THE HONG KONG POLYTECHNIC UNIVERSITY
HONG KONG COMMUNITY COLLEGE
________________________________________________________________________________
Subject Title : Taxation
Subject Code
: CCN3101
: Semester One, 2013/14
Session
Numerical Answers
Section B
Question B
HKCC Limited
Profits tax computation
Year of Assessment 2012/13
Basis period: year ended 31 March 2013
HK$
Net profit per account
Add Increase in general provision
20,000
Increase in special provision (staff loan)
8,000
Agents whose identities were not disclosed
50,000
Early termination of lease of the old office
100,000
Special contribution in one lump sum (200000
160,000
x 4/5)
Paid to Mr Chan, an individual director
65,000
Paid for HengSeng Bank loan with security
80,000
Paid for lease of new office
70,000
Refurbishment expenses (280000 X 4/5)
224,000
Payment of company’s profits tax
250,000
Travelling expenses related to Shanghai project
22,000
Depreciation expenses
500,000
Donations
220,000
Less
Offshore consultancy fee
Dividends from quoted shares
Interest on loans (available in UK)
Interest on qualifying debt instrument
Interest on a US$ fixed deposit in Shanghai
Damages of ventilation system
Cancellation of a major business contract
HK dollar bills of exchange in the US
Less
Depreciation allowances
Less
Approved charitable donations (max 35%)
120,000
300,000
15,000
12,000
33,000
23,000
500,000
80,000
HK$
531,000
1,769,000
2,300,000
1,083,000
375,000
842,000
220,000
Page 1 of 5
Assessable profits
622,000
Profits tax payable: @ 16.5%
102,630
Section C
Question C1
Jason
Property tax computation
Year of Assessment 2011/12 (original)
Rental income ($25,000 x 12)
Carpark fee ($4,000 x 12)
Premium ($100,000 x 12/24)
Assessable value
Less: rates
Less: 20% statutory deduction
NAV
Property tax liability @15%
HK$
300,000
48,000
50,000
398,000
6,000
392,000
78,400
313,600
47,040
Jason
Property tax computation
Year of Assessment 2012/13
Rental income ($30,000 x 10 - $30,000 x 1))
Premium $120,000 x 10/24
Expenses borne by tenant ($9,000 - $6,000)
Less: irrecoverable rent ($29,000 x 13)
Irrecoverable rent carried backward to set off in 2011/12
HK$
270,000
50,000
3,000
323,000
377,000
(54,000)
Jason
Property tax computation
Year of Assessment 2011/12 (revised)
Rental income ($25,000 x 12)
Carpark fee ($4,000 x 12)
Premium ($100,000 x 12/24)
Less: irrecoverable rent carried backward from 2012/13
Assessable value (revised)
Less: rates
Less: 20% statutory deduction
HK$
300,000
48,000
50,000
398,000
54,000
344,000
6,000
338,000
67,600
Page 2 of 5
NAV
270,400
Property tax liability (revised) @15%
Less: tax previously paid
Property tax refund
40,560
47,040
6,480
Question C2
Mr Patter
Salaries tax computation
Year of assessment 2012/13
$
Salary (50,000 x 9)
Bonus
Commission
Car running costs reimbursed ($40,000 x 50%)
Travelling allowances (5,000 x 9)
Gain on stock option [5,000 x (10-5) – 1,500]
Child education benefit
Less: allowable expenses
Travelling expenses
Rental value (948,500 – 23,500) x 10%
Less: Rent suffered $(30,000 – 25,000) x 9
Less: Self-education
Charitable donation
Contributions to recognized retirement scheme
NAI after concessionary deductions
Less: Married person allowance
Child allowance (63,000 x 2)
Disabled dependent allowance
Net chargeable income
Tax at NCI at progressive rates
$(439,500 – 120,000) x 17% + $8,400
Tax at standard rate: 871,500 x 15%
Salaries tax payable [lower of (A) and (B)]
$
450,000
250,000
100,000
20,000
45,000
23,500
90,000
978,500
(30,000)
948,500
92,500
(45,000)
(240,000)
(126,000)
(66,000)
47,500
996,000
(60,000)
(50,000)
(14,500)
871,500
(432,000)
439,500
62,715
(A)
130,725
(B)
62,715
Page 3 of 5
Question C3
(a)
Mr and Mrs Law
Personal Assessment Computation
Year of assessment 2012/13
Mr Law
$
Net assessable value ((120,000-8,000) x 80%)/2 for
44,800
both ; (40000x12-6000x4) x 80% for Mrs Law
Net assessable income
1,003,600
((880,000+84,000+40,000+32,000) x 1.1 - (34,00026,000) x 12 – 40,000)
Net assessable profit
0
Total income
1,048,400
Less: mortgage loan interest for producing rental
income (60,000/2) for both ; 300,000 for Mrs Law
(30,000)
(restricted to NAV)
1,018,400
Less: Concessionary deductions
MPF contribution
(14,500)
Home loan interest (jointly owned, restricted to
(50,000)
$50,000 per person)
Reduced total income
953,900
Less: Personal allowances
Married person’s allowance
Child allowance x 2
Net chargeable income
NCI at progressive rates:
$40,000 @ 2%
$40,000 @ 7%
$40,000 @ 12%
Remaining (897,500 – 120,000) @ 17%
Reduced total income at standard rate (1,263,500 x
15%)
Total tax payable under personal assessment[lower
of (A) or (B)]
Tax payable by:
Mr Law = $140,575 x 953,900 / 1,263,500
Mrs Law = $140,575 x 309,600/1,263,500
800
2,800
4,800
132,175
Mrs Law
$
409,600*
Total
$
0
280,000
689,600
(330,000)%
359,600
0
(50,000)
309,600
1,263,500
(240,000)
(126,000)
897,500
140,575
(A)
189,525
(B)
140,575
106,129
34,446
Page 4 of 5
Question C4
HKCC Limited
Computation of Depreciation Allowances
Year of assessment 2012/13
10% pool 20% pool 30% pool
WDV b/f
Additions ($110,000 + $200,000)
Less: IA (60%)
Transfer in
Less: Disposals
Less: AA
WDV c/f
HK$
200,000
HK$
400,000
110,000
HK$
600,000
200,000
0
66,000
120,000
0
200,000
150,000
50,000
5,000
45,000
0
444,000
100,000
344,000
68,800
275,200
171,500*
851,500
80,000
771,500
231,450
540,050
Total allowance for the year of assessment 2012/13
Total
Allowance
HK$
186,000
305,250
491,250
Page 5 of 5