The Assessment Year would be 2018/19. Notes on computation of Salaries Tax / Personal Assessment are attached.

May and Peter, both are 32, have been married for 4 years. Peter, a sale manager in an international retail store at a monthly salary of $28,000 and monthly commission of $6000. May is a full-time clerk of a trading company with a monthly salary of $18000. They only make mandatory contributions to their MPF schemes.

Currently, they have no children but plan to have a baby next year, after giving birth May will not work for several years. They presently rent an apartment in Yuen Long for $13,000 inclusive per month, but they would like to purchase a flat before having a baby. The familys other monthly expenses total at $16,000. Besides the aforementioned expenses, Peter gives his parents (aged 64 and 58) $4,000 allowance monthly while Marys parents (aged 62 and 56) are living with them.

Both Peters and Mays employers provided basic medical insurance. Both Peter and May purchased a whole life insurance for each other. The beneficiary of Peters life insurance is May; while the beneficiary of Mays life insurance is Peter. The insured amount of Peter is $3,000,000 while the insured amount of May is $1,000,000. Currently they have no will. They appreciate the importance of such estate planning tool, especially when they have a baby.

Peter and May current have $1,200,000 in their bank account, they do not have much investment experiences. They plan to use a major portion of this cash for down payment for a flat of $4,500,000. Eric and Mary plan to use another, relatively smaller, portion of this cash for investment.

(i) What is the amount of MPF contribution for May and Peter? Explain.(6 marks)

(ii) Using the above information of May and Peter for tax assessment year 2018/19, compute the amount of salaries tax payable if they elect joint assessment (excluding provisional tax and tax reduction). (14 marks)