed if: i) They sell it while they are in Dubai. ii) They sell it sometime after their return to Ireland. (4 Marks) [Total: 20 Marks] Page 1
2. (a) Martin Farrelly died in a tragic accident in Bilbao in March 2007. Martin had moved from Kilkenny to Spain in 2001 following a lotto win. He purchased a farm in northern Spain. Martin left his farm in Spain to his nephew Conor, who has an agricultural degree from UCC. Conor had moved to Spain in 2005 to work with Martin to gain practical experience with the intention of buying his own farm in Donegal. The market value of Martinʼs farm in March 2007 was 480,000. Martin left his house in Kilkenny to his widowed sister Ruth, who is now aged 56 and has lived in the house since Martin left for Spain. The house had a market value of 400,000 in March 2007. Martin left a cottage in Co. Kilkenny to a neighbour in Spain (no relation) for all the help he had given him since his arrival in Spain. The cottage had a market value of 80,000 in March 2007. Martin had taken out a policy in accordance with Section 72 of the CAT Act (commonly referred to as a Section 60 policy) before his death. The value of the policy is 60,000. The benefits are to be divided equally among his beneficiaries. REQUIREMENT: You are required to calculate the Irish inheritance tax, if any, that arises on the death of Martin Farrelly. (You may assume that no prior benefits have been taken by any beneficiary.) (10 marks) (b) On the 1st July 2007 Carly Taylor, a single woman, transferred a house she owned in Cork to her son Fred (aged 40) subject to a right of residence to her niece Christine (aged 58). The value of a life interest in an annuity for a woman aged 58 is 0.6778 (from table). The value of the property is 580,000. The gross annual value of the property is 55,000. The annual value of the right of residence is 16,000. REQUIREMENT: Calculate the capital acquisition tax that arises for Christine and Fred on the gift from Carly. (5 marks) (c) REQUIREMENT: Outline, in what circumstances, a 6% and 1% charge may arise to a discretionary trust. When can either of these charges be reduced? (5 marks) [Total: 20 marks] Page 2
3. Choosarus Ltd: Choosarus Ltd operates a number of shoe shops in Cork. It has been in business since 1997. Up to 2006 the company had 4 outlets. Choosarus Ltd decided to open 2 new shops and built both in urban renewal areas for the purpose of its trade. The properties were occupied and were brought into use at the beginning of January 2007. The total cost of the 2 properties is 2,100,000 (VAT xcl.) The builder has provided the following breakdown of this figure: Builders costs 1,200,000 Site cost 600,000 Profit 300,000 The companyʼs results for year ending 31 December 2007 are as follows: Note 1. Turnover includes: Turnover (Note 1) 4,500,000 Cost of sales 1,900,000 Gross Profit 2,600,000 Overheads (Note 2) 1,200,000 Net Profit 1,400,000 Deposit interest 70,000 Rental income 180,000 Irish dividends 40,000 Interest on Government stock 10,000 Note 2. Overheads include the following: Note 3. Directors salaries 300,000 Medical expenses (Note 3) 10,000 Legal expenses: Renewal of existing leases 2,000 Purchase of new building 20,000 22,000 Paid to Emmet Pontin to cover urgent surgical procedure. The company also loaned 10,000 to him to cover the balance. Emmet owns 100,000 5% preference shares. He is not a Director and is not employed by the company. During the year the company paid Emmet the full dividend on his shares. The company paid no other dividends. In addition, Written down values at 1 January 2007 were as follows: Shoe shop equipment 300,000 (all purchased on 1.2.2004) The cost of additions to plant and equipment for the new shoe shops was 170,000. Choosarus Ltd has unused losses forward of 300,000. REQUIREMENT: Advise the Financial Controller, Brendan Brickley, of the companyʼs liability to corporation tax and income tax for the year to 31 December 2007, maximising all available reliefs. (20 Marks) [Total: 20 Marks] Page 3
