Mr Andrew Lipow is an Australia resident. He was employed by Sugar Holdings Ltd (SUGAR'), a company with central management and control in Hong Kong, as the Marketing Manager effective from 1 April 2020. He was recruited through a personnel agent in Australia. He attended the interview with a director of SUGAR in Australia and negotiated his terms of employment during the interview. His employment contract was signed in Hong Kong on the day he reported duty. His remuneration was credited to his bank account maintained in Hong Kong. During the course of his employment, he was required to travel to various Asian Pacific cities and spent 164 days outside Hong Kong for the year ended 31 March 2021. Being an Australian resident, he believed that he was only liable to Hong Kong salaries tax for services provided in Hong Kong and his income would be charged by time apportionment basis. The following is information about Andrew related to the year of assessment 2020/21: 1 His monthly salary was $80,000. He also received a year-end bonus of $120,000 for the year. 2 SUGAR purchased a medical insurance policy for Andrew and his family at a cost of $18,000. Andrew received full reimbursement of medical expenses of $12,000 from the medical insurance scheme. 3. He rented a residential flat in Mongkok at a monthly rent of $30,000. He obtained a rental refund of $25,000 per month from SUGAR. On 1 October 2020, Andrew purchased a property in Hong Kong for $28 million and used it as his place of residence. He financed the acquisition of this property by way of a bank loan and paid loan interest of $110,000 for the year. Andrew moved into this new property from 1 October 2020. SUGAR agreed to further compensate Andrew by paying Andrew additional housing allowance of $20,000 per month, starting from 1 October 2020. 4 He engaged a domestic helper at a cost of $5,000 per month. SUGAR paid the helper's salary for him by cash reimbursement. 5 He purchased a car at a cost of $300,000 for the purpose of meeting clients. He paid for petrol, insurance and licence fees totalling $50,000 for the whole year. It was agreed with the Assessor that the business use portion of the car was 40%. Depreciation allowance of the car was calculated to be $216,000. Related expenses were not refunded by SUGAR. 6 In March 2021, Andrew took a five-day business trip to Italy. SUGAR paid the travel agent $25,000 for the air ticket and hotel accommodation package. 7 He joined a recreational club for the purposes of meeting customers and fostering business contacts. He paid a membership fee of $15,000 for the year and obtained a full refund from SUGAR. 8 On 1 December 2020, Andrew was granted a right to acquire 20,000 shares in SUGAR at $30 per share. He paid $20,000 for this option. On 1 December 2020, SUGAR's shares were traded at $35 per share. On 3 January 2021, Andrew exercised the option to acquire 15,000 shares when the market value was $40 per share. Unfortunately, the share price dropped shortly afterwards. On 1 March 2021, Andrew sold the option to acquire the remaining 5,000 shares for $4,000 and all of the 15,000 shares at $36 per share. 9 He joined the company's MPF scheme and contributed 5% of his monthly salary, totalling $48,000, to the scheme. He also set up a tax-deductible voluntary contributions (TVC) account under the MPF scheme, and made additional voluntary contributions to the TVC account for $50,000 during the year. 10 During the year, Andrew donated cash of $25,000 to a university in Australia and $20,000 to The Hong Kong Community Chest of Hong Kong 11 Mrs Lipow is a housewife. Mr and Mrs Lipow have two sons, aged 16 and 22. The elder son was attending university full-time in Australia 12 Mrs Lipow's parents, aged 54 and 58 during the year, lived in Australia. Mrs Lipow gaves them $5,000 per month as living expenses. Required: a Explain the Hong Kong tax position in respect of Andrew Lipow's employment, including whether or not he will be able to claim time apportionment for tax purpose. Note: also see the relevant rubric on the OLE. Mr Andrew Lipow is an Australia resident. He was employed by Sugar Holdings Ltd (SUGAR'), a company with central management and control in Hong Kong, as the Marketing Manager effective from 1 April 2020. He was recruited through a personnel agent in Australia. He attended the interview with a director of SUGAR in Australia and negotiated his terms of employment during the interview. His employment contract was signed in Hong Kong on the day he reported duty. His remuneration was credited to his bank account maintained in Hong Kong. During the course of his employment, he was required to travel to various Asian Pacific cities and spent 164 days outside Hong Kong for the year ended 31 March 2021. Being an Australian resident, he believed that he was only liable to Hong Kong salaries tax for services provided in Hong Kong and his income would be charged by time apportionment basis. The following is information about Andrew related to the year of assessment 2020/21: 1 His monthly salary was $80,000. He also received a year-end bonus of $120,000 for the year. 2 SUGAR purchased a medical insurance policy for Andrew and his family at a cost of $18,000. Andrew received full reimbursement of medical expenses of $12,000 from the medical insurance scheme. 3. He rented a residential flat in Mongkok at a monthly rent of $30,000. He obtained a rental refund of $25,000 per month from SUGAR. On 1 October 2020, Andrew purchased a property in Hong Kong for $28 million and used it as his place of residence. He financed the acquisition of this property by way of a bank loan and paid loan interest of $110,000 for the year. Andrew moved into this new property from 1 October 2020. SUGAR agreed to further compensate Andrew by paying Andrew additional housing allowance of $20,000 per month, starting from 1 October 2020. 4 He engaged a domestic helper at a cost of $5,000 per month. SUGAR paid the helper's salary for him by cash reimbursement. 5 He purchased a car at a cost of $300,000 for the purpose of meeting clients. He paid for petrol, insurance and licence fees totalling $50,000 for the whole year. It was agreed with the Assessor that the business use portion of the car was 40%. Depreciation allowance of the car was calculated to be $216,000. Related expenses were not refunded by SUGAR. 6 In March 2021, Andrew took a five-day business trip to Italy. SUGAR paid the travel agent $25,000 for the air ticket and hotel accommodation package. 7 He joined a recreational club for the purposes of meeting customers and fostering business contacts. He paid a membership fee of $15,000 for the year and obtained a full refund from SUGAR. 8 On 1 December 2020, Andrew was granted a right to acquire 20,000 shares in SUGAR at $30 per share. He paid $20,000 for this option. On 1 December 2020, SUGAR's shares were traded at $35 per share. On 3 January 2021, Andrew exercised the option to acquire 15,000 shares when the market value was $40 per share. Unfortunately, the share price dropped shortly afterwards. On 1 March 2021, Andrew sold the option to acquire the remaining 5,000 shares for $4,000 and all of the 15,000 shares at $36 per share. 9 He joined the company's MPF scheme and contributed 5% of his monthly salary, totalling $48,000, to the scheme. He also set up a tax-deductible voluntary contributions (TVC) account under the MPF scheme, and made additional voluntary contributions to the TVC account for $50,000 during the year. 10 During the year, Andrew donated cash of $25,000 to a university in Australia and $20,000 to The Hong Kong Community Chest of Hong Kong 11 Mrs Lipow is a housewife. Mr and Mrs Lipow have two sons, aged 16 and 22. The elder son was attending university full-time in Australia 12 Mrs Lipow's parents, aged 54 and 58 during the year, lived in Australia. Mrs Lipow gaves them $5,000 per month as living expenses. Required: a Explain the Hong Kong tax position in respect of Andrew Lipow's employment, including whether or not he will be able to claim time apportionment for tax purpose. Note: also see the relevant rubric on the OLE