In 2017, Henry was employed as a junior accountant by Easy Link Ltd, a trading company in Hong Kong. Henry supplies you with the following information relating to the year ended 31 March 2019.

1. His basic salary was $20,000 per month.
2. A rental subsidy of $9,000 per month was paid to Henry. Easy Link Ltd has no control over how the rental subsidy was spent and Henry was living alone in a flat owned by his father during the year.
3. Easy Link Ltd gave Henry, as a new year bonus, various items of used office equipment having a net book value of $18,000 and a resale value of $7,500.
4. In order to meet the tight deadline to finalize the annual report, Henry always worked overtime in January 2019. Easy Link Ltd provided Henry with a cash allowance of $1,000 in January 2019, of which only $600 was expended on meals.
5. In July 2018, Henry enrolled in a part-time master's course in accounting at the Chinese University of Hong Kong. The tuition fee of $28,000 was paid during the year. Easy Link Ltd did not reimburse any of the tuition fees.
6. During the year, Henry went on a vacation trip to Japan. He received a holiday passage from Easy Link Ltd in the sum of $8,000. In return, Henry submitted documentary proof that he had only used $6,800 to settle the group tour fee. Easy Link Ltd. allowed Henry to keep the balance.
7. Easy Link Ltd operated a group employee medical scheme which allows all staff to obtain free medical treatment from a medical centre located in Causeway Bay. During the year, Henry visited the medical centre three times. The cost of his treatment totalled $1,200.
8. Henry is entitled to use the company’s holiday flat located at Tai O. His family stayed at this flat for two days during the year. The market rental for the flat was $1,600 per day.
9. Henry was working in the PRC in October 2018 on an initial public offering project. He incurred travelling cost of $4,300. Easy Link Ltd reimbursed the full amount to Henry as it was reasonable.
10. Henry made a cash donation of $2,800 to an approved charity during the year.
11. During the year, Henry contributed 5% of his basic salary to Easy Link Ltd.’s Mandatory Provident Fund Scheme.
12. Henry contributed $1,500 and $2,000 per month to his father (aged 57) and his mother (aged 54) respectively.

Required

1. Compute Henry’s salaries tax liability for the year of assessment 2018/19. (Ignore provisional salaries tax).
2. Comment specifically upon the tax treatment you have accorded to the 2-9 items above.

Henry’s salary tax liability for the year of assessment 2018/19 under HK's tax system

	Note	$	$

Answer rating: 100% (QA)

1 Basic Salary 20000 x 2 400 Rental Allowance 9000 x 4 360 Bonus from company 18000 x 15 2700 Cash A... View the full answer