Question 2 (20 marks) Mr Lee is currently employed as the senior accounting manager of City Ltd (City), a company incorporated and carrying on business in Hong Kong. During the year ended 31 March 2020, Mr Lee had following income and expenditure: 1. Annual salary of $800,000, out of which 5% is deducted for MPF contribution. 2. City gave Mr Lee an allowance of $30,000 to spend during his holidays in Australia. He actually spent $25,000 and retained the balance. 3. City provided Mr Lee with a car. The car was leased from a car agency in the name of City, at a monthly rental of $8,000. 4. Mr Lee was provided with a flat by City at a nominal cost of $5,000 per month. The electricity and water bills totalling $16,500 were paid by Mr Lee but fully reimbursed by City. 5. On 1 May 2019, Mr Lee was given an option to purchase 20,000 shares at $8 each in City. He paid $1,200 for this option. On 1 July 2019, he exercised the option to acquire 15,000 shares. He sold the 15,000 shares on 31 January 2020. The share market values per share of City were as follows: 1 May 2019 1 July 2019 31 January 2020 $6 $10 $7 6. City paid a tuition fee of $70,000 for Mr Lee's son who is studying in Australia. 7. Mr Lee paid the following annual membership fees: The Association of Chartered Certified Accountants (ACCA) The Hong Kong Jockey Club $2,500 $30,000 8. Mr Lee is married with one child. His wife is a housewife and disabled. She is eligible for the Government Disability Allowance. Their son, aged 16, is studying in Australia. 9. During the year, Mrs Lee made a cash donation of $61,500 to the Red Cross of Hong Kong. 10. Mrs Lee's mother, aged 78, lives in her own flat in Causeway Bay. Mrs Lee paid a total of $48,000 to maintain her mother during the year. Required: Based on the Inland Revenue Ordinance and the prevailing practice, prepare the Hong Kong salaries tax computation for Mr Lee for the year of assessment 2019/20, showing clearly the basis period, assessable income, net assessable income, net chargeable income and the salaries tax payable. Ignore provisional tax and tax concession. (20 marks) Question 2 (20 marks) Mr Lee is currently employed as the senior accounting manager of City Ltd (City), a company incorporated and carrying on business in Hong Kong. During the year ended 31 March 2020, Mr Lee had following income and expenditure: 1. Annual salary of $800,000, out of which 5% is deducted for MPF contribution. 2. City gave Mr Lee an allowance of $30,000 to spend during his holidays in Australia. He actually spent $25,000 and retained the balance. 3. City provided Mr Lee with a car. The car was leased from a car agency in the name of City, at a monthly rental of $8,000. 4. Mr Lee was provided with a flat by City at a nominal cost of $5,000 per month. The electricity and water bills totalling $16,500 were paid by Mr Lee but fully reimbursed by City. 5. On 1 May 2019, Mr Lee was given an option to purchase 20,000 shares at $8 each in City. He paid $1,200 for this option. On 1 July 2019, he exercised the option to acquire 15,000 shares. He sold the 15,000 shares on 31 January 2020. The share market values per share of City were as follows: 1 May 2019 1 July 2019 31 January 2020 $6 $10 $7 6. City paid a tuition fee of $70,000 for Mr Lee's son who is studying in Australia. 7. Mr Lee paid the following annual membership fees: The Association of Chartered Certified Accountants (ACCA) The Hong Kong Jockey Club $2,500 $30,000 8. Mr Lee is married with one child. His wife is a housewife and disabled. She is eligible for the Government Disability Allowance. Their son, aged 16, is studying in Australia. 9. During the year, Mrs Lee made a cash donation of $61,500 to the Red Cross of Hong Kong. 10. Mrs Lee's mother, aged 78, lives in her own flat in Causeway Bay. Mrs Lee paid a total of $48,000 to maintain her mother during the year. Required: Based on the Inland Revenue Ordinance and the prevailing practice, prepare the Hong Kong salaries tax computation for Mr Lee for the year of assessment 2019/20, showing clearly the basis period, assessable income, net assessable income, net chargeable income and the salaries tax payable. Ignore provisional tax and tax concession. (20 marks)
