06 - BUSI 0018 Hong Kong Taxation Tutorial Questions Unit 6...

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1 BUSI 0018 – Hong Kong Taxation Tutorial Questions Unit 6 –Salaries Tax (4) and Personal Assessment Answer 15(a) Salaries Tax Liability under Separate Taxation Year of Assessment 2007/08 Mr. Mak Mrs. Mak $ $ $ Salaries ($20,000 x 12) 240,000 50,000 Commission ($4,000,000 x 1%) 40,000 Nil 280,000 50,000 Rental Value ($280,000 x 10%) 28,000 Less: Rent suffered ($1,000 x 12) (12,000) 16,000 Nil 296,000 50,000 Share option [($10 - $8) x 10,000] 20,000 Nil Net assessable income 316,000 50,000 Less: Concessionary deductions: Approved charitable donation (5,000 ) Nil 311,000 50,000 Less: Basic allowance (100,000) (100,000) Child allowances (2) (100,000) Nil Net chargeable income 111,000 Nil Tax payable at progressive rates (need to show steps): 8,370 Nil Tax payable at standard rate: 49,760 8,000 Therefore tax payable is 8,370 Nil (ignoring the salaries tax relief in 2007/08) Notes: 1. As the commission is derived from services rendered under an employment contract between Mr. Mak and Beta Ltd, it is subject to salaries tax rather than profits tax. 2. The market value of the share at the date of acquisition under the share option scheme is taken in the calculation. The subsequent selling price is irrelevant. 3. The share option benefit is not included in the calculation of rental value. 4. Child allowances are given for both children as they are under the age of 18 and unmarried (even though the daughter married during the year). 5.
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06 - BUSI 0018 Hong Kong Taxation Tutorial Questions Unit 6...

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