example%20%20ch%2004-all

example%20%20ch%2004-all - 14 edition Example 4-1 Mr Liu...

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14 edition Example 4-1 Mr Liu made a donation of beds to Po Chai Hospital, an approved charitable organisation. The cost of the beds was $10,000. Mr Liu cannot claim a deduction for the donation because it was not a donation of money. The aggregate amount of donations in a year of assessment should not be less than $100 in the year of assessment (s 26C(1)). The maximum allowable deduction is 35 per cent (25 per cent for the year of assessment 2003/04 to 2007/08) of the taxpayer's assessable income after deduction of outgoings and depreciation allowances but before the deduction of self-education expenses (s 26C(2)(a)). Any charitable donations allowable as a deduction under profits tax are disallowable under salaries tax (s 26C(2)(b)). Example 4-2 Mr Chu had an assessable income of $120,000 for the year of assessment year 1 and incurred an allowable expense of $10,000 during the year. Mr Chu made a donation of $50,000 to the Community Chest of Hong Kong in March year 1. The amount of approved charitable donation that Mr Chu can claim deduction for the year of assessment year 1 is as follows: Mr Chu Salaries tax computation Year of assessment year 1 Basis period: year ended 31 March year 1 $ Assessable income 120,000 Less: Allowable expense 10,000 Net assessable income 110,000 Less: Approved charitable donation (limited to $110,000 X 35% ) 38,500 Net assessable income after charitable donation 71,500 Even though Mr Chu donated $50,000 in the year of assessment year 1, he can only deduct the amount of $38,500, being 35 per cent of his net assessable income in that year. Example 4-3 Mr Chan has paid the following amounts of RCE during the year ended 31 March year 1: $55,000 in respect of his father who is aged 65 years old; $55,000 in respect of his mother who is 53 years old; and $68,000 in respect of his father-in-law who is 57 years old and is eligible to claim an allowance under the Government's Disability Allowance Scheme. Mr Chan is eligible to claim elderly RCE in respect of
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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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example%20%20ch%2004-all - 14 edition Example 4-1 Mr Liu...

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