4. Arthur Mulvihill acquired all the shares in Myquiros Ltd (Myquiros) for 100,000 in 1998. In January 2007, Alanadus Ltd (Alanadus) acquired a 60% interest in Myquiros by issuing 1000 shares to Arthur in exchange for his shares in Myquiros. The value of the Myquiros shares was 850,000. In March 2007 Alanadus had a bonus issue of 1 share for every 2 held. In June 2007 Alanadus sold a property it owned in Spain to Myquiros for 200,000. Alanadus had purchased the property for 90,000 in June 2000. In August 2007 Arthur gifted a 20% interest in Myquiros to his daughter Maureen. The value of the shares at that time was 300,000. In September 2007 Alanadus sold a property in Portugal to Myquiros for 250,000. Alanadus had purchased the property for 100,000 in May 1999. In November 2007 Arthur sold half his interests in Alanadus for 1,000 per share. Maureen sold her interest in Myquiros for 370,000 at the same time. Alanadus had trade income of 60,000 and rental income of 80,000 from its foreign properties for the year ended 31/12/2007. Alanadus paid no dividends during the year and will not pay any within the next 18 months. REQUIREMENT: (a) Advise Arthur and Maureen of their CGT liabilities for 31/12/2007. (12 marks) (b) Advise them when this is payable. (1 mark) (c) Advise Alanadus of its corporation tax liability for 31/12/2007. (4 marks) (d) Outline the conditions that must be fulfilled for transfer of business to company relief to apply for year end 31/12/2007. (3 marks) [Total: 20 Marks] Page 4
5. Paul Duel is Managing Director of your main client Duel Ltd., a manufacturing company in Dublin. He approaches you for VAT advice. Paulʼs friend Bert had responsibility for compiling VAT returns. Paul thinks that Bert has been drinking on the job and has become concerned about his work. Your enquiries have uncovered the following transactions: In June 2007 VAT was reclaimed on: A company car costing 21,000 (net). A van costing 35,000 (net). Diesel for vans costing 12,000 (net). Petrol for vans 6,000 (net). The staff Christmas party was held in December 2007 and the total bill came to 25,000 inclusive of VAT @ 21%. Bert omitted to reclaim the VAT. A U.K. computer consultant was employed at a cost of 50,000. He did not charge UK VAT. During August 2007 the company had a major share issue and incurred legal fees totalling 100,000 plus VAT of 21%. The VAT was reclaimed. In September 2007 the company built a new staff canteen costing 100,000. VAT of 13,500 was reclaimed. The company has let one of its offices under a 22 year lease to Alban Ltd, a travel agent (exempt from VAT). The 4A procedures were adopted and no VAT was charged. There was no contact with the Revenue Comissioners. Duel Ltd acquired the property in 2004 for 1.2m. An independent valuer valued the lease at 650,000. The annual rent is 21,000 per annum and is reviewed every 6 years. The current multiplier is 21.7. The company incurred 20,000 plus VAT on professional services for the recent share issue and reclaimed the VAT input credit. REQUIREMENT: 1. State the VAT consequences of each of the above transactions. (15 Marks) 2. The company manufactures urns and exports approximately 94% of the goods manufactured, mainly to the Middle East. Paul has heard that the company could be exempt completely from VAT if it elected for and was entitled to a 13B authorisation. He would like to know more about this authorisation, the conditions that must exist before it is granted, and how this will impact on the above type of transactions in the future. Advise Paul. (5 Marks) [Total: 20 Marks] Page 5
6. Harry Mercer has the following income and payments. Trade Interior Designer 500,000 Capital allowances on plant 15,000 Initial allowance on tax incentive premises 319,400 Deposit interest (gross) 12,400 Dividends from patent company (exempt) 45,000 Rental Income 80,000 Interest on loan to acquire shares in trading company 25,100 Retirement annuity premium 40,000 Investment in qualifying BES company 100,000 REQUIREMENT: The Finance Act 2006 introduced restrictions on the exemptions and reliefs that may be claimed by certain high net worth individuals. Advise Harry of the main provisions. (8 marks) Advise Harry of his Income Tax liability for 2007. (12 marks) [Total: 20 Marks] END OF PAPER Page 6
SUGGESTED SOLUTIONS THE INSTITUTE OF CERTIFIED PUBLIC ACCOUNTANTS IN IRELAND ADVANCED TAXATION PROFESSIONAL 2 EXAMINATION - AUGUST 2008 SOLUTION 1 (a) (i) Domicile: Domicile is generally considered to be the place the individual considers as his/ her permanent home to which they will return in due course. Domicile is usually determined by the domicile of the individualʼs father. This is referred to as the domicile of origin. An individual can, over time, change the domicile of origin by loosening ties with Ireland and developing closer ties with another country. (ii) Residence: An individual is considered Irish resident for a tax year if s/he spends: - 183 days in Ireland in that tax year, or - 280 days in Ireland over two tax years (provided they spend 30 days in Ireland