Q%20and%20A%20%20ch%2005-all

Q%20and%20A%20%20ch%2005-all - 14 edition Question 5-1 Mr...

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14 edition Question 5-1 Mr Ma was a manager employed by a local import and export company. In his employment contract covering the three years ended 31 March year 0, it was provided that Mr Ma's salary was $35,000 per month with one month bonus payable at the end of March each year. Mr Ma was entitled to receive a holiday passage allowance, free quarters, reimbursement of utilities, and free education benefits for his child. However, Mr Ma was required to incur all local travelling expenses in the performance of his duties and the cost of a fax transmission machine installed at his home. At the end of the contracting period, Mr Ma was entitled to a gratuity of $112,000. In the year ended 31 March year 0, Mr Ma received a holiday passage allowance of $20,000, three-fifths of which was used to purchase holiday warrants for him and his family while the balance was retained by him. Mr Ma's son, aged 20, was studying at the University of London, the tuition fee for the year being $90,000. Mr Ma lived with his wife in a flat in Causeway Bay provided by his employer, and the utility benefit he received during the year was $10,000. The total travelling expenses incurred by Mr Ma during the year amounted to $40,000, of which 60 per cent was incurred in visiting various clients in Hong Kong. The depreciation allowance for the fax transmission machine was agreed to be $3,000. In July year 0, in recognition of Mr Ma's good performance, the ownership of a used car with a market value of $5,000 was given to him free-of-charge from his employer. Mr Ma donated $80,000 to the Community Chest of Hong Kong during the year. He contributed $25,000 to a MPF-exempt retirement scheme during the year ended 31 March year 0. Mrs Ma was a typist in a solicitors' firm. Her salary and bonus for the year ended 31 March year 0 were $84,000 and $7,000 respectively. She made mandatory contributions to a mandatory provident fund amounting to 5 per cent of her total income. In February year 0, Mr Ma's application to emigrate to Australia was approved, and he therefore decided not to renew his employment contract with the employer. Mrs Ma also terminated her employment on 31 March year 0 after paying $5,000, being payment in lieu of notice, to her employer. For many years, Mrs Ma had paid $1,500 per month for the maintenance of her father, who was 65 years old and residing in Hong Kong. It was nominated by the couple that Mr Ma should claim the child allowance in respect of their only son. Required : Compute the amounts of salaries tax payable by Mr Ma and Mrs Ma for the year of assessment year 0, if any. (Ignore provisional salaries tax.) (12 marks) (Adapted fromACCA/HKSA2.3H D91Q2) Answer for Question 5-1 Mr and Mrs Ma Salaries tax computation Year of assessment year 0 Separate taxation Mr Ma Mrs Ma $ $ Salaries 420,000 84,000 Bonus 35,000 7,000 Holiday passage allowance 20,000 Education benefits 90,000 Utility benefits 10,000 Free car from employer 5,000 KSK/ch: DoraCh05.doc (Last update: 9/29/2011) Page 1
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Q%20and%20A%20%20ch%2005-all - 14 edition Question 5-1 Mr...

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