50.1K

Verified Solution

Link Copied!

1 w Part II: Answer any Two Questions (2 x 30 marks = 60 marks) Question 1 Peter Leung and Anna Cheung are husband and wife with the following income and expenses for the year of assessment 2020/21. Peter Leung Notes Income Salaries income 602,000 Rental income 2 162,000 Director's fee 3 50,000 Expenses Mortgage loan interest 250,000 Rates 20,000 Donations 16,000 Mandatory contributions to MPF scheme 17,500 Elderly residential care expenses 7 92,000 Annual subscription 8 3,000 Anna Cheung Profit from her own business 9 400,000 Notes: (1) Peter is the Senior Travel Consultant of a Hong Kong registered travel agency, Happy Star Travel. His responsibilities include providing tourist guide services to inbound tours visiting Hong Kong. His employer allows him to collect tips from customers. During the year, he received tips of 400,000 which was not included in the employers' return. 4 5 6 (2) Rental income from commercial property in Kowloon City 150,000 Rental income from investment property in the PRC 12,000 162,000 (3) The director's fee was received from a PRC company. (4) $120,000 mortgage interest was paid to Hang Seng Bank in respect of the mortgage loan to finance the purchase of the residential property. $130,000 mortgage interest was paid to Bank of East Asia in respect of the mortgage loan to finance the purchase of commercial property. (5) Rates PRC property Commercial property (6) Donations Hong Kong Community Chest Women Liberation Movement (PRC) 9,500 10,500 20,000 $ 10,000 6.000 16,000 (7) The elderly residential care expenses were paid to a residential care home in Hong Kong in respect of his father-in-law who is 67 years old. (8) Annual subscription Association of Professional Tour Guides Hong Kong Institute of Photographers 2,000 1,000 3,000 (9) Anna Cheung owns a small fast-food restaurant by herself in Wanchai. She draws a monthly salary of $5,000 for acting as cashiers of the restaurant. The couple lives with their two sons, aged 27 and 21 respectively. The elder son is self-employed. The younger son is a part-time student at the City University of Hong Kong. Required: (a) Compute the total tax liability of Mr. Leung & Mrs. Leung for the year of assessment 2020/21 if they do NOT elect for personal assessment. (19.5 marks) (b) Advise Mr. & Mrs. Leung whether it is to their advantage to elect personal assessment for 2020/21? (10.5 marks) 1 w Part II: Answer any Two Questions (2 x 30 marks = 60 marks) Question 1 Peter Leung and Anna Cheung are husband and wife with the following income and expenses for the year of assessment 2020/21. Peter Leung Notes Income Salaries income 602,000 Rental income 2 162,000 Director's fee 3 50,000 Expenses Mortgage loan interest 250,000 Rates 20,000 Donations 16,000 Mandatory contributions to MPF scheme 17,500 Elderly residential care expenses 7 92,000 Annual subscription 8 3,000 Anna Cheung Profit from her own business 9 400,000 Notes: (1) Peter is the Senior Travel Consultant of a Hong Kong registered travel agency, Happy Star Travel. His responsibilities include providing tourist guide services to inbound tours visiting Hong Kong. His employer allows him to collect tips from customers. During the year, he received tips of 400,000 which was not included in the employers' return. 4 5 6 (2) Rental income from commercial property in Kowloon City 150,000 Rental income from investment property in the PRC 12,000 162,000 (3) The director's fee was received from a PRC company. (4) $120,000 mortgage interest was paid to Hang Seng Bank in respect of the mortgage loan to finance the purchase of the residential property. $130,000 mortgage interest was paid to Bank of East Asia in respect of the mortgage loan to finance the purchase of commercial property. (5) Rates PRC property Commercial property (6) Donations Hong Kong Community Chest Women Liberation Movement (PRC) 9,500 10,500 20,000 $ 10,000 6.000 16,000 (7) The elderly residential care expenses were paid to a residential care home in Hong Kong in respect of his father-in-law who is 67 years old. (8) Annual subscription Association of Professional Tour Guides Hong Kong Institute of Photographers 2,000 1,000 3,000 (9) Anna Cheung owns a small fast-food restaurant by herself in Wanchai. She draws a monthly salary of $5,000 for acting as cashiers of the restaurant. The couple lives with their two sons, aged 27 and 21 respectively. The elder son is self-employed. The younger son is a part-time student at the City University of Hong Kong. Required: (a) Compute the total tax liability of Mr. Leung & Mrs. Leung for the year of assessment 2020/21 if they do NOT elect for personal assessment. (19.5 marks) (b) Advise Mr. & Mrs. Leung whether it is to their advantage to elect personal assessment for 2020/21? (10.5 marks)

Answer & Explanation Solved by verified expert

See Answer