Robert is employed by Hi-Tech Inc (Hi-Tech), a company incorporated in the US, as regional project director. His employment contract was concluded and enforceable in the US. Due to the business expansion, Robert is required to travel to the Asian countries frequently to look after the operations of Hi-Tech's subsidiaries. For convenience purposes, he is based in the Hong Kong office of Hi-Tech and is required to travel within the region when necessary. His salary is paid in HK dollars into his bank account in Hong Kong. Robert's travelling schedule (only the arrival day in Hong Kong is counted as present in Hong Kong) for the year ended 31 March 2020 (assume 365 days in the year) was as follows: Hong Kong China Other Asian countries USA (including 35 days annual leave) 132 days 93 days 60 days 80 days 365 days During the year ended 31 March 2020, Robert's remuneration from Hi-Tech together with his relevant personal expenditure were as follows: (1) Monthly salary of $90,000. (2) Robert received an annual director's fee of $100,000 from Advance Ltd, a wholly owned subsidiary of Hi-Tech incorporated in the US. As Robert was based in Hong Kong, he did not attend the board meetings held in New York during the year. (3) On 1 April 2019, he received a cash allowance of $36,000 towards relocating his wife and his daughter from the US to Hong Kong. He spent $26,000 in total for this purpose. (4) Robert was provided with a company car and a driver for use in Hong Kong. The car was worth $320,000 and was registered in the name of Hi-Tech. The driver was hired by Hi-tech at $16,000 per month. Robert used the car for both business and personal purposes on a 80:20 basis, which was agreed with the Inland Revenue Department for tax purposes. Robert was also provided with a corporate credit card which he used to pay for the petrol cost of $3,750 per month. The credit card balance was settled by Hi-Tech. Robert did not use the corporate credit card for any other purposes. (5) A reimbursement of medical expenses of $40,000 under Hi-Tech's group employees' medical insurance policy. Hi-Tech paid an annual insurance premium of $1,600 per employee to the medical scheme. (6) Robert lived in a flat leased at a monthly rental of $28,000, of which $26,000 is reimbursed by Hi-Tech upon the submission of rental receipt. He was also entitled to a total of $10,000 per year to cover his utilities bills. On 1 February 2019, Robert was granted an option to acquire 50,000 shares at $6 each in Hi-Tech. He paid $3,000 for this option. On 1 December 2019, Robert sold part of the option to acquire 30,000 shares to a colleague for $36,000 and exercised the option for the remaining shares. On 15 December 2019, Robert sold all of the shares acquired. The fair market values per share are as follows: 1 February 2019 1 December 2019 15 December 2019 $12 $15 (8) On 1 January 2018, Robert was granted 10,000 shares by Hi-Tech subject to a vesting period. The shares vested in him on 31 December 2019. The market values of the shares on 1 January 2018 and 31 December 2019 was $80,000 and $120,000 respectively. (9) A tuition fee of $80,000 for Robert's daughter to enrol in an international school in Hong Kong was paid directly by Hi-tech from the US. (10) Robert paid an annual subscription of $6,000 to the Hong Kong Golf Club. (11) Robert enrolled in a part-time master degree programme in management offered by a university in Hong Kong, and paid an annual tuition fee of $140,000 during the year. No reimbursement was paid by Hi- Tech (12) By virtue of his employment status, Robert and Hi-Tech are not required to make any contribution to the mandatory provident fund in Hong Kong. (13) During the year, Robert's wife made a cash donation of $5,000 to the Community Chest. (14) Robert's wife is a housewife. Their daughter (aged 14) is living with the couple in Hong Kong. Robert's mother resides in an elderly home in the US, for which the annual residential cost of $150,000 is paid by Robert. Required: (a) Based on the prevailing practice and principles adopted by the Inland Revenue Department, determine whether the director's fee of Advance Ltd received by Robert (see note (2) above) is subject to salaries tax in Hong Kong. (4 marks) (b) Assuming that Robert is under non-Hong Kong employment, prepare the salaries tax computation for the year of assessment 2019/20, showing clearly the basis period, assessable income, net assessable income, net chargeable income and salaries tax payable, if any. Ignore provisional tax, tax concession and overseas tax. (26 