SECTION A (21 marks) Answer ALL questions from this section. Question 1 (21 marks) Mr Pang is the financial controller of AA Ltd, a company incorporated and carrying on business in Hong Kong. He is also a shareholder BB Ltd, which is also a Hong Kong company and is a wholly owned subsidiary of AA Ltd. You have been supplied with the following information regarding the year of assessment 2015/16: (1) Annual Salary: $1,500,000 (2) Bonus: $300,000 (3) Dividend: $15,000 (4) Mr Pang took a 8-day business trip to London and Mrs Pang travelled with him. AA Ltd paid the following expenses in connection with the trip: Mr Pang Mrs Pang Flight by British Airways $12,000 $12.000 Hotel $22,000 No extra cost Meals $25,000 $25,000 Local tour in London Nil $3,000 (5) Mr Pang earned a gain on share options of $495,000. (6) Mr Pang rented a flat for his residence at a monthly rent of $22,000. His employer refunded $18,000 to him upon production of tenancy agreement and rental receipts. (7) At the annual dinner of AA Ltd on 30 September 2015, he won a cash coupon of $3,000 in the lucky draw. (8) Mr and Mrs Pang had paid the following expenses during the year: Mr Pang Mrs Pang S 2,350 $5,000 Membership subscriptions to HKICPA, a professional accountancy S2,350 body in Hong Kong Cash donations to the Community Chest, an approved charitable $15,000 institution in Hong Kong School fees for an accountancy degree programme at The Open $40,000 University of Hong Kong Fees paid to a residential care home in Hong Kong for Mr Pang's $60,000 father who is aged 70 SO SO (9) Mrs Pang is a housewife. The couple have a child aged 12. They are living with Mrs Pang's father and mother who are aged 65 and 58 respectively. REQUIRED: (a) Advise Mr Pang about the conditions under which an individual is entitled to a married person's allowance and if he is entitled to such an allowance. (5 marks) (b) Compute Mr Pang's salaries tax liability for the year of assessment 2015/2016. Ignore provisional salaries tax and tax rebates or reduction, if any. (11 marks) (c) Briefly explain the tax treatment of the following items under salaries tax: (1) Trip expenses paid by the company (item 4) (ii) Cash coupon (item 7) (5 marks) SECTION A (21 marks) Answer ALL questions from this section. Question 1 (21 marks) Mr Pang is the financial controller of AA Ltd, a company incorporated and carrying on business in Hong Kong. He is also a shareholder BB Ltd, which is also a Hong Kong company and is a wholly owned subsidiary of AA Ltd. You have been supplied with the following information regarding the year of assessment 2015/16: (1) Annual Salary: $1,500,000 (2) Bonus: $300,000 (3) Dividend: $15,000 (4) Mr Pang took a 8-day business trip to London and Mrs Pang travelled with him. AA Ltd paid the following expenses in connection with the trip: Mr Pang Mrs Pang Flight by British Airways $12,000 $12.000 Hotel $22,000 No extra cost Meals $25,000 $25,000 Local tour in London Nil $3,000 (5) Mr Pang earned a gain on share options of $495,000. (6) Mr Pang rented a flat for his residence at a monthly rent of $22,000. His employer refunded $18,000 to him upon production of tenancy agreement and rental receipts. (7) At the annual dinner of AA Ltd on 30 September 2015, he won a cash coupon of $3,000 in the lucky draw. (8) Mr and Mrs Pang had paid the following expenses during the year: Mr Pang Mrs Pang S 2,350 $5,000 Membership subscriptions to HKICPA, a professional accountancy S2,350 body in Hong Kong Cash donations to the Community Chest, an approved charitable $15,000 institution in Hong Kong School fees for an accountancy degree programme at The Open $40,000 University of Hong Kong Fees paid to a residential care home in Hong Kong for Mr Pang's $60,000 father who is aged 70 SO SO (9) Mrs Pang is a housewife. The couple have a child aged 12. They are living with Mrs Pang's father and mother who are aged 65 and 58 respectively. REQUIRED: (a) Advise Mr Pang about the conditions under which an individual is entitled to a married person's allowance and if he is entitled to such an allowance. (5 marks) (b) Compute Mr Pang's salaries tax liability for the year of assessment 2015/2016. Ignore provisional salaries tax and tax rebates or reduction, if any. (11 marks) (c) Briefly explain the tax treatment of the following items under salaries tax: (1) Trip expenses paid by the company (item 4) (ii) Cash coupon (item 7)