Question 1 Maria Ng owns a residential property in Tseung Kwan 0. She let out the property to Jimmy on the following terms: l. Lease term: three years from 1 April 2019. 2. Rent: $1 8,000 per month payable on the first day of each month. 3. Lease premium: $90,000 payable on signing the tenancy agreement. 4. Rental deposit: $36,000 payable on signing the tenancy agreement. 5. Rent-free period: two months from the start of the lease. 6. Rates and government rent: $2,800 and $1 ,680 per quarter respectively payable by the owner to the Government. 7. Building management fee: $1,300 per month payable by the tenant to the owner as collection agent for the building management office.
With Maria's permission, Jimmy sublet a room inside the property to his colleague, Gordon, starting from 1 January 2020 at a monthly rent of $6,000. Jimmy agreed to increase the monthly rent paid to Maria by $1,000 starting from 1 January 2020 for allowing him to sublet the room.
On 6 December 2019, Maria successfully recovered outstanding rent of $30,000 from an ex-tenant. This amount has been claimed as a deduction in the year of assessment 2018/19. Maria incurred legal fee of $10,000 to recover the debt.
Maria has duly paid all the rates and govemment rent for the year ended 31 March 2020. She also paid interest of $90,000 on a loan borrowed to finance the purchase of the property.
Maria would like to start a trading company in Hong Kong. She would rent a small office in Kwun Tong and employ two assistants. Required: : (a) Compute the property tax payable by Maria for the year of assessment 2019/20. Ignore provisional tax. Explanatory writing is NOT required for this part of the question. (8 marks) (b) Advise Jimmy if he is required to pay any tax in Hong Kong for the income received from subletting the room. (4 marks) (c) Advise Maria's obligations as a profits tax payer under section 51 and 51C of the Inland Revenue Ordinance. Only the first five obligations stated in your answers will be marked. (5 marks) Total: 17 marks
Question 1 Maria Ng owns a residential property in Tseung Kwan 0. She let out the property to Jimmy on the following terms: 1. Lease term: three years from 1 April 2019. 2. Rent: $18,000 per month payable on the first day of each month. 3. Lease premium: $90,000 payable on signing the tenancy agreement. 4. Rental deposit: $36,000 payable on signing the tenancy agreement. 5. Rent-free period: two months from the start of the lease. 6. Rates and government rent: $2,800 and $1,680 per quarter respectively payable by the owner to the Government. 7. Building management fee: $1,300 per month payable by the tenant to the owner as collection agent for the building management office. With Maria's permission, Jimmy sublet a room inside the property to his colleague, Gordon, starting from 1 January 2020 at a monthly rent of $6,000. Jimmy agreed to increase the monthly rent paid to Maria by $1,000 starting from 1 January 2020 for allowing him to sublet the room. On 6 December 2019, Maria successfully recovered outstanding rent of $30,000 from an ex- tenant. This amount has been claimed as a deduction in the year of assessment 2018/19. Maria incurred legal fee of $10,000 to recover the debt. Maria has duly paid all the rates and goverment rent for the year ended 31 March 2020. She also paid interest of $90,000 on a loan borrowed to finance the purchase of the property. Maria would like to start a trading company in Hong Kong. She would rent a small office in Kwun Tong and employ two assistants. Required: (a) Compute the property tax payable by Maria for the year of assessment 2019/20. Ignore provisional tax. Explanatory writing is NOT required for this part of the question. (8 marks) (b) Advise Jimmy if he is required to pay any tax in Hong Kong for the income received from subletting the room. (4 marks) (c) Advise Maria's obligations as a profits tax payer under section 51 and 51C of the Inland Revenue Ordinance. Only the first five obligations stated in your answers will be marked. (5 marks) Total: 17 marks Question 1 Maria Ng owns a residential property in Tseung Kwan 0. She let out the property to Jimmy on the following terms: 1. Lease term: three years from 1 April 2019. 2. Rent: $18,000 per month payable on the first day of each month. 3. Lease premium: $90,000 payable on signing the tenancy agreement. 4. Rental deposit: $36,000 payable on signing the tenancy agreement. 5. Rent-free period: two months from the start of the lease. 6. Rates and government rent: $2,800 and $1,680 per quarter respectively payable by the owner to the Government. 7. Building management fee: $1,300 per month payable by the tenant to the owner as collection agent for the building management office. With Maria's permission, Jimmy sublet a room inside the property to his colleague, Gordon, starting from 1 January 2020 at a monthly rent of $6,000. Jimmy agreed to increase the monthly rent paid to Maria by $1,000 starting from 1 January 2020 for allowing him to sublet the room. On 6 December 2019, Maria successfully recovered outstanding rent of $30,000 from an ex- tenant. This amount has been claimed as a deduction in the year of assessment 2018/19. Maria incurred legal fee of $10,000 to recover the debt. Maria has duly paid all the rates and goverment rent for the year ended 31 March 2020. She also paid interest of $90,000 on a loan borrowed to finance the purchase of the property. Maria would like to start a trading company in Hong Kong. She would rent a small office in Kwun Tong and employ two assistants. Required: (a) Compute the property tax payable by Maria for the year of assessment 2019/20. Ignore provisional tax. Explanatory writing is NOT required for this part of the question. (8 marks) (b) Advise Jimmy if he is required to pay any tax in Hong Kong for the income received from subletting the room. (4 marks) (c) Advise Maria's obligations as a profits tax payer under section 51 and 51C of the Inland Revenue Ordinance. Only the first five obligations stated in your answers will be marked. (5 marks) Total: 17 marks
