Under certain circumstances, election for personal assessment may have the effect of reducing
overall tax liability of the elector.' What are these circumstances?
(Adapted from ACCA/HKSA 2.3H D86Q6(b))
Answer for Question 19-x
The circumstances under which a personal assessment may reduce an elector's overall tax liability are
When a taxpayer has a loss for profits tax purposes which may be used to set-off against
income assessable under salaries tax and property tax.
When a taxpayer assessable under profits tax or property tax can enjoy the benefit of personal
allowances and progressive tax rates (unless his income is so large that the standard rate is
When a taxpayer has incurred interest expenses for the purpose of producing income assessable
under property tax.
When a taxpayer has made approved charitable donations which exceed 25 per cent of his
income assessable under salaries tax or profits tax, he may elect for personal assessment so that
the 'excessive' donations may be set-off under personal assessment.
Mr Kwok supplies you with the following information relating to the year ended 31 March year 0.
He was employed as an accountant by Jim Chase and Co (Jim Chase), a firm carrying on
construction business in Hong Kong, and received an annual salary of $300,000. He contributed
$12,000 to a MPF.
He was provided with a flat in Kowloon by the firm at a
monthly rental of $1,000
paid management service charges amounting to
$2,000 per annum
He received an annual salary of $60,000 from an
He received a holiday allowance from Jim Chase for $20,000 which he spent as follows:
tickets to Singapore for himself and his wife ($5,000 X 2), accommodation
It is a condition of his employment with Jim Chase that he joins the EA Club to help
the firm’s business interests. Annual subscription for club members is $20,000, of which the
firm refunded him $10,000.
Jim Chase provides him with a company credit card which he used to purchase petrol
motoring for a total value of $5,000.
He received a cash scholarship of $3,000 from Jim Chase to study advanced accounting at an
evening course run by the Baptist University.
He made a donation of
to the Community Chest.
He received interest of $10,000 paid by the administrator of his late father's estate for delayed
payment of a legacy.
He owns a flat in Kowloon Bay which is leased for $4,000 per month. He paid rates on this flat
of $3,000 for the year. He also took out a mortgage to purchase the flat and total interest
payments amounted to $50,000.