Question 3 (37 marks)

(Ignore the one-off tax reduction and concessionary measures for this question)

Today is 1 April 2020. Ms. Kei bought a property in Hong Kong 3 years ago for investment

purpose. The price of the property was $6,000,000. She borrowed a mortgage loan of 65% of the

property price from her bank. The loan is to be repaid by monthly installments for 15 years. The

monthly installment payment is $28,000.

The above-mentioned property is being rented out and Ms. Kei receives a rental income of

$180,000 in the year of assessment of 2019/20. Ms. Kei paid $36,000 management fee and

$9,000 rates in the same year of assessment.

Ms. Kei is a manager of a restaurant in Kowloon. Her annual salary is $330,000. She contributed

$18,000 to her MPF in the year of assessment 2019/20.

A. Calculate the interest rate (APR) of the mortgage loan. (4 marks)

B. Calculate the amount of loan outstanding as of today. (4 marks)

C. Calculate the total amount of interest Ms. Kei has paid in the year of assessment 2019/20.

(7 marks)

D. Ms. Keis bank manager informed her today that the interest rate of the mortgage is reduced

to 2.4% p.a. (APR) with immediate effect. Ms. Kei wants to maintain the original monthly

installment amount. How many installments are left until the loan is paid off? (5 marks)

E. Calculate Ms. Keis salaries tax payable under progressive tax rate in 2019/20. Ignore the

one-off tax reduction, concessionary measures and provisional tax. (6 marks)

F. Calculate Ms. Keis amount of property tax payable in 2019/20. Ignore the one-off tax

reduction, concessionary measures and provisional tax. (5 marks)

G. Calculate Ms. Keis amount of tax payable in 2019/20 if she chooses Personal Assessment.

Should Ms. Kei choose Personal Assessment for the year of assessment 2019/20? Ignore

the one-off tax reduction, concessionary measures and provisional tax. (6 marks)