Earnings Tax Answer2013

Answer

(a)

Miracle Limited

Earnings tax computation

Year of assessment 2008/09

Basis period: year ended 31 January 2009

$

$

Revenue per accounts

23, 000

Add: Product sales proceeds of computer

almost 8, 000

Commission payment to undisclosed recipients

100, 000

Advantages to known retirement structure

($90, 1000 – $250, 000 x 15%) + ($54, 000 –

$300, 000 by 15%)

twenty four, 000

Interest paid to Marce Limited

120, 000

Loan to employee crafted off

80, 000

Increase in general dotacion ($180, 1000 –

sixty, 000

$120, 000)

Via shawls by hoda

600, 1000

Property taxes

24, 1000

Profits taxes

140, 500

Accountancy charge for handling tax investigation

100, 000

Renovation spending for office premises

($300, 000 back button 4/5)

240, 000

Remodelling expenditure pertaining to directors' quarters

130, 500

Depreciation

110, 000

1, 769, 500

Less: Gross

Profit available for purchase of set asset

one hundred and fifty, 000

your five, 000

Exceptional contribution to recognized retirement living

scheme (for $500, 000 back button 1/5)

90, 000

Loan recovered

twenty, 000

Restoration expenditure ($100, 000 by 1/5)

twenty, 000

Depreciation allowance

320, 000

Commercial building allocation

($800, 000 + $130, 000) times 4%

37, 200

652, 200

1, 116, 800

Less: Authorized charitable donations ($1, 116, 800 times 35%)

390, 880

Assessable profits

725, 920

Earnings tax payable ($725, 920 x sixteen. 5%)

119, 776

(b)

Interest paid out to Financial institution A in Hong Kong for an overdraft

As the interest received by the company from your Hong Kong money fixed put in is chargeable to earnings tax, the interest paid by company is usually deductible mainly because it satisfies section 16(1)(a) and the condition below section 16(2)(d).

Interest paid out on mortgage from Marce Ltd

Curiosity paid to a connected person is not deductible even though it is used for choosing trading stock (section 16(2)(e)). As Marce Ltd is definitely not a company carrying about business in Hong Kong, the eye received because of it will not be controlled by Hong Kong revenue tax, therefore the condition below section...