in each year). (iii) Ordinary Residence: An individual is considered ordinarily resident in Ireland if s/he has been tax resident for the three prior tax years. An individual ceases to be ordinarily resident once s/he is non resident for each of the three prior tax years. (iv) Fiscal Domicile Fiscal Domicile is a concept of double taxation. It arises, where under the rules of two treaty countries, an individual is resident in both states. The application of each countriesʼ own tax laws (the main test of residence) may sometimes result in an individual being regarded as resident in each of the two states. If so, the 'fiscal domicile' provisions in a treaty goes on to provide a series of tests to determine the residence of the individual for purposes of the relevant treaty (his 'treaty residence'). (b) 2009 20011 Johnny and Yvette are domiciled, non resident and ordinarily resident. They are thus taxable in Ireland on their worldwide income less foreign employment income, trading income and Interest less than 3,810 Employment income - Dubai Rental Income from Irish Property Rental Income from Spanish Property Dividends from PLC (Assume Irish) Not Liable Liable. The tenant is obliged to deduct income tax at 20% from the gross rent and pay this to Revenue. Yvette can claim a credit against tax due on Case V profits. Liable but if taxable in Spain will be subject to terms of double taxation treaty. (Candidates are not expected to know the terms of the treaty) Liable Interest on Savings Dubai Bank Account Liable if greater than 3,810 Page 8
2012 20013 Johnny and Yvette are domiciled, non resident and not ordinarily resident. They are taxable in Ireland on Irish source income. Employment income - Dubai Rental Income from Irish Property Rental Income from Spanish Property Dividends from PLC Interest on Savings Irish Bank Account Interest on Savings Dubai Bank Account Not Liable Liable. The tenant is obliged to deduct income tax at 20% from the gross rent and pay this to Revenue. Yvette can claim a credit against tax due on Case V profits. Not Liable. Liable if Irish PLC and dividends are from Irish source income Liable Not Liable. (c) Property in Ireland is a specified asset. They are liable to Irish CGT regardless of when they sell. Johnny and Yvette can claim principal private residence relief on any capital gain arising from the sale of the house. The exemption is: Gain X period occupied or deemed occupied period of ownership Deemed occupied includes the last 12 months of ownership plus periods spent working abroad. They can only claim the period abroad provided: (i) (ii) They occupy the house as a residence following the period of absence. They do not have another residence qualifying for the relief. Therefore: (i) If the sell house while in Dubai then the period spent working in Dubai cannot be included in the numerator in the fraction. (ii) If they move back into their house when they return and it is regarded as their principal private residence, the numerator and the denominator in the exemption factor should be the same and should result in the gain being exempt. Page 9
SOLUTION 2 Capital Acquisitions Tax (a) Conor Ruth Neighbour Farm (note 1) 480,000 House 400,000 Cottage 80,000 Reliefs: Business Relief Nil - - Principal private residence - 400,000-480,000-80,000 Exempt 49,682 24,841 Taxable 430,318 55,159 Tax x 20% 86,064 11,032 Section 72 20,000 20,000 20,000 Excess 20,000 8,968 Exempt 24,841 Tax 66,064 nil 1,793 Note 1 Conor is ordinarily resident (b) Fred Christine Encumbrance free value 580,000 Less right of residence: 580,000 x 16,000/55,000 168,727 411,273 Exempt 496,824 Taxable nil Tax x 20% Right of residence: 168,727 x 0.6778 114,363 Exempt 49,682 Taxable 64,681 Tax x 20% 12,936 Page 10
6% Charge It is a once off charge and applies to the trust fund at a rate of 6%. The initial levy applies to discretionary trusts on the latest of the following dates. The date on which the property becomes subject to the discretionary trust; or The date of death of the settlor; or The date of the youngest principal objectʼs 21st birthday A principal object is defined as: The spouse of the disponer, The children of the disponer; and The minor children of a pre-deceased child of the disponer. There is a refund of half the initial levy if the trust is wound up within 5 years of the initial levy. This relief must be claimed; the Revenue Commissioners will not automatically make the refund. 1% Charge It is an annual charge and it applies to the trust fund at a rate of 1%. The annual levy commences the year after the year in which the initial levy is charged: for example, if the initial levy occurs on 6 May 2007, the annual levy will apply on 31 December 2008. There is no reduction of the 1% charge. Page 11
