Question 1 (15 marks) Mr. Simon Chiu (Tax File No.: 6M1-G37460483) acquired two residential properties at $15 million in Hong Kong by obtaining a mortgage of $9 million from HSBC. One (including car park space) is located at Causeway Bay and other is located in Yaumatei. Flat in Causeway Bay is held for rental purpose while other is occupied by his parents and brother The flat in Causeway Bay was let to Roy on 1 November 2019. The terms of the lease agreement are as below: Period of lease Thirty-two months Monthly rent $20,000 payable at the beginning of each month Car park fee $3,000 payable at the beginning of each month Refundable rental deposit $40,000 payable on 1 November 2019 Premium $80,000 payable on 1 November 2019 Ground rent and rate $2,200 per quarter payable by tenant Management fee $2,500 per month payable by landlord Repair and maintenance Payable by the landlord During the year ended 31 March 2020, Simon has paid $5,200 to replace air-conditioning. Due to an emergency incident, Roy has paid repair expense of $7,452 to replace the drainage system. Roy agreed to share half of the expense since the incident was made by him. REQUIRED: a Compute the property tax liabilities of Simon Chiu for the year of assessment 2019/20. Ignore provisional tax and tax rebates. Tax rate is 15%. Show all workings. (12 marks) b. Give brief explanation of the treatment of the refundable rental deposit. (3 marks) Question 1 (15 marks) Mr. Simon Chiu (Tax File No.: 6M1-G37460483) acquired two residential properties at $15 million in Hong Kong by obtaining a mortgage of $9 million from HSBC. One (including car park space) is located at Causeway Bay and other is located in Yaumatei. Flat in Causeway Bay is held for rental purpose while other is occupied by his parents and brother The flat in Causeway Bay was let to Roy on 1 November 2019. The terms of the lease agreement are as below: Period of lease Thirty-two months Monthly rent $20,000 payable at the beginning of each month Car park fee $3,000 payable at the beginning of each month Refundable rental deposit $40,000 payable on 1 November 2019 Premium $80,000 payable on 1 November 2019 Ground rent and rate $2,200 per quarter payable by tenant Management fee $2,500 per month payable by landlord Repair and maintenance Payable by the landlord During the year ended 31 March 2020, Simon has paid $5,200 to replace air-conditioning. Due to an emergency incident, Roy has paid repair expense of $7,452 to replace the drainage system. Roy agreed to share half of the expense since the incident was made by him. REQUIRED: a Compute the property tax liabilities of Simon Chiu for the year of assessment 2019/20. Ignore provisional tax and tax rebates. Tax rate is 15%. Show all workings. (12 marks) b. Give brief explanation of the treatment of the refundable rental deposit
