Tax Rates and Allowances 2017/18 2018/19* Stamp Duty Rates Standard rate 15% 15% Progressive rates Conveyance with consideration Rate (Scale 1) # Rate (Scale 2) First HK$45,000 2% w.e.f. 23 Feb 2013 w.e.f. 1 April 2010 Next HK$45,000 7% Up to $2,000,000 * 1.50% $100 Next HK$45,000 12% Remainder 17% $2,000,001 - $3,000,000 * 3.00% .50% Progressive rates $3,000,001 - $4,000,000 * 4.50% 2.25% First HK$50,000 Next HK$50,000 6% $4,000,001 - $6,000,000 * 6.00% 3.00% Next HK$50,000 10 % Next HK$50,000 $6,000,001 - $20,000,000* 7.50% 3.75% Remainder 17% Over $20,000,000 * 8.50% 1.25% Salaries tax relief for 2017/18: Reduction of an amount equivalent to 75% of the amount of * subject to marginal relief tax charged or HK$30,000, whichever is the less. (The Relief is also available for personal assessment and profits tax) # Flat rate of 15% (w.e.f. 5 November 2016) for residential properties Salaries tax relief for 2018/19: Reduction of an amount equivalent to 100% of the amount of tax charged or HK$20,000, whichever is the less. (The Relief is also available for personal assessment and profits tax) Special Stamp Duty (SSD): SSD Rate (A) SSD Rate (B) 2017/18 Holding Period (where applicable) (where applicable) Personal Allowances Basic 132,000 6 months or less 15% 20% Married person' 264 090 264,000 Single parent 132 090 132.000 > 6 months to 12 months 10% 15% - 1" to 9th (each) 100,000 120,000 > 12 months to 24 m 5%% 10% - Additional in the year of birth 100,000 120.000 Dependent parent / grandparent (each) > 24 months to 36 months 10% - Basic 46,000 50,000 (aged 55 or above but below 60) 23,000 25,000 (A): For property acquired on or after 20 November 2010 to 26 October 2012 Additional 46,000 50,000 (B): For property acquired on or after 27 October 2012 (aged 55 or above but below 60) 23,000 25,000 Dependent brother / sister (each) 37,500 37,50 Disabled dependant (each) 75.000 75,00 Buyer's Stamp Duty (BSD) 15% (w.e.f. 27 October 2012, where applicable) Personal disability 75.000 Deductions HKS HK$ Self-education expenses (maximum) 100 000 100 300 100 090 Lease with length of tenancy Home loan interest (maximum) 100,000 Elderly residential care expenses (each, maximum) 92.000 100 090 Not exceeding 1 year 0.25% on total rent payable over lease term Contribution to recognised retirement schemes 18,000 18,000 Between 1 to 3 years 0.5% on yearly or average yearly rent (maximum) Exceeding 3 years 1% on yearly or average yearly rent Approved charitable donation (limit) 350%% 350%% Profits Tax Rates 2017/15 Shares transfer |0.2% Unincorporated business 15.0% 15.0% Corporations 16 5% 16.5% * Two-tiered profits tax rates (half of the relevant tax rate for the first 2 million assessable profits) Page 2 of 9 Page 3 of 9 Question 1 Mr. Wong is the Senior Sales Manager of Honey Limited ("Honey") and he is subject to Hong Kong salaries tax under section 8(1) of the Inland Revenue Ordinance. He Question 1 (cont') provided you with the following information relating to his employment for the year ended 31 March 2019: Notes: Additional Information: His monthly salary was HK$90,000 and he received a commission in the sum of HK$100,000 in March 2019. His wife, Mrs. Wong, worked as a receptionist in a local trading company during the 2. He was provided with a flat by Honey rent-free at North Point, Hong Kong. year. She received a monthly salary of HK$8,000 during the year from her employer. However, he was required to pay the management fee of HK$2,000 per month. She contributed 5% of her salary, that is, HK$4,800 to the Mandatory Provident The flat was rented by Honey from the landlord at HK$35,000 per month. Fund scheme during the year. 3. Honey gave him two air tickets with hotel accommodation package to Singapore in December 2018. Honey directly contracted with the travel agency and it paid HK$22,000 for this holiday package, which had a resale value of HK$13,500. Mr. ii. Mrs. Wong's father and mother, aged 65 and 59 respectively during the year, were Wong spent the holiday in Singapore with his wife for Christmas in 2018. residing with Mr. and Mrs. Wong in their flat in North Point, Hong Kong throughout 4. He was provided with a company car by Honey. Fuel expenses incurred by him the year ended 31 March 2019. amounting to HK$40,000 during the year. No refund was made by Honey to him for the fuel expenses. Business use portion of the car was agreed with the Inland iii. Mr. and Mrs. Wong maintained two children who were aged 23 and 15 during the Revenue Department to be 60%. year. The elder daughter was studying full-time at a university in Australia during 5. During the year Honey paid an insurance premium of HK$1,800 for Mr. Wong's the year ended 31 March 2019 and she got married on 2 April 2018. share of medical benefit under a corporate medical insurance scheme. Mr. Wong obtained a refund of HK$7,500 from the insurand y for medical expenses incurred by him during the year. 6. He was requested by Honey to join the Great-health Fitness Club so that he could meet and entertain the existing and potential customers. He paid club fee of HK$9,000 during the year. Honey refunded the full amount of the club fee to him. Required: 7. He enrolled in a master degree course in Marketing offered by a local university and paid tuition fee of HK$138,000 during the year. He did not receive any re- Prepare the salaries tax computation under Joint Assessment for Mr. and Mrs. Wong for imbursement or subsidy from Honey for this study. the year of assessment 2018/19. You may assume that the couple will avail themselves to 8. On 18 April 2018, he was granted a share option (free of charge) to subscribe for whatever relief available to minimise their overall tax liability. 10,000 shares in Honey at HK$8.5 each. On 21 July 2018, he exercised the option to buy 6,000 shares, of which 4,000 shares were disposed in the market on 19 August 2018. He assigned the remaining option right to his colleague for (Show the detailed steps of your computation. Explanatory notes writing is NOT required HK$12,000 on 24 January 2019. The fair market value per share on respective dates was as follows and ignore provisional tax in your computation.) 18 April 2018 HK$9 21 July 2018 HK$11 19 August 2018 HK$12 24 January 2019 HK$15 (Total: 24 marks) 9. During the year he contributed HK$18,000 to Honey's recognised retirement scheme