powerpoint%20Chapter%2004%20-%20salaries%20tax%20%28deduction%29

Powerpoint%20Chapter%2004%20-%20salaries%20tax%20%28deduction%29

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(year 11/12) 14 th edition 1 Chapter 4 Key points Allowable outgoing and expenses Concessionary deduction Personal allowances Net assessable income Net chargeable income Tax rates Computation
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(year 11/12) 14 th edition 2 All outgoing expenses Other than domestic, private or capital nature Wholly, necessarily incurred In the production of assessable income
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(year 11/12) 14 th edition 3 Not allowable E.g. Wages to employ an amah Private medical expenses (D33/94) Maintenance payments to ex-wife (D61/99)
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(year 11/12) 14 th edition 4 Capital Not 100% allowable in the year of acquisition May claim depreciation allowance (Ch 17 & Ch 18)
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(year 11/12) 14 th edition 5 Wholly and Exclusively Sole purpose of producing the assessable income IRD practice --- may be apportioned under reasonable assumption(s)
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(year 11/12) 14 th edition 6 Necessarily (I) The basic test is whether the duties cannot be performed without incurring the particular outlay. (e.g. typewriter to typist)
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(year 11/12) 14 th edition 7 Necessarily (II) D89/89 – expense incurred in attending overseas conference D8/99 – loss from the sale of textbooks D51/99 – portion of household expenses All the above were disallowable
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(year 11/12) 14 th edition 8 In the Production of Assessable Income CIR v Humphrey 1970 Legal expenses CIR v Robert Burns 1980 Payment to employment agency “Taking job relating examination” “ expenses of further education” (the last 2 items may ONLY be deductible after 31/3/1996)
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(year 11/12) 14 th edition 9 Incurred Must be an established liability / definite commitment Mere contingent liability / anticipated future outgoing will NOT be deductible
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(year 11/12) 14 th edition 10 DIPN # 9 No binding force Traveling from home to office (X) Traveling from office to office (OK) Subscription to professional association (OK) Salary in lieu of proper notice (X) Payments to assistants (?) Entertainment (?) Clothing (X) Commission (OK*) (* If recipients are known.)
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(year 11/12) 14 th edition 11 Self-education Expenses Before 31/3/1996 – not allowed After 31/3/1996 – allowed: subject to maximum ($12,000/$20,000/$30,000/$40,000/$60,000) Must not be deducted under other provision of IRO Not reimbursed by employer Must be prescribed course of deduction (job- related) General interest classes e.g. Tai Chi class etc was generally not accepted
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(year 11/12) 14 th edition
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This note was uploaded on 09/29/2011 for the course ACCT 3161 taught by Professor Kwong during the Spring '11 term at CUHK.

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Powerpoint%20Chapter%2004%20-%20salaries%20tax%20%28deduction%29

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