marks) Robert is employed by Hi-Tech Inc (Hi-Tech), a company incorporated in the US, as regional project director. His employment contract was concluded and enforceable in the US. Due to the business expansion, Robert is required to travel to the Asian countries frequently to look after the operations of Hi-Tech's subsidiaries. For convenience purposes, he is based in the Hong Kong office of Hi-Tech and is required to travel within the region when necessary. His salary is paid in HK dollars into his bank account in Hong Kong. Robert's travelling schedule (only the arrival day in Hong Kong is counted as present in Hong Kong) for the year ended 31 March 2020 (assume 365 days in the year) was as follows: Hong Kong China Other Asian countries USA (including 35 days annual leave) 132 days 93 days 60 days 80 days 365 days During the year ended 31 March 2020, Robert's remuneration from Hi-Tech together with his relevant personal expenditure were as follows: (1) Monthly salary of $90,000. (2) Robert received an annual director's fee of $100,000 from Advance Ltd, a wholly owned subsidiary of Hi-Tech incorporated in the US. As Robert was based in Hong Kong, he did not attend the board meetings held in New York during the year. (3) On 1 April 2019, he received a cash allowance of $36,000 towards relocating his wife and his daughter from the US to Hong Kong. He spent $26,000 in total for this purpose. (4) Robert was provided with a company car and a driver for use in Hong Kong. The car was worth $320,000 and was registered in the name of Hi-Tech. The driver was hired by Hi-tech at $16,000 per month. Robert used the car for both business and personal purposes on a 80:20 basis, which was agreed with the Inland Revenue Department for tax purposes. Robert was also provided with a corporate credit card which he used to pay for the petrol cost of $3,750 per month. The credit card balance was settled by Hi-Tech. Robert did not use the corporate credit card for any other purposes. (5) A reimbursement of medical expenses of $40,000 under Hi-Tech's group employees' medical insurance policy. Hi-Tech paid an annual insurance premium of $1,600 per employee to the medical scheme. (6) Robert lived in a flat leased at a monthly rental of $28,000, of which $26,000 is reimbursed by Hi-Tech upon the submission of rental receipt. He was also entitled to a total of $10,000 per year to cover his utilities bills. On 1 February 2019, Robert was granted an option to acquire 50,000 shares at $6 each in Hi-Tech. He paid $3,000 for this option. On 1 December 2019, Robert sold part of the option to acquire 30,000 shares to a colleague for $36,000 and exercised the option for the remaining shares. On 15 December 2019, Robert sold all of the shares acquired. The fair market values per share are as follows: 1 February 2019 1 December 2019 15 December 2019 $12 $15 (8) On 1 January 2018, Robert was granted 10,000 shares by Hi-Tech subject to a vesting period. The shares vested in him on 31 December 2019. The market values of the shares on 1 January 2018 and 31 December 2019 was $80,000 and $120,000 respectively. (9) A tuition fee of $80,000 for Robert's daughter to enrol in an international school in Hong Kong was paid directly by Hi-tech from the US. (10) Robert paid an annual subscription of $6,000 to the Hong Kong Golf Club. (11) Robert enrolled in a part-time master degree programme in management offered by a university in Hong Kong, and paid an annual tuition fee of $140,000 during the year. No reimbursement was paid by Hi- Tech (12) By virtue of his employment status, Robert and Hi-Tech are not required to make any contribution to the mandatory provident fund in Hong Kong. (13) During the year, Robert's wife made a cash donation of $5,000 to the Community Chest. (14) Robert's wife is a housewife. Their daughter (aged 14) is living with the couple in Hong Kong. Robert's mother resides in an elderly home in the US, for which the annual residential cost of $150,000 is paid by Robert. Required: (a) Based on the prevailing practice and principles adopted by the Inland Revenue Department, determine whether the director's fee of Advance Ltd received by Robert (see note (2) above) is subject to salaries tax in Hong Kong. (4 marks) (b) Assuming that Robert is under non-Hong Kong employment, prepare the salaries tax computation for the year of assessment 2019/20, showing clearly the basis period, assessable income, net assessable income, net chargeable income and salaries tax payable, if any. Ignore provisional tax, tax concession and overseas tax. (26 marks)