tax_ppt
TRANSCRIPT
HK TAXATION Unit 5 – Salaries Tax(3)
Question 14Priscilla CHAN 2009054389Carly CHUNG 2009532135Kevin LI 2009277981Sharon YAU 2009557800Sindy YIU 2009149445
The Scenario
Mr Chinga PRC ResidentEmployed as a sales manager by Wang Laboratories Ltd in HK
Y/A 2009/10
(1)
IROS8(1)(a)
HK-sourced employmentService in HKNot visiting or visiting > 60 days
Fully taxable
Key Issue (1)Annual Salary of $240,000 from Wang Laboratories Ltd in HK
Application of IROHK-sourced employment Service in HK Not visiting or visiting > 60 days
Fully taxable
Presentation
Salary $60,000 $120,000 $60,000Meal Allowance $3,000Reimbursement for gas & utilities $3,000Housing Subsidy $60,000Outstanding Performance Award $1,250 $2,500 $1,250Refund on annual subscription $375 $750 $375Rental Value: 8%($64,625-$10,000X12X60%-$21,600X(3/12)X60%) $4,790 - - 10%($126,250-$10,000(6/12)x60%) - $2,677 -Share Option $435 $870 $435Assessable Income $69,850 $129,797 $122,060
(2),(3)
IROS9(1)(b)
Place of residence provided by ERER paid all the rent
rental value taxableS9(2)(a)
place of residence be a hotel2 rooms
rental value be 8% x (AI – outgoing and expense- DA)
IRO
S9(1)(a)Income from employment includes Wages, salaries, bonuses, leave pay, fees, commissions, gratuities, perquisites or allowance
taxable
Key Issue (2&3)
1/4/09 – 30/6/09 [3months]
2 hotel rooms providedMeal All’ce $1,000/month
Application of IROS9(1)(b)
Place of residence provided by ER ER paid all the rent rental value taxable
S9(2)place of residence is hotel 2 rooms
rental value be 8% x (AI – outgoing and expense- DA)
Application of IRO
S9(1)(a)Income from employment includes Wages, salaries, bonuses, leave pay, fees, commissions, gratuities, perquisites or allowance
taxable
Presentation
Salary $60,000 $120,000 $60,000Meal Allowance $3,000Reimbursement for gas & utilities $3,000Housing Subsidy $60,000Outstanding Performance Award $1,250 $2,500 $1,250Refund on annual subscription $375 $750 $375Rental Value: 8%($64,625-$10,000X12X60%-$21,600X(3/12)X60%) $4,790 - - 10%($126,250-$10,000(6/12)x60%) - $2,677 -Share Option $435 $870 $435Assessable Income $69,850 $129,797 $122,060
IROS(9)(1)(c)
Place of residence provided by ERER paid part of the rent
(rental value – rent borne by EE) taxable
S9(2)Rental value = 10% x (AI – outgoing expenses-DA)
IROS(9)(1)(a)
Income from employment includes Wages, salaries, bonuses, leave pay, fees, commissions, gratuities, perquisites or allowance
Expense AllowanceDischarge of ER’s own liability OR Reimbursement of deductible expenses
taxable
Key Issue (2&3)
1/7/09 – 31/12/09 [3months]
FlatEE paid rent, rate, mgt fee totaling $21,500/monthER reimbursed $20,000/month
Application of IRO
S(9)(1)(c)Place of residence provided by ER ER paid part of the rent
(rental value – rent borne by EE) taxable S9(2)
Rental value = 10% x (AI – outgoing expenses-DA)
Application of IROS(9)(1)(a)
Income from employment includes Wages, salaries, bonuses, leave pay, fees, commissions, gratuities, perquisites or allowance
Expense AllowanceDischarge of ER’s own liability OR Reimbursement of deductible expenses
taxable
Presentation
Salary $60,000 $120,000 $60,000Meal Allowance $3,000Reimbursement for gas & utilities $3,000Housing Subsidy $60,000Outstanding Performance Award $1,250 $2,500 $1,250Refund on annual subscription $375 $750 $375Rental Value: 8%($64,625-$10,000X12X60%-$21,600X(3/12)X60%) $4,790 - - 10%($126,250-$10,000(6/12)x60%) - $2,677 -Share Option $435 $870 $435Assessable Income $69,850 $129,797 $122,060
IROS(9)(1)(c)
Place of residence provided by ER ER paid part of the rent
(rental value – rent borne by EE) taxable
IROS(9)(1)(a)(iv)
Liability testER has sole & primary liability andNot person was a surety Not assessable
Key Issue (2&3)
1/1/10 – 31/03/10 [3months]
EE acquire flat under joint name with wifeER housing subsidy $20,000 per monthER reimburse utility expenses $3,000 whole periodER contract with domestic helper $4,000/month
Application of IROS(9)(1)(c)
Place of residence provided by ER ER paid part of the rent
taxable
Application of IROS(9)(1)(a)(iv)
Liability testER has sole & primary liability and Not person was a surety Not assessable
