Question 1 (20 marks)

Part A

HSDC, an investment bank in Hong Kong signed up Mr Peter Lam as their new Managing Director in Hong Kong effective 1 February 2018.

On 30 June 2019, due to personal reasons, Peter notified HSDC that with effect from 1 August 2019, he would resign from HSDC. He would leave Hong Kong with his family and take up a new position in Singapore on 15 November 2019.

Required:

Explain to Mr Peter Lam his taxpayers compliance obligations (including the due dates of these obligations if applicable) under the Inland Revenue Ordinance. (8 marks)

Part B

Mr Peter Lam acquired an apartment in Happy Valley on 3 January 2018, intending to stay in this apartment with his family and use it as his place of residence. He moved into his apartment with his family on 25 January 2018. As a result of taking up his new position in Singapore, he decided to sell this property. Peter engaged a property agent on 20 July 2019 and eventually sold his apartment through this agent on 15 August 2019. Peter moved out from the apartment on 15 October 2019. He made a gain of HK$200,000 on the sale of this property.

Required:

Discuss the factors which need to be considered in determining whether Mr Peter Lam is subject to Hong Kong profits tax in respect of the gain arising from the sale of the apartment. Give an opinion whether this gain is likely challenged by the Inland Revenue Department as taxable.

(12 marks)