ACCT3161ass2_1011_1st_Answer

ACCT3161ass2_1011_1st_Answer - THE CHINESE UNIVERSITY OF...

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THE CHINESE UNIVERSITY OF HONG KONG School of Accountancy ACCT 3161 – Taxation (1 st Term, 2010-2011) Assignment 2 Solution Question 1 (a) Mr Smith’s salaries tax assessment – 2005/06 $ Salary ($68,000 x 12 x 150/365) 335,342 Less: Basic allowance (100,000 ) Net chargeable income 235,342 Tax payable thereon: $30,000 at 2% 600 $30,000 at 8% 2,400 $30,000 at 14% 4,200 $145,342 at 20% 29,068 Tax payable 36,268 Mr Smith’s salaries tax assessment – 2006/07 $ Salary ($68,000 x 12 x 300/365) 670,684 Add: Value of quarters ($670,684 x 10%) – ($3,000 x 12) 31,068 701,752 Less: Basic allowance (100,000 ) Net chargeable income 601,752 Tax payable thereon: $30,000 at 2% 600 $30,000 at 7% 2,100 $30,000 at 13% 3,900 $511,752 at 19% 97,232 103,832 Less: 50% of tax payable waived (capped at $15,000) (15,000 ) Tax payable 88,832 Mr Smith’s salaries tax assessment – 2007/08 $ $ Salary ($80,000 x 12) 960,000 Director’s fee 40,000 1,000,000 Add: Value of quarters ($1,000,000 – $8,000) x 10% 99,200 1,099,200 Less: Travelling expenses (8,000 ) 1,091,200 Mrs Smith’s salary ($25,000 x 3) 75,000 Add: Gratuity ($25,000 x 24 x 25%) x 3/24 18,750 1,184,950 Less: Charitable donations 16,000 Married person’s allowance 200,000 Child allowance ($50,000 + $50,000) 100,000 (316,000 ) Net chargeable income 868,950 Tax payable thereon: $35,000 at 2% 700 $35,000 at 7% 2,450 $35,000 at 12% 4,200 $763,950 at 17% 129,871 Tax payable 137,221 Data file: ch/ACCT3161ass2_1011_1st_Answer Page 1
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(b) Child allowance may be granted where an individual had been living with, and was maintaining, during the year of assessment an unmarried child who was: (i) under the age of 18 years; (ii) over the age of 18 years but under the age of 25 years and was receiving full time education at a university, college, school or other similar education establishment; or (iii) over the age of 18 years and was by reason of physical or mental disability incapacitated for work. (c) If there is more than one claimant for the child allowance in respect of the same child for the same year of assessment, the allowance due shall be apportioned on such basis as the Commissioner may decide, having regard to the contributions made by each individual to the maintenance and education of the child during the year of assessment. Question 2
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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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ACCT3161ass2_1011_1st_Answer - THE CHINESE UNIVERSITY OF...

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