Question 2(25 marks) Mr Tong purchased a flat in Hong Kong under mortgage loans. The property was let out in December 2012 on the following terms: 1. Term of lease: 5 years from 1 January 2013 2. Rent: $30,000 per month 3. Initial premium: $300,000, payable on 2 January 2013 4. Rates: payable by landlord 5. Management fee: payable by landlord 6. Repairs: payable by landlord During the year ended 31 March 2016, Mr Tong had the following expenses during the year ended 31 March 2016 (a) (b) (c) (d) Rates: Repairs: Management fee: Mortgage interest: $8,000 $8,000 $500 per month $23,160 Additionally, you have been supplied with the following information in respect of Mr Tong during the year ended 31 March 2016: (1) Mr Tong is a retired government servant of Hong Kong and received government pensions totalling $160,000 (2) He made a donation of S15,000 to Po Leung Kuk, an approved charity in Hong Kong. (3) His wife had no income except receiving interest of $4,000 on a fixed deposit account with Hang Seng Bank, Hong Kong. (4) He and his wife live in another flat in Hong Kong which was also purchased by a mortgage loan. The amount of interest paid for this loan was $10,800. REQUIRED: (a) Compute the total tax liability of each of Mr Tong and Mrs Tong for the year of assessment 2015/16 if he/she does not elect for personal assessment. (15 marks) (b) Advise Mr Tong whether it is advantageous to elect for personal assessment for the year of assessment 2015/16 (10 marks) Question 2(25 marks) Mr Tong purchased a flat in Hong Kong under mortgage loans. The property was let out in December 2012 on the following terms: 1. Term of lease: 5 years from 1 January 2013 2. Rent: $30,000 per month 3. Initial premium: $300,000, payable on 2 January 2013 4. Rates: payable by landlord 5. Management fee: payable by landlord 6. Repairs: payable by landlord During the year ended 31 March 2016, Mr Tong had the following expenses during the year ended 31 March 2016 (a) (b) (c) (d) Rates: Repairs: Management fee: Mortgage interest: $8,000 $8,000 $500 per month $23,160 Additionally, you have been supplied with the following information in respect of Mr Tong during the year ended 31 March 2016: (1) Mr Tong is a retired government servant of Hong Kong and received government pensions totalling $160,000 (2) He made a donation of S15,000 to Po Leung Kuk, an approved charity in Hong Kong. (3) His wife had no income except receiving interest of $4,000 on a fixed deposit account with Hang Seng Bank, Hong Kong. (4) He and his wife live in another flat in Hong Kong which was also purchased by a mortgage loan. The amount of interest paid for this loan was $10,800. REQUIRED: (a) Compute the total tax liability of each of Mr Tong and Mrs Tong for the year of assessment 2015/16 if he/she does not elect for personal assessment. (15 marks) (b) Advise Mr Tong whether it is advantageous to elect for personal assessment for the year of assessment 2015/16 (10 marks)
