Mr M has been employed as an engineer by A Ltd., a company incorporated in Hong Kong. During the year ended 31 March 2019, Mr M had the following income and expenditure.

1. A monthly salary of $80,000.
2. A bonus of $20,000.
3. A meal allowance of $20,000, of which $18,000 was actually spent.
4. During the year Mr M went on a vacation trip to Singapore and he received a holiday allowance from A Ltd. in the sum of $6,000.
5. A reimbursement of medical expenses in the sum of $35,000 from the medical scheme of an insurance company. A Ltd. paid an annual premium of $5,000 for each member of staff.
6. A Ltd. owned a car at a cost of $380,000. It was provided to Mr M for his private use. The second-hand value of the car as at 31 March 2019 was $200,000. In addition, Mr M was reimbursed $500 per month to cover for petrol cost.
7. During the period from 1 April 2018 to 30 June 2018, Mr M lived in a leased flat at a monthly rental of $30,000, out of which $25,000 was reimbursed by A Ltd. With effect from 1 July 2018, Mr M moved to a newly acquired property. The property was purchased by Mr M. The property cost was $6,000,000 and was financed by a low interest mortgage loan financed by A Ltd. The commercial rate at that time was 5% per annum, and the rate offered by A Ltd., was 3% per annum. Mr M paid mortgage interest of $88,000 to A Ltd. during the year ended 31 March 2019.
8. Since Mr M moved into his own property, A Ltd., paid the electricity and water bills for him in the total amount of $30,000. A domestic helper at an annual wage of $40,000 was employed by A Ltd. and assigned a domestic servant to serve Mr M’s family.
9. Mr M paid the following membership fees: The Chartered Institute of Engineers: $2,100; The Hong Kong Recreation Club: $30,000.
10. On 1 June 2018, Mr M was granted an option to buy the shares of A Ltd.’s parent company which was incorporated in Canada. The shares were listed on the Canadian Stock Exchange. The option enabled Mr M to buy 10,000 shares at a price of $5 per share, and carried an expiry date of 31 March 2019. On 1 September 2018, Mr M exercised the option to buy 5,000 shares and sold the option to buy 2,000 shares to a colleague for $3,000. The 5,000 shares were then sold on 1 October 2018. The remaining option expired on 31 March 2019. Details of the share market value were: 1 April 2018: $22, 1 June 2018: $25, 1 September 2018: $29, 1 October 2018: $31, 31 March 2019: $26.
11. In order to equip himself with updated knowledge, Mr M enrolled for an evening course on engineering with the Hong Kong Polytechnic University and paid a tuition fee of $40,000. The enrolment was fully supported by A Ltd. which planned to expand the business in mainland China. However, A Ltd. did not approve any refund for the tuition fee finally.
12. Mr M contributed 5% of his monthly salary to a MPF scheme.
13. Apart from the above, the following additional information is available:
14. Mr M has two children The eldest child is nine, studying in Australia, the second child was born on 4 December 2018. Mrs M was an employee and has her own income. Mr M is to claim all child allowances, if any.
15. Mr M’s father, aged 63, is currently living in Australia, but receives remittance from Mr M regularly.
16. During the year, Mr M made various charitable donations in an aggregate amount of $300,000 to the Community Chest in Hong Kong, a recognized charity.

Required: Calculate the Salaries Tax payable by Mr M for the year of assessment 2018/2019 (21 points). Provide detailed explanations to the treatment of the following items: Reimbursement of medical expense, annual insurance premium paid by the employer, the use of the company car, the benefit of the low interest rate, the benefit of using the domestic helper, membership fees to the Hong Kong Recreation Club, and the applicability of dependent parent allowance in Mr M’s case (7 points).

writing speed in answering the questions, Le the ves. The forma suggested in this chapter is for the purpose of arriving at the correct rental value. The formal p all items affecting the rental value before the rental value. Mr. Pak Salaries Tax Computation Year of Assessment 2020/21 Salaries Bonus Miscellaneous allowances B C D Less: Allowable expenses: Travelling from office to office E Professional subscription F G H Add: Rental value (H x 10%) Less: Rent suffered J S (i.e., Rent paid by employee - Rent refunded) Add: Lump sum received at the termination of employment Gain on share option Less: Self-education expenses Net assessable income before concessionary deductions Less: Concessionary deductions (*effective from 2019/20) Charitable donation (limited to 35% of P) Elderly residential care expenses Home loan interest Contributions to recognised retirement schemes Health insurance premiums * Qualifying annuity premiums MPF voluntary contributions 4 * 202 K L M N 0 P Q R V STUS 3 W X Y YY Z IV 8.