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*It also applies to any age eligible to claim government's Disability Allowance Scheme Deductions Home loan interest Contributions to recognized retirement scheme Approved charitable donations ceiling 100.000 18,000 35% 100% of salaries tax, profits tax or tax under personal assessment will be waived, subject to the maximum of $10.000. Question 3 (15 marks) Mrs Lee is a resident in mainland China. During a visit to Hong Kong in early 2019, she bought a residential property and leased it for rental income with terms as follows: (a) The lease is for two years from 1 April 2019 to 31 March 2021. 6) Monthly rental is $30,000. Initial premium of $24,000 paid on signing of the lease agreement. (d) Quarterly rate of $4.000 is payable by the landlord. Mrs Lee financed the purchase of the residential property by a mortgage loan and mortgage interests incurred for the year of assessment 2019/20 and 2020/21 were $64,000 and $60,000 respectively. Mrs Lee incurred $12,000 for some repair works to the bathroom in December 2019. Mrs Lee also paid monthly management fee of $1,300. Mrs Lee appointed a Hong Kong property agent to look after the tenancy and paid monthly fee of $1,600 to the agent. Mrs Lee noted that she did not received rental income since July 2020. She contacted her agent to follow up and was informed that the tenant has moved out without giving notification to the agent. The property was subsequently rented out on 1 January 2021 at monthly rental of $25.000 for two years and with rates to be paid by the landlord. The assessor from the Inland Revenue Department agreed that the outstanding rents were inrecoverable on 1 March 2021. Required: (a) Ignore provisional tax and tax rebate - Compute Mrs Lee's property tax liability for the years of assessment 2019/20 and 2020/21. (7 marks) (6) If Mrs Lee sets up a sole proprietorship - Lee & Company to hold the above property, compute the profits tax liability for the year of assessment 2019/20, and explain whether Mrs Lee can apply for the property tax exemption under 55(2)a). (8 marks) (Total marks: 15) *It also applies to any age eligible to claim government's Disability Allowance Scheme Deductions Home loan interest Contributions to recognized retirement scheme Approved charitable donations ceiling 100.000 18,000 35% 100% of salaries tax, profits tax or tax under personal assessment will be waived, subject to the maximum of $10.000. Question 3 (15 marks) Mrs Lee is a resident in mainland China. During a visit to Hong Kong in early 2019, she bought a residential property and leased it for rental income with terms as follows: (a) The lease is for two years from 1 April 2019 to 31 March 2021. 6) Monthly rental is $30,000. Initial premium of $24,000 paid on signing of the lease agreement. (d) Quarterly rate of $4.000 is payable by the landlord. Mrs Lee financed the purchase of the residential property by a mortgage loan and mortgage interests incurred for the year of assessment 2019/20 and 2020/21 were $64,000 and $60,000 respectively. Mrs Lee incurred $12,000 for some repair works to the bathroom in December 2019. Mrs Lee also paid monthly management fee of $1,300. Mrs Lee appointed a Hong Kong property agent to look after the tenancy and paid monthly fee of $1,600 to the agent. Mrs Lee noted that she did not received rental income since July 2020. She contacted her agent to follow up and was informed that the tenant has moved out without giving notification to the agent. The property was subsequently rented out on 1 January 2021 at monthly rental of $25.000 for two years and with rates to be paid by the landlord. The assessor from the Inland Revenue Department agreed that the outstanding rents were inrecoverable on 1 March 2021. Required: (a) Ignore provisional tax and tax rebate - Compute Mrs Lee's property tax liability for the years of assessment 2019/20 and 2020/21. (7 marks) (6) If Mrs Lee sets up a sole proprietorship - Lee & Company to hold the above property, compute the profits tax liability for the year of assessment 2019/20, and explain whether Mrs Lee can apply for the property tax exemption under 55(2)a). (8 marks) (Total marks: 15)
