Marker	Meaning
Enacted	In force, or an ordinance already gazetted. Safe to apply, subject to its own commencement date.
Gazetted / bill	Published or before LegCo but not yet law. Know it is coming; do not apply it.
Proposed	Policy announcement only, needs an amendment ordinance. Do not apply it to a live filing or transaction.

IRD date	Item	Status	Page updated
29 Sep 2026	Stamp Duty (Amendment) (No. 3) Bill 2026 — intra-group relief: association test 90% → 75%, widened to non-share-capital entities	Bill	Stamp Duty §6
16 Sep 2026	Child allowance $140,000 → $160,000, 2nd and subsequent children born on/after 16 Sep 2026	Proposed	Salaries Tax §5
16 Sep 2026	Stamp duty waiver capped at $20,000 for newborn families	Proposed	Stamp Duty §6
8 Jul 2026	Stamp Duty (Amendment) (No. 2) Ordinance 2026 — RMB settlement, dual-counter stock	Enacted	Stamp Duty §2
14 Jul 2026	Block Extension Scheme — "D" code 2025/26 dates extended	Enacted	IRD Administration §2
12 Jun 2026	Funds / FIHV / carried interest preferential regimes Bill 2026	Bill	Profits Tax §2
10 Jun 2026	Shipping-related activities & physical commodity trading Bill 2026	Bill	Profits Tax §2
9 Jun / 27 Jul 2026	Corporate treasury centres — Action Plan and consultation	Consultation	Profits Tax §2
30 Jun 2026	Qualifying debt instruments / sovereign bonds list refreshed	Enacted	Profits Tax §2
8 Jun 2026	GIR XML schema and user guides (GloBE Information Return)	Enacted	Profits Tax §2
17 Jun 2026	AEOI Amendment Ordinance 2026 — amended CRS	Enacted	IRD Administration §7A
1 / 22 Jun 2026	Crypto-Asset Reporting Framework — bill and guidance page	Bill	IRD Administration §7A
8 Jun 2026	Business Tax Portal — new Responsible Person capacities	Enacted	IRD Administration §2
4 Sep / 13 Jul / 12 Jun 2026	CDTAs with Slovenia (60th), Nigeria, Cyprus	Signed	IRD Administration §7
Jul–Sep 2026	Fraudulent email alerts ×4 + eTAX app warning	Advisory	IRD Administration §7A

Child	Born before 16 Sep 2026	Born on/after 16 Sep 2026
First child	140,000	140,000 (unchanged)
Second and subsequent	140,000	160,000 (proposed)

Date	Measure	What changes	Status
12 Jun 2026	Funds / FIHV / carried interest Bill 2026	Wider "fund" definition; broader schedule of qualifying assets (supports private credit); 5% incidental-transaction cap removed; relaxed SPE and family-owned SPE conditions; enhanced carried interest regime. Adds a tax reporting mechanism plus economic substance requirements modelled on the FIHV regime — the cost side of the deal.	Bill — first reading 24 Jun 2026
10 Jun 2026	Shipping & physical commodity trading Bill 2026	Elective 15% concessionary rate for shipping-related activities, elected annually — a BEPS 2.0-aware alternative to the 0%/8.25% concessions, since a 0% rate invites top-up tax elsewhere. New half-rate (8.25%) concession for physical commodity trading.	Bill — gazetted 12 Jun 2026
9 Jun / 27 Jul 2026	CTC Action Plan + consultation	Government action plan for corporate treasury centres, then a consultation on enhancing the CTC tax concession. Expect qualifying-activity and safe-harbour conditions for the 8.25% CTC rate to move.	Consultation
12 Aug 2026	FSTB response — carried interest	FSTB reply to media enquiries on the preferential regime for carried interest; read with the June bill above.	Context
30 Jun 2026	QDI / sovereign bond list	Refreshed list of debt instruments and sovereign bonds eligible for profits tax concession or exemption. The published list is the test — an older copy will be wrong.	Current
8 Jun 2026	GIR XML schema & user guides	Machine-readable filing format for the GloBE Information Return, for MNE groups in scope of the Pillar Two top-up tax (fiscal years beginning on/after 1 Jan 2025).	Published

