or assessment 2015/16 and 2016/17, stating the assumptions, if any, that you make. Ignore provisional tax, tax reduction or tax waiver in your calculations. (15 marks) (b) Besides clubs, section 24 of IRO covers the profits tax treatment for business, professional and trade associations. Using section 24 of IRO as a starting point, explain the test tests which is/are to be used to determine whether a trade association is subject to Hong Kong profits tax (5 marks) ur 0 Question 3 (20 marks) Benedict is a system engineer and has just started a new employment with a computer solutions company that is incorporated and managed in Hong Kong. His annual salary is HK$1,000,000, paid by his Hong Kong employer. In his new position, he needs to work in Hong Kong and mainland China from time to time, Benedict is concerned about his potential tax liability in mainland China and comes to you for advice. Required: (a) With reference to the "Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion on Income", advise Benedict on his tax exposure in respect of individual income tax in mainland China under the following separate scenarios: (i) He works exclusively In mainland China. (ii) He works, n aggregate, around 120 days in mainland China per year (iii) He works, in aggregate, around 250 days in mainland China per year. (9 marks (b) Under the China taxation system, there is a set of rules called "Controlled foreign corporation rules". Explain how a controlled foreign corporation is defined, and the rules with regard to the taxation of controlled foreign corporations. (11 marks) [END OF SECTION AL Page 5 of 8 ACT B415F (1704) or assessment 2015/16 and 2016/17, stating the assumptions, if any, that you make. Ignore provisional tax, tax reduction or tax waiver in your calculations. (15 marks) (b) Besides clubs, section 24 of IRO covers the profits tax treatment for business, professional and trade associations. Using section 24 of IRO as a starting point, explain the test tests which is/are to be used to determine whether a trade association is subject to Hong Kong profits tax (5 marks) ur 0 Question 3 (20 marks) Benedict is a system engineer and has just started a new employment with a computer solutions company that is incorporated and managed in Hong Kong. His annual salary is HK$1,000,000, paid by his Hong Kong employer. In his new position, he needs to work in Hong Kong and mainland China from time to time, Benedict is concerned about his potential tax liability in mainland China and comes to you for advice. Required: (a) With reference to the "Arrangement between the Mainland of China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion on Income", advise Benedict on his tax exposure in respect of individual income tax in mainland China under the following separate scenarios: (i) He works exclusively In mainland China. (ii) He works, n aggregate, around 120 days in mainland China per year (iii) He works, in aggregate, around 250 days in mainland China per year. (9 marks (b) Under the China taxation system, there is a set of rules called "Controlled foreign corporation rules". Explain how a controlled foreign corporation is defined, and the rules with regard to the taxation of controlled foreign corporations. (11 marks) [END OF SECTION AL Page 5 of 8 ACT B415F (1704)