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Unformatted text preview: U6A_Salaries_4 1 THE UNIVERSITY OF HONG KONG SCHOOL OF BUSINESS BUSI 0018 – Hong Kong Taxation Unit 6A – Salaries Tax (4) Coverage 1 Relating back of lump sum income 2 Provisional salaries tax 3 Assessment of husband and wife Learning Objectives After completing this unit, you should be able to: • identify the lump sums which can be related back in salaries tax computation and how they are related back • advise whether a taxpayer should apply for relating back of lump sums and how an application can be made • compute provisional salaries tax • explain the salaries tax position of husband and wife • calculate the salaries tax payable by the husband and wife under joint assessment 1 RELATING BACK OF LUMP SUM INCOME 1.1 Lump Sum Payment • Examples of lump sum payment: - Compensation for deprivation of rights – not taxable - Lump sum provided for in the contract – taxable - Lump sum withdrawn from RORS/MPF – subject to certain conditions - Bonus - taxable - Salary in lieu of notice – not taxable - Payment in lieu of leave – taxable - Ex-gratia payment – not taxable if proved to be not a reward for services - Severance payment - if within statutory requirement Æ compensation for loss of office and not taxable, - amount in excess of statutory requirement is taxable - Long-service payment (treatment is similar to severance payment) - if within statutory requirement Æ compensation for loss of office and not taxable, - amount in excess of statutory requirement is taxable • If lump sum is received after cessation of employment – amount deemed to accrue on the last day of employment • Relief available: certain assessable lump sums can be related back (spread) over periods of services (to take the benefit of lower marginal tax rates in previous years) U6A_Salaries_4 2 1.2 What lump sum can be related back? – S11D(b)(i) • Lump sum payment or gratuity paid or granted upon retirement from or termination of: - any office or employment; or - any contract of employment • Lump sum payment of deferred pay/arrears of pay...
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This note was uploaded on 02/23/2012 for the course BUSI 0018 taught by Professor C.ng during the Spring '11 term at HKU.
- Spring '11