ABC Ltd is a company incorporated in Hong Kong, and carries out business in Hong Kong. Mr. Kim is the head of sales for the company. His employment contract was signed in Hong Kong, and his annual salary of $900,000 is deposited into his Hong Kong bank account. In addition to his salary, he is given an annual bonus of $600,000. As part of his job, Mr. Kim performs services for the company both inside and outside of Hong Kong. During the year ended March 31, 2020, Mr. Kim spent 70 days working in Hong Kong, and the rest of the year he worked in various other countries. Mr. Kims wife, Mrs. Kim, lives in Hong Kong and takes care of their two children, aged 14 and 16. Mrs. Kim does not work. Mr. Kim also supports his father, aged 67, who lives in his house in Hong Kong throughout the year. Mr. Kim contributed $40,000 to his traditional MPF account. In addition to his previously mentioned salary, Mr. Kim received ownership of a car from ABC Ltd. with a fair market value of $40,000. Mr. Kim contributed $20,000 as a donation to the local community chest (an approved charity).

(Assume voluntary contributions to MPF, if any, are not paid into a TVC account).

Question 2 (20 marks) ABC Ltd is a company incorporated in Hong Kong, and carries out business in Hong Kong. Mr. Kim is the head of sales for the company. His employment contract was signed in Hong Kong, and his annual salary of $900,000 is deposited into his Hong Kong bank account. In addition to his salary, he is given an annual bonus of $600,000. As part of his job, Mr. Kim performs services for the company both inside and outside of Hong Kong. During the year ended March 31, 2020, Mr. Kim spent 70 days working in Hong Kong, and the rest of the year he worked in various other countries. Mr. Kim's wife, Mrs. Kim, lives in Hong Kong and takes care of their two children, aged 14 and 16. Mrs. Kim does not work. Mr. Kim also supports his father, aged 67, who lives in his house in Hong Kong throughout the year. Mr. Kim contributed $40,000 to his traditional MPF account. In addition to his previously mentioned salary, Mr. Kim received ownership of a car from ABC Ltd. with a fair market value of $40,000. Mr. Kim contributed $20,000 as a donation to the local community chest (an approved charity). (Assume voluntary contributions to MPF, if any, are not paid into a TVC account). Required: A. Calculate salaries tax liability for Mr. Kim for the year of assessment 2019/20. Ignore provisional taxes, tax rebates, and foreign taxes. Show and label all intermediate steps for the calculation. (16 marks) B. Mr. Kim heard that if he had stayed in Hong Kong for less than 60 days, he would have been able to avoid paying Hong Kong tax on his salary. Is this true in Mr. Kim's situation? Explain why or why not? (4 marks) Question 2 (20 marks) ABC Ltd is a company incorporated in Hong Kong, and carries out business in Hong Kong. Mr. Kim is the head of sales for the company. His employment contract was signed in Hong Kong, and his annual salary of $900,000 is deposited into his Hong Kong bank account. In addition to his salary, he is given an annual bonus of $600,000. As part of his job, Mr. Kim performs services for the company both inside and outside of Hong Kong. During the year ended March 31, 2020, Mr. Kim spent 70 days working in Hong Kong, and the rest of the year he worked in various other countries. Mr. Kim's wife, Mrs. Kim, lives in Hong Kong and takes care of their two children, aged 14 and 16. Mrs. Kim does not work. Mr. Kim also supports his father, aged 67, who lives in his house in Hong Kong throughout the year. Mr. Kim contributed $40,000 to his traditional MPF account. In addition to his previously mentioned salary, Mr. Kim received ownership of a car from ABC Ltd. with a fair market value of $40,000. Mr. Kim contributed $20,000 as a donation to the local community chest (an approved charity). (Assume voluntary contributions to MPF, if any, are not paid into a TVC account). Required: A. Calculate salaries tax liability for Mr. Kim for the year of assessment 2019/20. Ignore provisional taxes, tax rebates, and foreign taxes. Show and label all intermediate steps for the calculation. (16 marks) B. Mr. Kim heard that if he had stayed in Hong Kong for less than 60 days, he would have been able to avoid paying Hong Kong tax on his salary. Is this true in Mr. Kim's situation? Explain why or why not? (4 marks)