Question 12 (15 marks)
Nic Tse is employed as the marketing manager of SPACE HK Lid, a company carrying on business in Hong Kong, SPACE HK Lid has a wholly-owned subsidiary in the Mainland China, SPACE China Lad, which manufactures the products for SPACE HK Lid. Nic is also one of the directors of SPACE China Ltd. You have been supplied with the following information in respect of Nie Tse during the year ended 31 March 2015:
1. His salary from SPACE HK Ltd was $360,000 for the year. He also received commission income of $220,000.
2. He received a director's fee of $100,000 from SPACE China Ltd. He normally ends board meetings in Mainland China. When he cannot make the meetings in person, he uses video conferencing from the Hong Kong office. He has paid income tax in the Mainland of $12.000 equivalent in respect of his director's fee.
3. He rented a car from a motorcar company at a monthly rent of $3,000 and paid petrol costs amounting to $42.000 for the year. He obtained the full refund of car rental and petrol costs from SPACE HK Lid. The Inland Revenue Department agreed that 50% of the car was used for employment purposes.
4. He is enrolled in SPACE HK Lad's medical insurance scheme. SPACE HK Lad paid insurance premium of $2,100 for his medical cover. During the year, David has claimed medical reimbursement of $4.500 from the insurance company.
5. He made a gain on share option of $305,000
6. He made a contribution of S15,000 to the Mandatory Provident Fund.
7. He enrolled in a diploma course in marketing offered by a local university. He paid a tuition fee of $40,000 in August 2014.
8. Nic is married and his wife, Faye, is a housewife. They have a baby, born on 10 February 2015.
9. Nic's parents, aged 50 and 58 during the year, reside in Hong Kong. Nic is their only child and they are not living together. Nic supported their living by giving them $5,000 per month towards their maintenance. 9.
Required:
(a) Compute Nic Tse's salaries tax liability for the year of assessment 2014/2015. Ignore provisional salaries tax and tax rebates or reduction, if any. (10 marks)
(b) Advise Nic Tse whether his director's fee received from SPACE China Lad is taxable in Hong Kong assuming he is liable to pay PRC tax on his director's fee. (5 marks)
Question 12 (15 marks) Nic Tse is employed as the marketing manager of SPACE HK Lid, a company carrying on business in Hong Kong. SPACE HK Ltd has a wholly-owned subsidiary in the Mainland China, SPACE China Lad, which manufactures the products for SPACE HK Lid. Nic is also one of the directors of SPACE China Ltd. You have been supplied with the following information in respect of Nie Tse during the year ended 31 March 2015: 1. His salary from SPACE HK Ltd was $360,000 for the year. He also received commission income of $220,000. He received a director's fee of $100,000 from SPACE China Ltd. He normally ends board meetings in Mainland China. When he cannot make the meetings in person, he uses video conferencing from the Hong Kong office. He has paid income tax in the Mainland of $12.000 equivalent in respect of his director's fee. He rented a car from a motorcar company at a monthly rent of $3,000 and paid petrol costs amounting to $42.000 for the year. He obtained the full refund of car rental and petrol costs from SPACE HK Lid. The Inland Revenue Department agreed that 50% of the car was used for employment purposes. He is enrolled in SPACE HK Lad's medical insurance scheme. SPACE HK Lad paid insurance premium of $2,100 for his medical cover. During the year, David has claimed medical reimbursement of $4.500 from the insurance company. He made a gain on share option of $305,000 He made a contribution of S15,000 to the Mandatory Provident Fund He enrolled in a diploma course in marketing offered by a local university. He paid a tuition fee of $40,000 in August 2014 Nic is married and his wife, Faye, is a housewife. They have a baby, born on 10 February 2015. Nic's parents, aged 50 and 58 during the year, reside in Hong Kong. Nic is their only child and they are not living together. Nic supported their living by giving them $5,000 per month towards their maintenance. 9. Required: (a) Compute Nic Tse's salaries tax liability for the year of assessment 2014/2015. Ignore provisional salaries tax and tax rebates or reduction, if any. (10 marks) (b) Advise Nic Tse whether his director's fee received from SPACE China Lad is taxable in Hong Kong assuming he is liable to pay PRC tax on his director's fee. (5 marks) Question 13 (10 marks) Happy Lid carries on a business of trading in electronic appliances in Hong Kong. You have been supplied with the following information relating to its assets for the year ended 31 March 2016 An old motor car with original purchase cost of $250,000 (annual allowance at 30%) was sold for $130,000 New office furniture (annual allowance at 20%) costing $80,000 was acquired during the year. Tax written down values as at 1 April 2015 are: - 20% pool: $185,000 -30% pool: $177,000 Required: Compute the depreciation allowance for the year of assessment 2015/2016 - End of Paper - (10 marks) Page 5 Question 12 (15 marks) Nic Tse is employed as the marketing manager of SPACE HK Lid, a company carrying on business in Hong Kong. SPACE HK Ltd has a wholly-owned subsidiary in the Mainland China, SPACE China Lad, which manufactures the products for SPACE HK Lid. Nic is also one of the directors of SPACE China Ltd. You have been supplied with the following information in respect of Nie Tse during the year ended 31 March 2015: 1. His salary from SPACE HK Ltd was $360,000 for the year. He also received commission income of $220,000. He received a director's fee of $100,000 from SPACE China Ltd. He normally ends board meetings in Mainland China. When he cannot make the meetings in person, he uses video conferencing from the Hong Kong office. He has paid income tax in the Mainland of $12.000 equivalent in respect of his director's fee. He rented a car from a motorcar company at a monthly rent of $3,000 and paid petrol costs amounting to $42.000 for the year. He obtained the full refund of car rental and petrol costs from SPACE HK Lid. The Inland Revenue Department agreed that 50% of the car was used for employment purposes. He is enrolled in SPACE HK Lad's medical insurance scheme. SPACE HK Lad paid insurance premium of $2,100 for his medical cover. During the year, David has claimed medical reimbursement of $4.500 from the insurance company. He made a gain on share option of $305,000 He made a contribution of S15,000 to the Mandatory Provident Fund He enrolled in a diploma course in marketing offered by a local university. He paid a tuition fee of $40,000 in August 2014 Nic is married and his wife, Faye, is a housewife. They have a baby, born on 10 February 2015. Nic's parents, aged 50 and 58 during the year, reside in Hong Kong. Nic is their only child and they are not living together. Nic supported their living by giving them $5,000 per month towards their maintenance. 9. Required: (a) Compute Nic Tse's salaries tax liability for the year of assessment 2014/2015. Ignore provisional salaries tax and tax rebates or reduction, if any. (10 marks) (b) Advise Nic Tse whether his director's fee received from SPACE China Lad is taxable in Hong Kong assuming he is liable to pay PRC tax on his director's fee. (5 marks) Question 13 (10 marks) Happy Lid carries on a business of trading in electronic appliances in Hong Kong. You have been supplied with the following information relating to its assets for the year ended 31 March 2016 An old motor car with original purchase cost of $250,000 (annual allowance at 30%) was sold for $130,000 New office furniture (annual allowance at 20%) costing $80,000 was acquired during the year. Tax written down values as at 1 April 2015 are: - 20% pool: $185,000 -30% pool: $177,000 Required: Compute the depreciation allowance for the year of assessment 2015/2016 - End of Paper - (10 marks) Page 5
