Francis Lam, a fellow member of HKICPA, is the CFO of a Hong Kong-based Investment Bank located in Central. For the year of assessment 2020/21, he received an annual salary of $2,500,000, and a cash bonus of $500,000. Francis stays in an apartment in the mid-levels that he bought back in 2015. He borrowed money from his friend Nathan Wong on his apartment and he pays a total of HK$100,000 interest in the year of assessment 2020/21 to Nathan. In the year 2020/21, Francis incurred $10,000 travelling expenses on his personal holidays in Europe. He paid a course fee of $50,000 for a wine-tasting class as he has deep interest in wine and meeting friends. He bought three charity show tickets at a cost of HK$5,000 from UNICEF Hong Kong during the year. Francis’s wife Mandy passed away in 2003 and he is maintaining his 19-year old son, who is currently studying a part-time university degree with the City University of Hong Kong. His mother is 66 years old and lives in a nursing home in Dongguan China. Francis paid a total of HK$200,000 to the nursing home during the year of assessment. Francis thinks that with his good past tax filing records with the Inland Revenue Department, his chances of having his return be challenged and audited in this year should be very remote. He wants to minimize his net chargeable income in 2020/21 tax return so he can pay less tax and save more money for his son and family. He intends to under-report his cash bonus paid by his employer. He also plans to claim the deductions of (1) travelling expenses of $10,000; (2) self-education of $50,000 (for course fee of wine-tasting class); (3) donation of $5,000; (4) elderly residential care expense; (5) home loan interest of HK$100,000. He also wishes to claim (1) married person’s allowance; (2) child allowance; and (3) additional dependent parent allowance. Required:

(a) Name FOUR stakeholders in this case (excluding Francis himself).

(b) Advise Francis on his tax position on his intended actions.

(c) Advise Francis on the ethicality of the intended actions, using the ethical theories of Utilitarian, Deontologist as well as Virtual Ethics.

(d) Advise Francis on the potential consequences if a member of the HKICPA is found to violate its Code of Ethics.