Presentation
Salary $60,000 $120,000 $60,000Meal Allowance $3,000Reimbursement for gas & utilities $3,000Housing Subsidy $60,000Outstanding Performance Award $1,250 $2,500 $1,250Refund on annual subscription $375 $750 $375Rental Value: 8%($64,625-$10,000X12X60%-$21,600X(3/12)X60%) $4,790 - - 10%($126,250-$10,000(6/12)x60%) - $2,677 -Share Option $435 $870 $435Assessable Income $69,850 $129,797 $122,060
(4)
IROS9(1)(a)
Income from employment includes Wages, salaries, bonuses, leave pay, fees, commissions, gratuities, perquisites or allowance
taxable
Key Issue (4)
EE receive an award $5000 outstanding job performance
Application of IRO
S9(1)(a)Income from employment includes Wages, salaries, bonuses, leave pay, fees, commissions, gratuities, perquisites or allowance
taxable
Presentation
Salary $60,000 $120,000 $60,000Meal Allowance $3,000Reimbursement for gas & utilities $3,000Housing Subsidy $60,000Outstanding Performance Award $1,250 $2,500 $1,250Refund on annual subscription $375 $750 $375Rental Value: 8%($64,625-$10,000X12X60%-$21,600X(3/12)X60%) $4,790 - - 10%($126,250-$10,000(6/12)x60%) - $2,677 -Share Option $435 $870 $435Assessable Income $69,850 $129,797 $122,060
(5)
IROS12(1)(a)
Outgoing and expenseNot domestic, private or capitalWholly ,exclusively and necessarily Incurred in the production of AI
For dual purpose and Amount is separable and identifiable Apportionment allowed
deductable
IROS12(1)(a)
Depreciation allowance Plant and machinery onlyEssential for production of AIApportionment between business & private use
deductable
Key Issue (5)EE purchased a car to meet clients40% for private use (assessor agreed)EE paid insurance and licensing fees $10,000 per annumDA is given as $21,600
Application of IROS12(1)(a)
Outgoing and expenseNot domestic, private or capital Wholly ,exclusively
For dual purpose and Amount is separable and identifiable
Apportionment allowed And necessarily Incurred in the production of AI
deductable
Application of IROS12(1)(a)
Depreciation allowance Plant and machinery only Essential for production of AI Apportionment between business & private use
deductable
(given)
Presentation
Assessable Income $69,850 $129,797 $122,060 Less: Insurance & licence fees $1,500 $3,000 $1,500 Depreciation Allowance $3,240 $6,480 $3,240
$4,740 $9,480 $4,740 Net Assessable Income $65,110 $120,317 $117,320 Total Net Assessable Income (NAI) $302,747
(6)
IROS12(1)(a)
Outgoing and expenseNot domestic, private or capitalWholly ,exclusively and necessarily incurred in the production of AI
Direct connection between expenditure and production of incomeNot sufficient if only enable the duty to perform
deductable
Key Issue (6)• EE paid $3000 annual
subscription to join the HK Country Club (asked by ER)
• ER refunded $1500 to EE
Application of IROS12(1)(a)
Outgoing and expenseNot domestic, private or capital Wholly ,exclusively and necessarily
Essential to the conduct of employment Not sufficient if only related to and aid production of income
Application of IROS12(1)(a)(continue)
Outgoing and expenseincurred in the production of AI
Direct connection between expenditure and production of income Not sufficient if only enable the duty to perform
deductable
Presentation
Salary $60,000 $120,000 $60,000Meal Allowance $3,000Reimbursement for gas & utilities $3,000Housing Subsidy $60,000Outstanding Performance Award $1,250 $2,500 $1,250Refund on annual subscription $375 $750 $375Rental Value: 8%($64,625-$10,000X12X60%-$21,600X(3/12)X60%) $4,790 - - 10%($126,250-$10,000(6/12)x60%) - $2,677 -Share Option $435 $870 $435Assessable Income $69,850 $129,797 $122,060
(7)
IROS9(1)(d)
Share OptionObtained as holder of an office/ employment Gain realized on exercise or assignment or release of share option
taxable
Key Issue (7)1/12/08
ER granted EE a share option cost of $100 to purchase 1,000 shares @ $2 each
12/1/09EE sold the option
4/9/09EE exercised 600 shares (Market price @ $5 each)
Application of IRO
ComputationTaxable gain = the excess of market value on date of exercise over consideration given for the shares and option
