Unit 6B - THE UNIVERSITY OF HONG KONG SCHOOL OF BUSINESS...

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U6B_PA 1 THE UNIVERSITY OF HONG KONG SCHOOL OF BUSINESS BUSI 0018 – Hong Kong Taxation Unit 6B – Personal Assessment Coverage 1 Purposes of PA election 2 Eligibility to elect PA 3 Election Procedures 4 Calculation of Total Income 5 Rates of charge Learning Objectives After completing this unit, you should be able to: advise the purposes and advantages of electing for personal assessment identify who is eligible to elect for personal assessment describe the procedures and manner for election of personal assessment compute the tax liability under personal assessment 1 PURPOSES OF PA ELECTION Personal assessment is a single assessment on total income from: - Property Tax (Part II) - Salaries Tax (Part III) - Profits Tax (Part IV) Purposes for electing PA - deduction of interest expenses from property income - claiming of personal allowances - being taxed at progressive rates - setting off business loss against other source of income - deduction of more approved charitable donations 2 ELIGIBILITY TO ELECT PA Individual - of or above the age of 18, or - under the age of 18 with both parents dead; and - who, or whose spouse, is either a permanent resident or a temporary resident
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U6B_PA 2 Deceased individual - The executor may elect on behalf of the deceased if the deceased was eligible if he were alive Husband and wife not living apart - If only one spouse has income assessable, the income earning spouse can elect PA provided that age and residentship conditions are satisfied - If both spouses have income assessable but only one spouse is eligible for election, the eligible spouse elects PA by himself/ herself - If both spouses have income assessable, and both are eligible for election, both spouses must elect PA jointly Meaning of ‘resident’ in IRO (S.41(4)) - ‘Temporary resident’ means an individual who: - stays in Hong Kong for more than 180 days during the Y/A in which election is made; or - stays in Hong Kong for more than 300 days in 2 consecutive years, one of which is the Y/A in which election is made - ‘Permanent resident’ means an individual who: - ordinarily resides in Hong Kong From case law, - ‘Ordinarily resides’ means - regular and substantial period of visits from year to year ( Lysaght v CIR ) - a place of abode is maintained ( Copper v Cadwalader ) - ‘Resides’, i.e. to dwell permanently or for a considerable time, to have one’s settled or usual abode, to live in or at a particular place 3 ELECTION PROCEDURES In writing Lodged with CIR not later than: - 2 years after the end of the Y/A concerned; or - 1 month after an assessment forming part of the total income for the Y/A is final and conclusive [i.e. 2 months after the issue date of a tax assessment (with no objection)]; or - further period as CIR may allow; whichever is later By concession, withdrawal can be made within 6 years after the end of the Y/A
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U6B_PA 3 4 CALCULATION OF TOTAL INCOME Proforma PA Calculation for an Individual:
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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.

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Unit 6B - THE UNIVERSITY OF HONG KONG SCHOOL OF BUSINESS...

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