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ACY3161ass1_1112_1st_Answer-1

ACY3161ass1_1112_1st_Answer-1 - THE CHINESE UNIVERSITY OF...

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THE CHINESE UNIVERSITY OF HONG KONG School of Accountancy ACY 3161 – Taxation (1 st Term, 2011-2012) Assignment 1 Solution Question 1 (a) Mr Lo Property tax Year of assessment 2009/10 $ Rent receivable : 1.4.2009 -30 . 9 . 2009 ($25 , 000 x 6) 150,000 1.3 . 2010-31 . 3.2010 ($28 , 000 x 1) 28,000 Premium $120,000 x 6/24 + $150,000 x 3/36 42,500 220,500 Less : Irrecoverable rent ($25,000 x 3) 75,000 145,500 Less : Rates ($9 , 000 x 1/3) 3,000 142,500 Less: 20% statutory deduction 28 , 500 Net assessable value 114,000 Tax payable @15% 17,100 (b) Under property tax, only the following items can be deducted from the assessable value : (a) irrecoverable rent; (b) rates agreed to be paid by the landlord ; and (c) an allowance for repairs and outgoings of 20% of the assessable value after deduction of rates and irrecoverable bad debts, if any. As such, no deduction of management fee paid by Mr. Lo is available under property tax. For the payment of rates, it is only agreed with the tenant that the rates for the period from 1.1.2010 to 31.3 . 2010 is payable by Mr . Lo. Only the rate paid by him for this period is deductible . Other rates paid by him are not deductible.
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