SOLUTION 3 Turnover 4,500,000 Less: Deposit Interest 70,000 Rental Income 180,000 Dividends 40,000 Government Stock 10,000 300,000 4,200,000 Cost of Sales 1,900,000 Overheads 1,200,000 3,100,000 Net Profit 1,100,000 Add: Medical Expenses 10,000 Legal Expenses 20,000 30,000 Adjusted Profit 1,130,000 Capital Allowances Plant & Machinery Item 1 Item 2 Total WDV 300,000 170,000 Cost 300,000 x 100 (100-37 1 /2) 480,000 170,000 W & T x 12 1 /2% 60,000 21,250 81,250 Commercial Property Allowable Cost 2,100,000 x 1,200 = 1,800 1,400,000 Free Depreciation 700,000 Building brought into use 01/01/2007. No expenditure in 2007. Total Capital Allowances 81,250 + 700,000 = 781,250 Adjusted Profits 1,130,000 Capital Allowances (781,250) Losses (300,000) Case i 48,750 Case iii 80,000 Case v 180,000 260,000 Corporation Tax 48,750 x 12.5% 6093.75 260,000 x 25% 65,000 71093.75 Page 12
Surcharge Case iii 80,000 Case v 180,000 260,000 Tax x 25% (65,000) 195,000 FII 40,000 235,000 Less 7_% 17,625 217,375 Distributions Made (17,500) 199,875 Surcharge 199,875 x 20% 39,975 Income Tax Loan to Participator 10,000 x 100 x 20% 2,500 80 Distribution: Medical Expenses 10,000 Tax credit 2,500 Gross 12,500 5% Preference Dividend 5,000 Total 17,500 Page 13
SOLUTION 4 Arthur Mulvihill CGT January 1998 shares in Myquiros cost 100,000. January 2007 Transferred 60% of Myquiros shares to Alandus in exchange for 1,000 shares in Alandus [no gain arises on transfer deemed cost of shares in Alandus 100,000 X 60% -share for share] March 2007 Bonus issue now holds 1,500 total cost 60,000 August 2007 Gift to daughter at market value cost 100,000 X 20% November 2007 sold 750 shares for 750,000 cost 60,000 X 50% August Gift 300,000 Cost 100,000 x 20% x 1.212 24,240 275,760 November Disposal 750,000 100,000 x 60% x 1.212 x 50% 36,360 713,640 Gain (275,760 + 713,640) 989,400 exempt 1,270 Chargeable Gain 988,130 CGT @ 20% 197,626 Maureen Mulvihill - CGT Proceeds 370,000 Cost 300,000 Gain 70,000 exempt 1,270 68,730 CGT @ 20% 13,746 Due Date Where a disposal takes place in the first nine months of the year (on or before 30th September), the due date is on or before 31 October in that year. Where a disposal is in the last three months of the year (on or before 31st December), the due date is on or before the following 31 January CGT @ 20% Alandus CT 364,384 @ 12.5% = 45,548 Case i 60,000 Case iii 80,000 140,000 Chargeable gain 364,384 504,384 364,384 X 12.5% 45,548 60,000 x 12_% 7,500 80,000 x 25% 20,000 73,048 Surcharge Case iii 80,000 Tax 20,000 60,000 Less 7_% 4,500 55,500 Distributions made Nil Surcharge 55,500 x 20% 11,100 Page 14
Chargeable Gain Property 1 Proceeds 200,000 Cost 90,000 X 1.144 102,960 Gain 97,040 Adjusted Gain 97,040 X 20/12.5 155,264 Property 2 Proceeds 250,000 Cost 100,000 X 1.193 119,300 Gain 130,700 Adjusted Gain 130,700 X 20/12.5 209,120 The relief applies: Where a person (other than a company) transfers a business. As a going concern to a company. Wholly or partly in exchange for shares in the company, relief from capital gains tax is available to the extent that the consideration for the transfer is taken in the form of shares. The whole of the assets of the business or all of those assets other than cash must be transferred. The relief does not apply unless the transfer is for bona fide commercial reasons and not as part of a tax avoidance scheme. Page 15
SOLUTION 5 A company car costing 21,000 (net) Not Allowed 21,000@21% A van costing 35,000 (net) Allowed Diesel for vans costing 12,000 (net) Allowed Petrol for vans 6,000 (net) Not Allowed 6,000@21% Staff Christmas party 25,000 inclusive of VAT Not Allowed entertainment expenses A U.K. computer consultant was employed at 4th Schedule Service a cost of 50,000. He did not charge UK VAT. Charge VAT on Return 50,000@21% Input Credit 50,000@21% VAT neutral Transaction During August 2007 the company had a major VAT incurred on costs associated with the issue share issue and incurred legal fees totalling of new stocks, new shares made to raise capital 100,000 plus VAT of 21%. are deductible to the extent that the person making the issue is entitled to deductibility on his or her business supplies. Full entitlement to deductibility on these costs applies if the accountable personʼs business activities are fully taxable. Apportionment