Mr. Go emigrated to Canada several years ago and he owns a residential property and an office in Hong Kong. The following information is provided in respect of the properties lease transactions: Property A The property was rented to Mr. Kan under the following terms: 1) Lease period: 1st July 2014 to 30th June 2016 2) Monthly rent: $20,000 payable in advance at the beginning of each month 3) Premium: $100,000 paid on 30th June 2014 4) Rent deposit: $40,000 paid on 30th June 2014. The deposit is refundable to Mr. Kan upon termination of lease when he returns the property to Mr. Go in good condition 5) Rates: $2,500 per quarter payable by Mr. Go 6) Management fee: $1,200 per month payable by Mr. Go 7) Mortgage interest: $25,000 per month, incurred by Mr. Go on a bank loan obtained to acquire the property. B) Renovation: $50,000, incurred by Mr. Go to a decoration company. 9) Property agency fee: half of the monthly rental. Due to financial difficulty, Mr. Kan was unable to pay rent to Mr. Go starting from 1 st March 2015. On 1st May 2015, both parties reached the following new agreement: 10) Monthly rent reduced to $15,000 starting from 1st May 2015 11) Rent deposit of $40,000 would be used to fully settle the outstanding rent 12) Other terms and conditions of the lease remain unchanged Property B This office was vacant during the period from 1st March 2015 to 31st December 2015. Starting from 1st January 2016, the property was let to Boss Lid. at a monthly rent of $30,000. Rates of $6,100 per quarter and the monthly management fee of $2,800 were payable by Mr. Go. The assessor accepted the rent of $85,000 owed by the previous tenant for the period of 1 st December 2014 to 28" February 2015 was irrecoverable when that tenant was declared bankruptcy on 30th June 2015. Mr. Go had never considered any tax reporting in Hong Kong as he believed that he was not subject to Hong Kong tax on the basis that he is no longer a resident in Hong Kong and all rentals are deposited into his bank account in Canada