Question

Q1

Miss Law, a Hong Kong resident, is employed by an overseas airline company as air-hostess. She stayed in Hong Kong for 60 days, 48 days and 75 days during the years of assessment 2016/17, 2017/18 and 2018/19 respectively. Her Hong Kong salaries tax position is:

Select one:

a. She is not liable to salaries tax for any year of assessment.

b. She is liable to salaries tax for the year of assessment 2018/19.

c. She is liable to salaries tax for the year of assessment 2017/18 and 2018/19.

d. She is liable to salaries tax for all years of assessment.

Q2

Mr Cheng, a US resident, is under a non-Hong Kong employment. He spent a total of 62 days (including his days of arrival and departure) for a business trip in Hong Kong. He took 12 days annual leave during his visit in Hong Kong. What is the Hong Kong salaries tax position of Mr Cheng?

Select one:

a. He is exempt from salaries tax because he is a US resident.

b. He is exempt from salaries tax because he worked in Hong Kong for not more than 60 days during the year.

c. He is liable to salaries tax because he visited Hong Kong for more than 60 days and rendered some services in Hong Kong.

d. He is liable to salaries tax and will be 100% taxable because he rendered service in Hong Kong.

Q3

Henry Ltd is carrying on business in Hong Kong. It acquires funding from various sources in Hong Kong and makes investment in securities listed in overseas markets. Henry Ltd's directors carries out investment analysis in Hong Kong and instructs its overseas agents to execute the orders of purchase and sale in overseas stock exchange. During the year 2019/20, $10 million profits were derived from trading of these overseas listed securities.

Henry Ltd's assessable profits derived from trading of overseas listed securities for the year 2019/20:

Select one:

a. $3 million.

b. $10 million.

c. $5 million.

d. Nil.

Answer 1

1. Answer: Option B

Explanation: Aircrew can claim exemption from salaries tax if they were present in Hong Kong for not more than 60 days. In given case, Miss Law is present in Hong Kong for less tha 60 days in 2016/17 and 2017/18 and hence will not be liable to salaries tax. She is present for more tha 60 days (75 days) in 2018/19 and hence will be liable to salaries tax.

2. Answer: Option C

Explanation: When an individual is in Hong Kong for more than 60 days for the purpose of his non Hong Kong employment, the individual will be liable to salaries tax. However his salary will be taxable on proportionate basis (number of days in Hong Kong).

3. Answer: Option D

Explanation: Hong Kong follows a territorial basis for taxing profits of a business carried out in Hong Kong. Thus the place where the profit is made is an important factor. In case of profits on trading of securities, the profits are taxable only if the securities which are traded are listed in a stock exchange located in Hong Kong. Thus in this case it won't be taxable as the stock exchange is not located in Hong Kong.