$5x 600 – ($100 x 600/1000 + $2 x600)= $1740
Presentation
Salary $60,000 $120,000 $60,000Meal Allowance $3,000Reimbursement for gas & utilities $3,000Housing Subsidy $60,000Outstanding Performance Award $1,250 $2,500 $1,250Refund on annual subscription $375 $750 $375Rental Value: 8%($64,625-$10,000X12X60%-$21,600X(3/12)X60%) $4,790 - - 10%($126,250-$10,000(6/12)x60%) - $2,677 -Share Option $435 $870 $435Assessable Income $69,850 $129,797 $122,060
(8)
IROS29
Married person allowanceMarried andHis/her spouse does not have AI
Grant
IROS31Child Allowance
maintain unmarried child at any time during Y/A One of age requirement:
Aged ≥18 but < 25 and receive full-time education
Grant
Key Issue (8)
EE’s wife no AIEE’s son aged 19Studies in CanadaEE’s sister paid EE’s son’s school fee & wholly supported his living
Application of IROS29
Married person allowanceMarried and His/her spouse does not have AI
Grant
Application of IROS31
Child Allowancemaintain unmarried child at any time during Y/A One of age requirement:
Aged ≥18 but < 25 and receive full-time education
Grant
Presentation
Total Net Assessable Income (NAI) $302,747 Less: Concessionary Deductions under Part IVA Approved Charitable Deductions (limit to 25%) $105,961.45 Elderly Residential Care Expense (Mrs. Ching's mother & father) $120,000 Contribution to Retirement Scheme $12,000 Net Assessable Income After Concessionary Deductions $64,785.55 Less: Personal Allowance under Part V Married Person All'ce $216,000 Dependent Parent All'ce (DPA - Mr. Ching's Mother) $60,000 Disabled Dependent All'ce (Mrs. Ching's Mother) $60,000 Net Chargeable Income (NCI) ($271,214.45)
(9)
IROS30
Dependent Parent Allowancethe person or spouse not living apart maintains his/her or spouse’s parent
Parent Ordinarily resident in HK and Aged ≥60 or aged <60 but eligible to claim the Gov’t’s disability allowance
Grant
IROAdditional Dependent parent allowance
Taxpayer reside with parent continuously throughout Y/Agrant
Key Issue (9)
EE’s mother aged 65lives together with the EE’s family
EE’s father aged 67fully maintained by the EE, butLives in the PRC
Application of IROS30
Dependent Parent Allowancepersonor spouse not living apart maintains his/spouse’s parent
Parent Ordinarily resident in HK andAged ≥60 or aged <60 but eligible to claim the Gov’t’s disability allowance
Grant
(F) (M)
(M)
(M) (M)
(F) (F)
(F)
Application of IROAdditional Dependent parent allowance
Taxpayer reside with parent continuously throughout Y/Agrant (M)
(M)
Presentation
Total Net Assessable Income (NAI) $302,747 Less: Concessionary Deductions under Part IVA Approved Charitable Deductions (limit to 25%) $105,961.45 Elderly Residential Care Expense (Mrs. Ching's mother & father) $120,000 Contribution to Retirement Scheme $12,000 Net Assessable Income After Concessionary Deductions $64,785.55 Less: Personal Allowance under Part V Married Person All'ce $216,000 Dependent Parent All'ce (DPA - Mr. Ching's Mother) $60,000 Disabled Dependent All'ce (Mrs. Ching's Mother) $60,000 Net Chargeable Income (NCI) ($271,214.45)
(10)
IROS26(D)
Elderly residential Care expenseERCE paid by the person or his/her spouse to a residential care home in respect of the person’s or his/her spouse’s parent or grandparentAge ≥60 or <60 but eligible to claim the Govn’t disability allowance Grant
Max $60,000 each elderly
IROS26(D) con’tElderly Residential Care expense
Max $60,000 each elderlyDDA can still be claimed if the same elderly is eligible for the Govn’t disability allowance
IROS31(A)
“dependent” eligible to claim the Gov’t’s disability allowance
Dependent” includes Parent qualifying for DPA/ERCE
Grant
Key Issue (10)EE’s mother-in-law aged 53
EE’s father-in-law, aged 60Both stay in a registered Nursing Home EE paid ERCE totaling $150,000
Oct 2009
Legs broken
Feb 2010,
lodged claim on being eligible for Gov’t’s Disability All’ce
May 2010,
received approval
Application of IROS26(D)
Elderly residential Care expenseERCE paid by the person or his/her spouse to a residential care home in respect of the person’s or his/her spouse’s parent or grandparent Age ≥60 or <60 but eligible to claim the Govn’t disability allowance Grant (both)
