Nancy worked as a teacher in a secondary school under a two-year contract as follows:

The contract period started from 1 June 2018 to 31 May 2020.

Monthly salary during the contract period was $40,000.

Contract gratuity: 15% of her total contract salary upon completion of the 2-year employment contract

Other information during the year of assessment 2019/20

Nancy took a course (tuition: $3,000)to improve her teaching skills.

Nancy and her husband had a 5-year old daughter.

Nancys husband was unemployed.

Nancy lived with her mother who was aged 59the entire time.

Nancy and her husband bought a flat under a mortgage loan from bank. The annual interest payment for the mortgage was $49,000.

Nancy purchased a health insurance package which is a certified plan of Voluntary Health Insurance Scheme at a premium of $4,000 per year.

Nancy selected to have the contract gratuity related back.

Question

(a)Compute the amount of contract gratuity to be assessed in each of the years of assessment concerned.(10 marks)

(b)Compute Nancys income tax payable for the year of assessment 2019/20.Which tax rate, standard or progressive, would she choose to pay the tax?Be reminded to take into account the MPF retirement scheme.(25marks