ACCT3161_ass4_1011_2nd_Answer

ACCT3161_ass4_1011_2nd_Answer - THE CHINESE UNIVERSITY OF...

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THE CHINESE UNIVERSITY OF HONG KONG School of Accountancy ACCT 3161 – Taxation (2 nd Term, 2010-2011) Assignment 4 Solution Question 1 General expenses General expenses are allowable under s16(1) if they are incurred for the production of chargeable profits. The deduction of specific expenses should be referred to other relevant legislation. (a) Salaries and allowances Mr Lee's (sole trader's) salaries are not allowable. His income from the business should be subject to profits tax instead of salaries tax. Other staff salaries are allowable under s16(1). (b) Commission The commission paid to unidentified recipients is not allowable by the IRO (OIPN 12). Other commission expenses paid to local or overseas agents are allowable under s 16(1) as they are incurred for the production of chargeable prOfits. (c) Rent and rates Rent paid for Office A to Mr Lee is not allowable. His income from the business should be subject to profits tax instead of property tax. The rent and rates for his residence is also disallowed under s17(1 ) (a) because it is his private expense. Other expenses are allowable under s16(1).
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This note was uploaded on 02/04/2012 for the course ACCT 3161 taught by Professor Kwong during the Spring '11 term at CUHK.

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ACCT3161_ass4_1011_2nd_Answer - THE CHINESE UNIVERSITY OF...

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