1. Which of the following items is normally NOT assessable under salaries tax? a. Payment in lieu of notice to an employee who has been dismissed without adequate notice given by the employer. b. Tuition fee paid by an employer for an employee's children, where the employer has entered into the relevant contract with the school directly. c. Reimbursement of medical expenses of an employee by an employer pursuant to the terms provided in the employment contract. d. Lump sum payment to a resigning employee in consideration of his not engaging in the same industry for two years. 2. 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 carry out investment analysis in Hong Kong and instruct its overseas agents to execute the orders of purchase and sale in the overseas stock exchange. During the year 2020/21, $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 2020/21: a. $5 million. b. Nil. c. $10 million. d. $3 million. 3. For profits tax purposes, which of the following statements is incorrect? a. Even if an income is not sourced in Hong Kong, it is still taxable if deemed to be a trading receipt. b. Foreign exchange gain in revenue nature is taxable only when it is realised. c. If an income is received from a non-resident, it will not be chargeable to profits tax. d. If an expense is capital in nature, it is normally not deductible.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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1. Which of the following items is normally NOT assessable under salaries tax?

a. Payment in lieu of notice to an employee who has been dismissed without adequate notice given by the employer.

b. Tuition fee paid by an employer for an employee's children, where the employer has entered into the relevant contract with the school directly.

c. Reimbursement of medical expenses of an employee by an employer pursuant to the terms provided in the employment contract.

d. Lump sum payment to a resigning employee in consideration of his not engaging in the same industry for two years.

2. 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 carry out investment analysis in Hong Kong and instruct its overseas agents to execute the orders of purchase and sale in the overseas stock exchange. During the year 2020/21, $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 2020/21:

a. $5 million.

b. Nil.

c. $10 million.

d. $3 million.

3. For profits tax purposes, which of the following statements is incorrect?

a. Even if an income is not sourced in Hong Kong, it is still taxable if deemed to be a trading receipt.

b. Foreign exchange gain in revenue nature is taxable only when it is realised.

c. If an income is received from a non-resident, it will not be chargeable to profits tax.

d. If an expense is capital in nature, it is normally not deductible.

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