Question 2 The following information relates to the property owned by Eva in Hong Kong: 1)...
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Question 2 The following information relates to the property owned by Eva in Hong Kong: 1) 2) 3) 4) 5) 6) 7) Tenant Fanny Lease term 4 years from 1 October 2020 Rent free period 1 month at the beginning of the lease Monthly Rent, payable in advance HK$15,000 Rent deposits (refundable) HK$30,000 Initial premium, payable at the HK$90,000 beginning of lease Rates and Government rent 8) 9) Repairs Management fee 10) Mortgage loan interest HK$6,000 rates per quarter payable by landlord HK$5,000 Government rent was paid by landlord HK$1,500 per month payable by landlord HK$2,000 was paid by tenant for repair of drainage on 1 March 2021 and Eva refused to pay back the tenant. HK$20,000 was paid by landlord for the year ended 31 March 2021 Additional information:- 11) Irrecoverable rent of HK$10,000 was proved to be bad and was deducted in the year of assessment 2017/18. On 1 January 2021, half of this amount was recovered and received by Eva. 12) Due to the financial difficulties, Fanny was unable to pay for the rent of March 2021 on due date and she promised to settle in May 2021. Required a) Compute Eva's property tax liability for the year of assessment 2020/21. (Ignore provisional property tax) (12 marks) b) Explain the tax treatments accorded to each of items (8) to (12) (8 marks) TAX RATES AND ALLOWANCES Standard Rate Progressive Rates First $50,000 Next $50,000 Next $50,000 Next $50,000 Remainder Basic allowance Married person's allowance Child allowance Personal Allowances: - 1st to 9th child - new born child Dependent parent/grandparent allowance Tax rates: Aged 60 or above or subject to other criteria Ages 55 to 59 not eligible for disability allowance Additional dependent parent/grandparent allowance Aged 60 or above or subject to other criteria Ages 55 to 59 not eligible for disability allowance Dependent brother/sister allowance Disabled dependent allowance Personal disability allowance Single Parent allowance Deductions (Maximum): Home loan interest Elderly residential care expenses Contribution to MPF/MPF-exempted retirement scheme Self-education expenses Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contribution Qualifying Premiums Under Health Insurance Scheme Charitable donation 2020/21 15.0% 2.0% 6.0% 10.0% 14.0% 17.0% HK$ 132,000 264,000 120,000 120,000 50,000 25,000 50,000 25,000 37,500 75,000 75,000 132,000 HK$ 100,000 100,000 18,000 100,000 60,000 8,000 35% Question 2 The following information relates to the property owned by Eva in Hong Kong: 1) 2) 3) 4) 5) 6) 7) Tenant Fanny Lease term 4 years from 1 October 2020 Rent free period 1 month at the beginning of the lease Monthly Rent, payable in advance HK$15,000 Rent deposits (refundable) HK$30,000 Initial premium, payable at the HK$90,000 beginning of lease Rates and Government rent 8) 9) Repairs Management fee 10) Mortgage loan interest HK$6,000 rates per quarter payable by landlord HK$5,000 Government rent was paid by landlord HK$1,500 per month payable by landlord HK$2,000 was paid by tenant for repair of drainage on 1 March 2021 and Eva refused to pay back the tenant. HK$20,000 was paid by landlord for the year ended 31 March 2021 Additional information:- 11) Irrecoverable rent of HK$10,000 was proved to be bad and was deducted in the year of assessment 2017/18. On 1 January 2021, half of this amount was recovered and received by Eva. 12) Due to the financial difficulties, Fanny was unable to pay for the rent of March 2021 on due date and she promised to settle in May 2021. Required a) Compute Eva's property tax liability for the year of assessment 2020/21. (Ignore provisional property tax) (12 marks) b) Explain the tax treatments accorded to each of items (8) to (12) (8 marks) TAX RATES AND ALLOWANCES Standard Rate Progressive Rates First $50,000 Next $50,000 Next $50,000 Next $50,000 Remainder Basic allowance Married person's allowance Child allowance Personal Allowances: - 1st to 9th child - new born child Dependent parent/grandparent allowance Tax rates: Aged 60 or above or subject to other criteria Ages 55 to 59 not eligible for disability allowance Additional dependent parent/grandparent allowance Aged 60 or above or subject to other criteria Ages 55 to 59 not eligible for disability allowance Dependent brother/sister allowance Disabled dependent allowance Personal disability allowance Single Parent allowance Deductions (Maximum): Home loan interest Elderly residential care expenses Contribution to MPF/MPF-exempted retirement scheme Self-education expenses Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contribution Qualifying Premiums Under Health Insurance Scheme Charitable donation 2020/21 15.0% 2.0% 6.0% 10.0% 14.0% 17.0% HK$ 132,000 264,000 120,000 120,000 50,000 25,000 50,000 25,000 37,500 75,000 75,000 132,000 HK$ 100,000 100,000 18,000 100,000 60,000 8,000 35%
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