Max $60,000 each elderly
(both)
(both)
Application of IROS31(A)
“dependent” eligible to claim the Gov’t’s disability allowance
Dependent” includes Parent qualifying for DPA/ERCE
Grant (mother-in-law) (mother-in-law)
Presentation
Total Net Assessable Income (NAI) $302,747 Less: Concessionary Deductions under Part IVA Approved Charitable Deductions (limit to 35%) $105,961.45 Elderly Residential Care Expense (Mrs. Ching's mother & father) $120,000 Contribution to Retirement Scheme $12,000 Net Assessable Income After Concessionary Deductions $64,785.55 Less: Personal Allowance under Part V Married Person All'ce $216,000 Dependent Parent All'ce (DPA - Mr. Ching's Mother) $60,000 Disabled Dependent All'ce (Mrs. Ching's Mother) $60,000 Net Chargeable Income (NCI) ($271,214.45)
(11)
IROS26C
Approved Charitable DonationAggregate of ACD made during the Y/A by the person or his/her spouse
Cash≧ $100 in aggregate
Grant Max : 35%x (AI-outgoing expenses- DA)
Key Issue (11)
Cash donation $110,000 Po Leung Kuk
Application of IROS26C
Approved Charitable DonationAggregate of ACD made during the Y/A by the person or his/her spouse
Cash ≧ $100 in aggregate
Grant Max : 35%x (AI-outgoing expenses- DA)
Presentation
Total Net Assessable Income (NAI) $302,747 Less: Concessionary Deductions under Part IVA Approved Charitable Deductions (limit to 35%) $105,961.45 Elderly Residential Care Expense (Mrs. Ching's mother & father) $120,000 Contribution to Retirement Scheme $12,000 Net Assessable Income After Concessionary Deductions $64,785.55 Less: Personal Allowance under Part V Married Person All'ce $216,000 Dependent Parent All'ce (DPA - Mr. Ching's Mother) $60,000 Disabled Dependent All'ce (Mrs. Ching's Mother) $60,000 Net Chargeable Income (NCI) ($271,214.45)
(12)
IROS26G
Contribution to Recognized retirement Schemes
Recognized retirement scheme include MPFAmount: lesser of Contribution paid by EE or mandatory contribution to MPF
GrantMax : $12,000 in a Y/A
Key Issue (12)
EE made Mandatory contribution $12,000 to MPF scheme
Application of IROS26G
Contribution to Recognized retirement Schemes
RRS include MPF Amount: lesser of Contribution paid by EE or mandatory contribution to MPF
Grant Max : $12,000 in a Y/A
Presentation
Total Net Assessable Income (NAI) $302,747 Less: Concessionary Deductions under Part IVA Approved Charitable Deductions (limit to 35%) $105,961.45 Elderly Residential Care Expense (Mrs. Ching's mother & father) $120,000 Contribution to Retirement Scheme $12,000 Net Assessable Income After Concessionary Deductions $64,785.55 Less: Personal Allowance under Part V Married Person All'ce $216,000 Dependent Parent All'ce (DPA - Mr. Ching's Mother) $60,000 Disabled Dependent All'ce (Mrs. Ching's Mother) $60,000 Net Chargeable Income (NCI) ($271,214.45)
Salaries Tax of Mr ChingYear of Assessment 2009/2010
1/4/09 - 30/6/09 1/7/09 - 31/12/09 1/1/10 - 31/3/10Salary $60,000 $120,000 $60,000Meal Allowance $3,000Reimbursement for gas & utilities $3,000Housing Subsidy $60,000Outstanding Performance Award $1,250 $2,500 $1,250Refund on annual subscription $375 $750 $375Rental Value: 8%($64,625-$10,000X12X60%-$21,600X(3/12)X60%) $4,790 - - 10%($126,250-$10,000(6/12)x60%) - $2,677 -Share Option $435 $870 $435Assessable Income $69,850 $129,797 $122,060 Less: Insurance & licence fees $1,500 $3,000 $1,500 Depreciation Allowance $3,240 $6,480 $3,240
$4,740 $9,480 $4,740 Net Assessable Income $65,110 $120,317 $117,320 Total Net Assessable Income (NAI) $302,747 Less: Concessionary Deductions under Part IVA Approved Charitable Deductions (limit to 35%) $105,961.45 Elderly Residential Care Expense (Mrs. Ching's mother & father) $120,000 Contribution to Retirement Scheme $12,000 Net Assessable Income After Concessionary Deductions $64,785.55 Less: Personal Allowance under Part V Married Person All'ce $216,000 Dependent Parent All'ce (DPA - Mr. Ching's Mother) $60,000 Disabled Dependent All'ce (Mrs. Ching's Mother) $60,000 Net Chargeable Income (NCI) ($271,214.45)(NAI-Concessionary Deductions)X15% $9,717.83 Total Salaries Tax Liabitlity Nil
Final Computation
Thank You for Listening!