Tax Assignment in Hong Kong

Topics: Progressive tax, Taxation, Property tax Pages: 5 (809 words) Published: February 25, 2013
Question 1

Ans:
Mr. Chan
Salaries tax
Year of assessment 2010/11
Basic period: year ended 31 March 2010

$ $ Salary ($100,000*12) 1,200,000 Education benefits 150,000 Reimbursement of tuition fees 100,000 Reimbursement of utilities 50,000 1,500,000 Add: Rental value (($1,500,000-2,000)*10%) 149,800 Less: Rent suffered ($20,000*50%*12) 120,000 29,800

1,529,800 Less: Professional subscription 2,000 Net assessable income 1,527,800 Less: Married person’s allowance 216,000 Child allowance 100,000 316,000 Net chargeable income 1,211,800

Progress rate on $1,211,800:
$40,000 at 2% 800 $40,000 at 7% 2,800 $40,000 at 12% 4,800 $1,091,800 at 17% 185,606 194,006 Standard rate 15%*$1,527,800=$229,170

Salaries tax payable
Lower of $194,006 and $229,170 less $6,000 tax waived $188,006

Mr. Chan
Property tax assessment
Year of assessment 2010/11
Basic period: year ended 31 March 2011
$ Rent received ($15,000*12) 180,000 Non-refundable rent ($30,000*12/36) 10,000 Assessable value 190,000 Less: Government rates ($3,000*4) (12,000) Government rent ($2,000*4) (8,000) 170,000 Less: Statutory deduction at 20% (34,000) Net assessable value 136,000 Property tax at 15% 20,400

Mr. Chan
Personal Assessment Computation
Basis period: Year ended 10/11
$ Net assessable value 136,000 Net assessable income 1,527,800 1,663,800 Less: Mortgage interest paid ($10,000*12) (120,000) Reduced total income 1,543,800 Less: Personal allowances ($216,000+100,000) (316,000)

Reduced total income after personal allowances 1,227,800

Tax at progressive rate $8400+(1,227,800-120,000)*17%=196,726 Standard rate 15%*$1,543,800=$231,570
Salaries tax payable
Lower of $196,726 and $231,570 less $6,000 tax waived $190,726

Conclusions: Based on the computations, without PA, Mr. Chan should pay total tax amount of property tax and salaries tax, which is 20,400+188,006=208,406. But under PA, Mr. Chan could only pay tax of 190,726, which less than the amount of 208,406. So, Mr. Chan should elect personal assessment for the year of assessment 2010/11.

Question 2

Ans:

a)Salaries tax computation:
$
Salary ($45,000*12) 540,000 Housing allowance ($6,000*6) 36,000...
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