Accounting Date Code "D" (1–31 December 2025)	Previous due date	Extended due date
Paper filing	17 August 2026	31 August 2026
Electronic filing	17 September 2026	2 October 2026

Date	Item	Why it matters
17 Jun 2026	AEOI Amendment Ordinance 2026 passed	Implements the OECD's amended Common Reporting Standard — new/changed due diligence and reporting fields for reporting financial institutions.
1 Jun 2026	CARF Bill introduced into LegCo	Crypto-Asset Reporting Framework — brings crypto-asset service providers into the reporting net. A new population of reporting entities, not merely a new field.
22 Jun 2026	IRD CARF guidance page	IRD's operative CARF landing page — watch it for due diligence guidance as the bill progresses.
8 Jun 2026	Business Tax Portal — new Responsible Person capacities	More capacities in which an RP may register a business for the BTP. Check capacity before opening a client account; a wrong-capacity account must be redone.
29 Jun 2026	Advisory Committee on Tax Policy — first meeting	Standing forum now shaping medium-term HK tax policy. Worth tracking for early signals on future regimes.
9 Jul 2026	Annual Report on Performance Pledge 2025-26	IRD's published turnaround times — useful when setting client expectations on objections and refunds.
31 Aug 2026	IRD responds to Ombudsman direct investigation report	Administrative practice, no change to tax rules.
2 Jul 2026	Tax Obligations of Taxpayers and Employers	Refreshed IRD leaflet — the plain-language statement of s.51/s.52 duties.
11 Jun 2026	Tax obligations of property owners	Companion leaflet for property tax; pairs with the Property Tax page.

Signed	Jurisdiction	Note
4 Sep 2026	Slovenia	Hong Kong's 60th comprehensive double taxation agreement.
13 Jul 2026	Nigeria	First CDTA with Nigeria.
12 Jun 2026	Cyprus	First CDTA with Cyprus.

Exam preparation — TX-HKG (Taxation, Hong Kong)

ACCA TX-HKG

Syllabus coverage against this Hub, what the examining team actually reports as weak, and original practice questions in the exam's own format — worked on the current basis with the exam-year figure alongside.

ACCA TX-HKG 考試考試大綱對應本平台頁面、考官報告所指的弱項，以及依考試格式原創的練習題（15 條 MCQ 及三條 Section B），以現行年度計算並並列考試年度數字。附已驗證的 ACCA 官方連結。

A complete 100-mark mock paper §5 to §11 together make up a full TX-HKG paper at the real weighting: 15 MCQs × 2 marks (30) plus four 10-mark and two 15-mark questions (70). Sit it in three hours against the clock, or take the questions individually. Answers follow each question — cover them first.

Everything here is original or linked No ACCA question, model answer or examiner's report is reproduced on this page. Their material is linked to ACCA's own site, where it is free to download. The practice questions below were written for this Hub. See §10.

1. Exam format

Section	Structure	Marks
A	15 multiple-choice questions, 2 marks each, across the whole syllabus	30
B	4 questions of 10 marks + 2 questions of 15 marks. All compulsory.	70
Total	Three-hour computer-based exam, predominantly computational	100

Section A is 30% of the paper and the cheapest marks in it The examining team note that a good Section A performance "greatly facilitates the task of obtaining an overall pass". Fifteen two-mark questions with no working required is the highest marks-per-minute rate in the paper — and unlike Section B, a wrong figure costs you the whole 2 marks rather than one mark in a chain.

2. Which year of assessment applies

This matters more than it looks, and it is the first thing to settle before working any question.

