Mr. Yeung was a senior finance manager of Bob (HK) Ltd (Bob), a Hong Kong incorporated subsidiary of a Chinese-based company, Bob Technology Ltd. During the year ended 31 March 2020, Mr. Yeung received the following income and made the following expenditure:

1) Mr. Yeung’s basic salary was $70,000 per month. He contributed $3,000 per month to the MPF scheme. In addition, he also contributed 8% of his monthly salary into a TVC account (Tax Deduction for Annuity Premium and MPF Voluntary Contribution) starting from 1 September 2019.

2) A bonus of $28,000 was received by Mr. Yeung from Bob HK for winning a competition organized by Bob HK. The competition, which was open to all employees, invited design of a company logo for promotion of business.

3) On 31 December 2019, Mr. Yeung was given an option to purchase 20,000 shares in Bob Technology, the parent company listed in HK Stock Exchange, at a price of $25 per share. Mr. Yeung paid $500 to acquire the option right. He exercised the option on 15 March 2020 and sold all 20,000 shares on 2 April 2020.

Date	Market price
31 December 2019	$26.0
15 March 2020	$30.0
2 April 2020	$28.5

4) Mr. Yeung rented a flat at a monthly rent of $40,000 by himself. His employer reimbursed him $37,000 per month upon production of rental receipts.

5) Bob HK agreed to assign a Filipino domestic helper to work at Mr. Yeung’s residence and agreed to bear the annual wages of $63,000. Because of labor regulation, the contract with the domestic helper was signed by Mr. Yeung.

6) A car rented by Bob at an annual rental of $72,000 was given to Mr. Yeung for both his private and business uses. Mr. Yeung received a total reimbursement of $37,000 from his employer to cover the petrol cost and carpark.

7) Holiday journey allowance of $38,000 was paid to Mr. Yeung for a personal trip to Europe. Mr. Yeung spent $30,000 for paying the trip expense and pocketed the balance of $8,000.

8) Mr. Yeung paid annual membership subscriptions of $2,500 to the HKICPA, and also paid $2,200 to ACCA. No refund was obtained from his employer.

9) An annual tuition fee of $90,000 was paid to Tsinghua University, Beijing for studying a part-time IT course conducted in Shenzhen and in Hong Kong.

The following addition information about Mr. and Mrs. Yeung is available: 4

10) Mrs. Yeung worked as a part time bookkeeper in a trading firm. She received of $72,000 during the year and contributed 5% of her salary to the MPF scheme.

11) Mr. Yeung made a cash donation of $14,000 to Tung Wah Hospital. Mrs. Yeung also made a cash donation of $35,000 to Community Chest of HK during the year.

12) Mr. and Mrs. Yeung have three children. The eldest son, aged 23, was studying full-time in Canada. The second daughter, aged 20, works as a design trainee and studying part-time in Hong Kong Youth College. Both were born by Mr. Yeung’s ex-wife who had passed away ten years ago. The youngest son, aged 6, was born by Mrs. Yeung.

13) Mr. Yeung’s father, aged 66, was living in Zhuhai, China. Mr. Yeung remitted $8,000 per month to his father for his living expenses. Mrs. Yeung’s mother, aged 58, who is an ordinary resident of HK, was living with Mr. Yeung’s family throughout the year and was fully supported by Mr. and Mrs. Yeung. Mr. Yeung also paid $12,000 each year towards the maintenance of his ex-wife’s mother, aged 70, who is an ordinary resident of Hong Kong.

14) Mr. Yeung purchased VHIS policies and paid qualifying premium for himself, Mrs. Yeung and the eldest two children in the amounts of $18,000, $15,000, $7,500 and $7,200 respectively on 1 June 2019.

Required:

1. (a) Compute the salaries tax liabilities of Mr. Yeung and Mrs. Yeung for the year of assessment 2019/20, using the most beneficial tax assessment method. Compute the tax payable by Mr. Yeung and Mrs. Yeung respectively. (33 marks)

1. (b) Compute total amount of salaries tax saved from contribution to a TVC account (Item 1) and buying VHIS policies. (Item 14). (2 marks)

Answer rating: 100% (QA)

a Mr Yeungs salaries tax liability Taxable Income Basic Salary Bonus Option G... View the full answer