Question 3 a. Explain the differences between tax avoidance and tax evasion.

(Total 24 marks)

(4 marks)

b. Compute the amount of salaries tax payable (excluding provisional tax and tax reduction) by the taxpayer with the following data, if

1. (i) Mr. and Mrs. Ho elect separate assessments (18 marks)

2. (ii) Mr. and Mrs. Ho elect joint assessments (11 marks)

Assessment Year: Age: Occupation: Marital status: Child:

Mr. Hos Parents: Monthly salary: Donation: MPF contributions: Qualifying Annuity: Home property: Mortgage repayments: Mortgage interest:

2020/21 Mr. Ho: 44; Mrs. Ho: 40 Mr. Ho: Certified Accountant & Mrs. Ho: Part-time Secretary Married Aged 10 Aged 78 and 74 (both parents live with the taxpayer) Mr. Ho: $72,000 & Mrs. Ho: $12,000 $50,000 cash 5% mandatory Mr. Ho: $3,000 per month Current value at $8,500,000, purchased 5 years ago. $17,325.00 per month. $100,378 paid during the assessment year.

(iii) Should Mr. and Mrs. Lee elect joint assessment? Why?

(2 marks) (Total 35 marks)