The June and December 2025 exams were set on YA 2024/25 — not 2025/26 The TX-HKG J25–D25 syllabus and study guide states that candidates should use the latest 2024/25 editions for the June and December 2025 exams. The June 2026 paper was set on YA 2025/26 — its questions state that year explicitly — so December 2026 is examined on YA 2025/26 too, sharing the same syllabus period. Conveniently, IRD publishes 2024/25 and 2025/26 as a single column: the allowances are identical across both, so one set of exam-year figures covers J25 through D26. A past paper worked on any other year's allowances will not reconcile to the published answer.

Everywhere on this Hub the current basis is YA 2026/27. The practice questions below are worked on that basis, with the exam-year figure shown alongside wherever it differs — so you can see both what the rule is now and what the 2025 papers wanted.

Item	YA 2026/27 — current, used here	YA 2024/25 & 2025/26 — J25 to D26
Basic allowance	145,000	132,000
Married person's allowance	290,000	264,000
Child allowance, 1st–9th child	140,000	130,000
Single parent allowance	145,000	132,000
Dependent parent, 60 or over	55,000	50,000
Dependent parent, 55–59	27,500	25,000
Salaries tax progressive bands	2% / 6% / 10% / 14% on four $50,000 bands, then 17% — same both years
Salaries tax standard rate	15% on the first $5,000,000 of net income, 16% above — two-tiered from 2024/25, same both years
Profits tax, corporations	8.25% on the first $2,000,000, 16.5% above — same both years
Property tax	15% on net assessable value — same both years

Only the allowances moved. Every rate is the same on both bases, which is why the computations below are identical in structure and differ only at the allowance lines.

3. Syllabus → Hub coverage

Every TX-HKG syllabus area mapped to the page that covers it, with the gaps stated rather than glossed over.

§	Syllabus area	Covered by	Status
A	The Hong Kong tax system and its administration	IRD Administration — returns, assessment, objections and appeals, provisional tax, penalties, AEOI/CARF	Full
B	Salaries tax liabilities	Salaries Tax + Illustrations + format	Full
C	Profits tax liabilities	Profits Tax + Illustrations + Depreciation & Allowances + format + BIR51 guide	Full
D	Property tax liabilities	Property Tax + Illustrations + format	Full
E	Personal assessment	Personal Assessment — eligibility, the 2018/19 separate election, time limits, the standard-rate cap, four illustrations	Full
F	Employability and technology skills	Not covered — this is about operating the CBE software, spreadsheet and word-processing response areas. Practise it in ACCA's own CBE practice platform, which is the only place it can be practised properly.	Gap

Two things on this Hub that are beyond TX-HKG Stamp duty is not in the TX-HKG syllabus — it sits in ATX-HKG. Our Stamp Duty pages are useful for work and for ATX, but do not spend TX revision time on them.
Also excluded by the syllabus: general anti-avoidance under s.61 and s.61A, all specific anti-avoidance provisions, and service company rules including DIPN 24 and 25. Our profits tax pages mention some of these — they are not examinable in TX.

4. What the examining team reports as weak

Summarised in our own words from ACCA's published examiner's reports for June 2026 (the most recent), June 2025 and December 2018. Read the originals — these are the single most useful free resource ACCA publishes.

What two consecutive years tell you

	June 2026	June 2025
Weakest	Tax administration · profits tax expense treatment · personal assessment computation	Tax administration · depreciation allowances · partnerships
Best	Property tax · profits tax computation	Property tax · salaries tax · profits tax

Tax administration is weakest in both years, and in both the report blames the same thing: candidates find written questions harder than computational ones and under-prepare a topic that is "examined regularly". It is the most reliable source of cheap marks in the paper.

Two things moved. Personal assessment became a weak area in 2026 having not featured in 2025, and salaries tax fell from best-performing to "far from satisfactory". Do not assume last year's strong topics are safe.

