02-Property_tax - s - Unit 2: Property Tax 1 LEARNING...

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1 Unit 2: Property Tax
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2 LEARNING OBJECTIVES After this lecture, you should be able to: Explain the scope of charge of property tax Identify the owner of a chargeable property State the circumstances under which rental income is subject to both property and profits tax Define the taxable consideration Ascertain the assessable value and net assessable value Compute the property tax liability
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3 Scope of charge ( ) The charging section ( ) s.5(1) Meaning of land and/or buildings s.7A ( ) Meaning of “ situated in Hong Kong ( ) Definition of owner ( )
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4 The charging section s.5(1) On owner Of land and buildings Situated in Hong Kong At standard rate (15%; or 15.5% or 16%) On the net assessable value (NAV) ( )
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5 Definition of owner s.2 Owner includes Person holding land and/or building directly from the government (include assignee of government lease) ( ) Person who holds land and/or buildings subject to ground rent ( ) or other annual charges ( ) Ground rent – rent charged for the ground usually under a lease that provides for the development of the land.
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6 Life tenant ( ) or beneficial owner ( ) Mortgagor ( ) Mortgagee in possession ( ) Definition of owner s.2
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7 Purchaser financed by a society registered under the Co-operative Society Ordinance ( ) Executor ( ) of owner’s estate Person with adverse title ( ) to land receiving rent from buildings or other structures erected on that land name registered in the Land Registry( ) Definition of owner s.2
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8 Meaning of land or buildings s.7A Ordinary meaning of land / buildings Also include : Piers ( ), wharves ( ) & other structures ( ) A part of building except separately rated
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9 Meaning of “situated in Hong Kong” Land / buildings physically located in Hong Kong Taxable if the property is situated in Hong Kong because the rental income is derived from HK (territorial concept)
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10 Basis of Assessment ( ) Chargeable when rent due rather than when cash is received Basis Period: from 1 April to 31 March of subsequent year Separate assessment for each property (even the same owner). A single assessment for a property owned by more than one owner (e.g. joint- ownership, co-ownership).
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11 Returns ( ) A sole owner individual has to return his rental income from solely owned properties in the Tax Return - Individuals A joint owner or tenant-in-common has to return his rental income from the properties concerned in the Property tax Return
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12 Property Tax Computation Format ABC Limited Property Tax Computation For The Year of Assessment 200X/X Taxable consideration (e.g. rent, premium) A {s 5B} Add: Bad debt recovered B {s 7C(2)} C Less: Bad debts incurred (D) {s 7C(1)} E Less: Unrelieved bad debt (carried back) (F) {s 7C(3)} Assessable value G Less: Rates paid by owner (H) {s5(1A)(b)(i)} I Less: I x 20 % statutory deduction (J) {s5(1A)(b)(ii)} Net Assessable Value (NAV) K Property Tax Rate % (K x tax rate%)
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02-Property_tax - s - Unit 2: Property Tax 1 LEARNING...

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