applies if the accountable personʼs business includes both taxable and exempt activities. No entitlement applies if the personʼs business includes only exempt activities. In September 2007 the company built a new Allowed staff canteen costing 100,000. VAT of 13,500 was reclaimed. The company incurred 20,000 plus VAT on Allowed professional services for a recent share issue and reclaimed the VAT input credit. m Cost 1.2 Economic value (1.2 X 22/35) 0.75 Cannot be less than (1.2 X 75%) 0.9 Valuation of lease (i) Valuer 0.65 (ii) 21,000 x 25 x 75% 0.346 (iii) 21,000 x 21.7 0.455 The 4A procedures should not have been used. Revenue would not have given permission as Alban is not registered. Since all the valuations are less than the economic value, it is a self supply and exempt. The input claimed must be repaid. (3 Mark) Zero Rating of Supplies to Exporters Where a taxable person exports over 75% of turnover, he can apply to the Revenue to receive all goods and services free of VAT. The exporter must export at least 75% of sales and would consequently be in a permanently repayment situation thus assisting cash flow. Revenue will issue authorisation (under S.13 A/13B), which the exporter copies, and sends to all his suppliers and to Customs authorities. The authorisation number must be quoted on all VAT invoices or import documentation where the zero rates are applied. The authorisation is normally for a period of three years and the exporter must inform the Revenue if they cease to be a qualifying person. Goods and services which are non-deductible cannot be supplied VAT free. Page 16
SOLUTION 6 Harry Mercer Taxable Specified Ringfenced Income (TI) Amount(S) Income(R) Case I 500,000 Capital allowances 15,000 485,000 Initial All 319,400 319,400 Case V 80,000 Case IV (interest) 12,400 12,400 Patents 45,000 BES 100,000 100,000 Loan Interest 25,100 25,100 Retirement Annuity 40,000 Total Income 92,900 489,500 12,400 34,000@20% 6,800 12,400@20% 2,480 46,500@41% 19065 28,345 Personal Credit 1,760 DIRT 2,480 4,240 24,105 Adjusted Income (A) =(TI + S R) 570,000 Threshold Amount (TA) (Note 1) 250,000 Does the restriction apply? (A) is greater than or equal to (TA) yes 570,000> 250,000 (S) is greater than or equal to (TA) yes 489,500> 250,000 (S) is greater than 50% of (A) yes 489,500> 285,000 Mercer is taxable on: (Note 2) 297,400 34,000@20% 6,800 12,400@20% 2,480 189869@41% 93036 102,316 Personal Credit 1,760 DIRT 2,480 98.076 44,128 Note 1 (A) is > 500,000 therefore: TA = 250,000 Note 2 [(TI + S) (the greater of TA or (A) X 50%)] 92,900 + 489,500 285,000 = 297,400 Page 17
The Finance Act 2006 introduced a restriction on the amount of certain specified reliefs that an individual can claim, in calculating their income tax liability. Where an individualʼs adjusted income exceeds 250,000, the amount of the specified reliefs that they can claim will be limited to 250,000 or 50% of the individualʼs adjusted income, whichever is the greater. In calculating the individualʼs adjusted income certain income is disregarded ( ring fenced income ) including: Deposit interest subject to DIRT Qualifying EU deposit account interest subject to tax at 20% Profits from the sale of residential property taxed at 20% Broadly, the reliefs to be restricted are those reliefs that are primarily used by high-income individuals to significantly reduce their tax liability. These are- Certain property based tax incentives, including section 23 and any properties qualifying for accelerated allowances Certain exemptions including artistsʼ exemption, stallion fees, woodland income and patent royalties, Reliefs for donations to charities and to sports bodies. Certain investment reliefs such as the BES, film relief and interest relief on loans to invest in companies and partnerships. In general, the more commonly claimed credits and allowances such as medical expenses, service charges, personal tax credits and exemptions will not be restricted. In addition, normal business or rental expenses, deductions for capital allowances on plant and machinery, genuine business or rental trading losses will not be restricted. Items not included in the definition of specified reliefs include: Personal tax credits and exemptions Pension contributions Medical expenses Case V (or Case III in the case of foreign lettings) rental deductions for expenses of lettings. Case V (or Case III in the case of foreign lettings) interest on loan to acquire or improve rental property. Case I/II capital allowances Case I/II expenses Case I/II losses Page 18