The one piece of advice the examiners repeat most In a computation, list every item the question mentions — and put a zero (0) against anything that is not taxable, not deductible, or needs no adjustment. The June 2026 report repeats this with the word "again", and every computational question that session carried the instruction in its own rubric. Marks are available for those items, and they are only awarded if the zero appears in the computation. A separate list of non-adjusting items underneath does not get them.

This refines the advice on our Tax Reconciliation page: say "no adjustment" in your working, but in the computation itself, write 0.

Topic	Reported performance and the errors named
Tax administration weakest	Poor, "despite the topic being examined regularly". Candidates were unprepared for written rather than computational questions. Specifically missed: the duty to notify an employee's departure from Hong Kong and to retain money due to the employee. Those who knew the obligation often could not state the time limit and due date. Some answered on record-keeping when asked about notifying chargeability.
Depreciation allowances weak	"Far from satisfactory", though not a difficult topic. Those who laid out a proper schedule scored well; those who did not scored very low. Named errors: disposal proceeds deducted from the wrong pool, or not deducted at all; a hire-purchase asset put into the pool; initial allowance on a hire-purchase asset computed on full cost instead of the capital portion of instalments paid; a balancing allowance claimed while the pool still had a positive balance; commercial building allowance brought-forward figure wrong; balancing adjustment on the building omitted.
Partnerships weak	Unsatisfactory, and less frequently examined so less well prepared. Candidates allocated on the loss per the accounts instead of first computing the adjusted loss. Non-deductible MPF and loan interest were not allocated to the partners. Few knew that where the partnership has an adjusted loss, profit allocated to one partner must be reallocated to the loss-making partners. Loss relief for corporate partners was not understood. Salaries and MPF for a partner's spouse, and loan interest to a partner, wrongly treated as deductible; MPF for a partner wrongly treated as non-deductible.
Property tax satisfactory	Errors named: lease premium spread wrongly; irrecoverable rent miscalculated; a forfeited rental deposit not set off against irrecoverable rent; rates and management fees payable by the tenant treated as deductible or as income; a rent-free period included in assessable rental income; the 20% statutory allowance omitted; irrecoverable rent deducted after the 20%, corrupting the 20% itself; and "assessable value" / "net assessable value" mixed up with "assessable income" / "net assessable income". June 2026 adds: the rental deposit itself included in assessable income; and a reminder that property tax is computed for each property separately, not on an aggregated basis. On a follow-up part, candidates could say repairs were not deductible but could not explain that they are deemed covered by the 20% allowance and that no depreciation allowance exists under property tax. Covered here →
Salaries tax best	Best performing. Remaining errors were in the newer concessionary deductions: qualifying annuity premiums not restricted, and the unused portion not transferred to the spouse; failing to see that the wife's donations should be claimed by the husband to reduce the couple's total liability. Also: employer-reimbursed medical expenses not assessed; relocation shipping and air fares, and interest saved on a staff loan, wrongly taxed; reimbursed medical expenses wrongly included in the base for the 10% rental value; 8% applied to a two-room hotel serviced apartment where 10% was right; hotel service charges treated as "rent suffered". June 2026 — fell to "far from satisfactory". A share award valued at the market value on the grant date instead of the vesting date; income taxed on a time basis rather than applying the s.8(1A)(c) exemption; reimbursed deductible self-education expenses wrongly taxed while reimbursed medical expenses wrongly untaxed; rental value at 8% where 10% applied; child allowance omitted; dependent parent allowance claimed for a parent holding a Hong Kong identity card but not ordinarily resident here; the standard rate applied to net chargeable income; and foreign tax paid deducted from either the income or the tax.
Personal assessment weak — new in 2026	Unsatisfactory on a question the report calls straightforward. Some candidates computed the tax payable when only reduced total income was asked for. Named errors: the 20% statutory allowance not deducted; the loss brought forward not set against the proprietorship profit; approved donations not deducted from that profit after the loss set-off; mortgage interest on the couple's own home not claimed as home loan interest; the share of a partnership loss not taken off total income after the interest and concessionary deductions. And two transfers between spouses missed — that a husband's unabsorbed approved donations and his excess loss can both pass to the wife.
Profits tax — expense treatment weak — new in 2026	A "state deductible / partially deductible / non-deductible and explain why" table, and performance was not satisfactory — with many candidates leaving the reasons column blank, which is where half the marks are. Rules not known: the initial one-off MPF contribution is deductible over five years, and an electrically powered car is 100% deductible. Wrong both ways: an employee's salaries tax paid by the employer and the wages of a driver employed by a director are deductible staff costs; compensation for a restrictive covenant is capital and is not; a staff loan written off and its legal fees are not; and a family car bought for a director's use is.
Profits tax computation good	Good overall. Errors on less-common items: foreign exchange gains and insurance compensation wrongly deducted as non-taxable; cash paid for a table at a charity banquet claimed as a donation; MPF special contributions — only one fifth is allowed in the year, so 80% must be added back; a staff loan written off allowed when s.16(1)(d)(i) does not permit it; legal fees for dealing with IRD enquiries wrongly disallowed; only 80% of rental income assessed; and the two-tier rate not applied. June 2026 adds: the finance charge on a hire purchase not disallowed; no tax charged on interest from a HKD fixed deposit used to secure an offshore loan; a capital loss on disposal of a computer not added back; interest to a parent company and to a director not chargeable on it, not added back; commission to a non-disclosed agent not added back; the 100% deduction claimed for an electric vehicle bought on hire purchase instead of depreciation allowances; and disposal proceeds of a hire-purchase computer not taken out of the 30% pool.

