acy3161ABCmte2009-10ansWOmark

acy3161ABCmte2009-10ansWOmark - ACY3161 Mid-term Common...

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ACY3161 Mid-term Common Examination (2009/2010) SCHOOL OF ACCOUNTANCY THE CHINESE UNIVERSITY OF HONG KONG ACY 3161ABC Taxation MID-TERM EXAMINATION SOLUTION Problem 1 (32%) (a) 4% Mr Kwan Computation of share option gain Cash received from sale of 110,000 Market value of shares at the date of exercise: 50,000 x $8.2 410,000 Less: Cost of shares: 50,000 x $2.5 (125,000) Cost of option (20,000 ) Total share option gain 375,000 Mr. Kwan wants to sell the option at a much lower price may be due to (1) he has no cash, (2) he wants to avoid risk (3) sell it at a lower price to his friend or (4) tax planning technique. (b) 3% Mr Kwan Computation of Holiday Journey Benefit $ $ Holiday journey paid by employer 44,000 Less: Expenses attributable to business journey: Air ticket 9,000 5,000 14,000 Assessable benefit 30,000 (c) 21% Mr. Kwan Salaries tax Year of assessment 2006/07 Basic period: year ended 31 March 2007 $ $ Salaries $(600,000 + 120,000) 720,000 Bonus $(75,000 + 10,000) 85,000 Holiday journey benefit (Part b) 30,000 Salaries tax payment on 3/1/2007 87,000 922,000 Rental value $(922,000 – 8,000) x 10% 91,400 Less: Rent suffered $(30,000 – 28,000) x 12 24,000 67,400 989,400 Share option gain (Part a) 375,000 1,364,400 Less: (8,000 ) Net assessable income 1,356,400 Less: Concessionary deductions Approved charitable donation 22,000 Contributions to MPF scheme 12,000 232,000 Net assessable income after concessionary deductions 1,124,400 Less: Basic allowance 100,000 Child allowance 40,000 Dependent parent allowance 60,000 Dependent parent allowance (aged 55-59) 30,000 230,000 Net chargeable income 894,400 Mr. Kwan Salaries tax File: KSK/ch FILE:/KSK/EXAM/acy3161ABCmte2009-10.doc 2012/2/8A2P2 02:11 Page 1 of 6
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ACY3161 Mid-term Common Examination (2009/2010) Year of assessment 2006/07 Basic period: year ended 31 March 2007 $ Salaries 200,000 Bonus 80,000 $280,000 Less: Contribution to MPF (MAX) 12,000 Net assessable income after concessionary deductions 268,000 Less: Basic allowance 100,000 Net chargeable income 168,000 Joint assessment Year of assessment 2006/07 Mr Kwan Mrs Kwan Joint Net assessable income
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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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acy3161ABCmte2009-10ansWOmark - ACY3161 Mid-term Common...

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