2. Mr Kei purchased a property in Taikooshing on 1 February 2017, the purchase of which...

  

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2. Mr Kei purchased a property in Taikooshing on 1 February 2017, the purchase of which was partly financed by a bank loan. The property was let to Mr Pau on 1 April 2017 for a term of 2 years at a monthly rent of $25,000 payable in advance. Rates of $2,700 per quarter and management fee of $1,100 per month were payable by the tenant. Mr Pau failed to pay rent since 1 October 2018 and he moved out the premises on 31 December 2018 after the following agreement had been made with Mr Kei: a. Mr Pau would pay all the rates up to 31 December 2018; b. Mr Kei allowed Mr Pau to settle the outstanding rent on or before 30 June 2019; c. The management fees for the months of November and December 2018 were to be paid by Mr Kei. After Mr Pau moved out of the premises, the property was occupied by Mr Kei's uncle, who visited Hong Kong for 10 weeks, without any rent. Both rates and management fee were paid by Mr Kei's uncle. Mr Kei's uncle gave Mr Kei a diamond ring worth $20,000 for the right of use of the property during his visit. After his uncle had moved out, Mr Kei incurred a sum of $60,000 to re-decorate his property and carry out some minor repairs in March 2018. The property was re-let to Mr Lam on 1 April 2019 under the following terms: a. lease period: 1 April 2019-30 September 2021 b. monthly rent: $20,000 payable in advance premium: $360,000 payable on 1 April 2019 d. rates: $2,700 per quarter payable by the landlord e. management fee: $1,400 per month payable by the tenant Mr Pau was declared bankrupt on 1 May 2019 and Mr Kei could not recover any rent from Mr Pau. Mr Kei had also paid loan interest of $150,000 and $135,000 to the bank for the years ended 31 March 2019 and 31 March 2020 respectively. Required: a. Advise Mr Kei the obligations under the Inland Revenue Ordinance regarding the keeping of records of his rental income from properties. b. Calculate the property tax liabilities of Mr Kei for the years of assessment 2018/19 and 2019/20, assuming that Mr Kei has not elected personal assessment for these two years. (Ignore provisional property tax) 2. Mr Kei purchased a property in Taikooshing on 1 February 2017, the purchase of which was partly financed by a bank loan. The property was let to Mr Pau on 1 April 2017 for a term of 2 years at a monthly rent of $25,000 payable in advance. Rates of $2,700 per quarter and management fee of $1,100 per month were payable by the tenant. Mr Pau failed to pay rent since 1 October 2018 and he moved out the premises on 31 December 2018 after the following agreement had been made with Mr Kei: a. Mr Pau would pay all the rates up to 31 December 2018; b. Mr Kei allowed Mr Pau to settle the outstanding rent on or before 30 June 2019; c. The management fees for the months of November and December 2018 were to be paid by Mr Kei. After Mr Pau moved out of the premises, the property was occupied by Mr Kei's uncle, who visited Hong Kong for 10 weeks, without any rent. Both rates and management fee were paid by Mr Kei's uncle. Mr Kei's uncle gave Mr Kei a diamond ring worth $20,000 for the right of use of the property during his visit. After his uncle had moved out, Mr Kei incurred a sum of $60,000 to re-decorate his property and carry out some minor repairs in March 2018. The property was re-let to Mr Lam on 1 April 2019 under the following terms: a. lease period: 1 April 2019-30 September 2021 b. monthly rent: $20,000 payable in advance premium: $360,000 payable on 1 April 2019 d. rates: $2,700 per quarter payable by the landlord e. management fee: $1,400 per month payable by the tenant Mr Pau was declared bankrupt on 1 May 2019 and Mr Kei could not recover any rent from Mr Pau. Mr Kei had also paid loan interest of $150,000 and $135,000 to the bank for the years ended 31 March 2019 and 31 March 2020 respectively. Required: a. Advise Mr Kei the obligations under the Inland Revenue Ordinance regarding the keeping of records of his rental income from properties. b. Calculate the property tax liabilities of Mr Kei for the years of assessment 2018/19 and 2019/20, assuming that Mr Kei has not elected personal assessment for these two years. (Ignore provisional property tax)

Answer rating: 100% (QA)

ANSWER a Mr Kei is required to keep records of his ren... View the full answer