Take home assignment $4-$Salaries tax computation exercise $(20$ marks$)$

Julian Balonese is an Australian resident. On $1$ April $2016,$ he was employed by Netzero

Limited $("$NL$"),$ a company carrying on a business in Melbourne, Victoria, Australia.

Julian was appointed as the Vice$-$President of Emerging Markets, who is responsible for

the business development of NL$\text{'}$s health$-$food products in Asia Pacific regions. His

contract was negotiated, concluded and enforceable in Victoria, Australia, and his salary

is paid directly into his bank account in Melbourne.

Julian's travel itinerary for the year ended $31$ March $2023$ was as follows:

During the year of assessment $\frac{2022}{23},$ Julian received the following income and made

the following payments:

i$.$ Annual basic salary of $$1,440,000.$

ii$.$ An entertainment allowance of $$72,000$ a year, in the form of cash.

iii. Cash bonus of $$40,000,$ and it was received for winning the regional "Best

Business Development Proposal" of the year. That was a yearly cash award given

to the employee who had proposed the best strategy, and yet through viable

means to expand the business of NL$.$

iv$.$ Julian lived in a serviced apartment at Townplace, SOHO Kennedy Town, Hong

Kong; with $2-$bedroom. The accommodation was arranged and paid by NL$.$ Total

charges during the year were $$84,000$; and he was required to contribute and pay

$10\%$ of the total charges towards this housing arrangement.

v$.$ He took a $30-$day business trip to Hanoi, Vietnam, and stayed behind for an extra

$10$ days to visit his friends. NL approved Julian's itinerary of this trip and paid the

hotel room charges amounting $$40,000$ for the entire trip of $40$ days.

vi$.$ Julian joined the Australian Chamber of Commerce in Hong Kong $("$AustCham

HK$")$ with effect from $1$ January $2023.$ He paid an annual subscription of $$3,600.$

Julian often met with his business contacts in AustCham HK$.$ He obtained a full

reimbursement from NL$.$

vii. On $1$ January $2020,$ Julian was granted an option to acquire $100,000$ shares in $NL,$

at $$5$ each. On $1$ March $2023,$ he exercised the option and obtained $100,000$

shares from NL$,$ while the fair market value per share was $$8$ on the same day. He

paid $$8,000$ for this option. Right after he exercised this option, he sold the shares

at $$15$ per share on $15$ March $2023$ and obtained a gain.

viii. Julian enrolled and undertook an MBA course with The Chinese University of Hong

Kong. He paid a tuition fee of $$435,000.$

ix$.$ Julian donated $$48,000$ to the Australian Red Cross: Humanitarian Aid,

Headquarter in Melbourne, Australia. He also donated $$80,000$ to Community

Chest Hong Kong, an approved charity for tax purpose.

x$.$ Apart from the mandatory MPF contributions made, Julian also contributed $5\%$ of

his basic salary into a Tax$-$deductible Voluntary Contribution $($TVC$)$ account in

Hong Kong.

xi$.$ Julian lives with his family in Hong Kong. His wife is a housewife. They have a son

that was $14$ years old.

xii. He paid qualifying premiums of Voluntary Health Insurance Scheme $($VHIS$)$

policies purchased for himself, his spouse and his son in the amount of $$12,000,$

$$7,000$ and $$3,000$ respectively.

xiii. Julian supports his father, aged $72$ who lives in Australia. His father has a Hong

Kong identity card and travels frequently to Hong Kong visiting his son and

grandson.

Required:

a$)$ Advise Julian Balonese on the extent to which he is liable to Hong Kong salaries

tax for the year of assessment $2022/23.$ Note: Ignore double tax issues

$(5$ marks$)$

b$)$ Calculate the Hong Kong salaries tax payable by Julian for the year of assessment

$2022/23.$ Show all your numerical workings.

Round to whole numbers for income and expenses; truncate to whole numbers for tax liabilities. Note: Ignore foreign tax issues; provisional salaries tax; tax rebate $(15$ marks$)$