SECTION B (40 marks) Answer ALL questions from this section. Question 11 (15 marks) Faye Wong is a resident of the Mainland China. She acquired a property in Hong Kong for $10 million in June 2012 for investment purposes. As she only comes to Hong Kong for several weeks a year, she engaged a property agent to lease out the property and to collect the rent on her behalf. The property was let to Nic Tse on the following terms: Lease period: two years from 1 July 2012. Lease premium: $50,000 payable on signing the tenancy agreement. Monthly rent: $20,000 payable on the first day of each month. Rental deposit: $40,000 payable on signing the tenancy agreement. Rates and government rent: $3,500 and $2,100 per quarter respectively payable by the owner. Building management fee: $2,000 per month payable by the tenant to the building management office. 1. 2. 3. 4. 5. 6. Since December 2012, Nic has failed to pay the rent on time. As of 31 March 2013, Nic has only paid rent up to January 2013. All the rates, government rent and management fee have been paid by the respective parties. You may ignore any rates concession. As the For the year ended 31 March 2013, Faye has paid an agency fee of $10,000 to the property agent. purchase consideration was partly financed by a mortgage loan, she incurred mortgage interest of $187,000 for the year. Required: (a) Calculate the property tax liability of Faye Wong, if any, for the year of assessment 2012/13. provisional property tax and tax rebate or reduction, if any. Ignore (8 marks) (b) Advise Faye on the following: (i) who is eligible to elect for personal assessment and whether she would qualify for the election. (4 marks) (ii) the possible advantages of electing for personal assessment in her case, if she is qualified to do so. (3 marks) Page 4 SECTION B (40 marks) Answer ALL questions from this section. Question 11 (15 marks) Faye Wong is a resident of the Mainland China. She acquired a property in Hong Kong for $10 million in June 2012 for investment purposes. As she only comes to Hong Kong for several weeks a year, she engaged a property agent to lease out the property and to collect the rent on her behalf. The property was let to Nic Tse on the following terms: Lease period: two years from 1 July 2012. Lease premium: $50,000 payable on signing the tenancy agreement. Monthly rent: $20,000 payable on the first day of each month. Rental deposit: $40,000 payable on signing the tenancy agreement. Rates and government rent: $3,500 and $2,100 per quarter respectively payable by the owner. Building management fee: $2,000 per month payable by the tenant to the building management office. 1. 2. 3. 4. 5. 6. Since December 2012, Nic has failed to pay the rent on time. As of 31 March 2013, Nic has only paid rent up to January 2013. All the rates, government rent and management fee have been paid by the respective parties. You may ignore any rates concession. As the For the year ended 31 March 2013, Faye has paid an agency fee of $10,000 to the property agent. purchase consideration was partly financed by a mortgage loan, she incurred mortgage interest of $187,000 for the year. Required: (a) Calculate the property tax liability of Faye Wong, if any, for the year of assessment 2012/13. provisional property tax and tax rebate or reduction, if any. Ignore (8 marks) (b) Advise Faye on the following: (i) who is eligible to elect for personal assessment and whether she would qualify for the election. (4 marks) (ii) the possible advantages of electing for personal assessment in her case, if she is qualified to do so. (3 marks) Page 4
