A The HR Manager of ACE HK Limited, May Chan, approached you for some tax planning advice.

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Question:

The HR Manager of ACE HK Limited, May Chan, approached you for some tax planning advice. May is now preparing an offer to the final candidate Simon Firth, for the position of CEO for their Hong Kong operations. She is thinking to include the benefits listed below in Simon’s offer/employment contract:

• Providing Simon Firth a housing allowance in cash for HK$100,000/month.

• Reimbursing Simon Firth on his utility bills (electricity, water and gas).

• Giving Simon Firth a monthly car allowance of HK$8,000 so that he can rent a car to drive and use when he is in Hong Kong.

Required:

(a) Advise May on how the company might structure the offer so that their new CEO Simon Firth can minimise his salaries tax liabilities with respect to the above benefits. (6 marks)

(b) Comment on the legal and ethical implications in minimising salaries tax liabilities of Simon through tax planning. (5 marks)

Part B

Mr Wong is a Hong Kong Permanent Resident (HKPR) and does not own any residential property in Hong Kong. On 1 December 2019, acting on his own behalf, he entered into a Agreement for sale and purchase (ASP) to acquire a residential property at a purchase price of $6 million.

Required:

(a) Advise Mr Wong on the Stamp Duty implications of his acquisition. (3 marks)

(b) Advise Mr Wong on the consequences of non-stamping of the ASP. (3 marks) [Total for Question 5: 17 marks]