Question 3 (15 marks) Mr Cheung purchased a property in Hong Kong and signed a lease with Miss Fan with the following details: (1) Term of lease: Two years from 1 April 2015- (2) Monthly rental: $20,000 (3) Rent-free period: One month from 1 April 2015 (4) Management fee: $2,000 per month, payable by Miss Fan directly to the property management company (5) Monthly loan interest: $25,000 payable by Mr Cheung on his bank mortgage loan to fund the purchase price of the property (6) Rates: $3,000 per quarter, payable by Mr Cheung (7) Agency fee: $10,000 for letting the property (8) Annual agency management fee: 0.2% of the rentals received Required: (a) Calculate the property tax liability for the year of assessment 2015/16. Ignore provisional property tax and tax rebate or reductions, if any. (10 marks) (b) Give explanations on the tax treatment of management fee (item 4) and mortgage loan interest (item 5). (5 marks) Question 3 (15 marks) Mr Cheung purchased a property in Hong Kong and signed a lease with Miss Fan with the following details: (1) Term of lease: Two years from 1 April 2015- (2) Monthly rental: $20,000 (3) Rent-free period: One month from 1 April 2015 (4) Management fee: $2,000 per month, payable by Miss Fan directly to the property management company (5) Monthly loan interest: $25,000 payable by Mr Cheung on his bank mortgage loan to fund the purchase price of the property (6) Rates: $3,000 per quarter, payable by Mr Cheung (7) Agency fee: $10,000 for letting the property (8) Annual agency management fee: 0.2% of the rentals received Required: (a) Calculate the property tax liability for the year of assessment 2015/16. Ignore provisional property tax and tax rebate or reductions, if any. (10 marks) (b) Give explanations on the tax treatment of management fee (item 4) and mortgage loan interest (item 5)