How to read that table The three weak topics — administration, depreciation allowances, partnerships — are where marks are cheapest to gain, because most candidates drop them. The three practice questions below target the first two directly.

5. Practice — Section A

Fifteen questions, two marks each, on the current YA 2026/27 basis. Where a 2024/25 figure differs it is shown so you can see both. Answers and reasoning follow each question — cover them first.

Q1 · Salaries tax — source

Ivan is employed by Crestway Ltd, a company centrally managed and controlled in Hong Kong. He manages Crestway's branch in a country with no double taxation arrangement with Hong Kong, and spent nine months of the year working there and three months in Hong Kong. His salary is $100,000 a month. The salary for the nine months abroad was charged to income tax there; the tax of $180,000 was paid and borne by Crestway.

What is Ivan's assessable income for the year?

$180,000
$300,000
$480,000
$1,380,000

C — $480,000. Crestway is managed and controlled in Hong Kong, so Ivan has a Hong Kong employment and is chargeable on all his income. But s.8(1A)(c) excludes income for services rendered in a non-DTA territory where tax of substantially the same nature has been paid there — so the nine months' salary drops out. The foreign tax borne by the employer is itself a taxable perquisite. ($100,000 × 3) + $180,000 = $480,000. The trap is answering $300,000: excluding the foreign salary correctly but forgetting the tax the employer paid.

Q2 · Administration — penalty

Nora let out a flat and did not notify the Commissioner of her chargeability to property tax. She has no reasonable excuse. The property tax that would have been undercharged is $15,000.

What is the maximum penalty she faces under s.80(2)?

$10,000
$45,000
$55,000
$10,000 and imprisonment for six months

C — $55,000. Failure to notify chargeability under s.51(2) without reasonable excuse is an offence under s.80(2): a fine at level 3 ($10,000) plus treble the tax undercharged. ($15,000 × 3) + $10,000 = $55,000. Answering $10,000 — remembering the fine but not the treble-tax element — is the common error.

Q3 · Property tax

Raymond let a flat for the whole year at $25,000 a month. He paid rates of $9,000. The tenant paid management fees direct to the building's manager.

What is the property tax payable?

$34,920
$36,000
$43,650
$45,000

A — $34,920. Assessable value $300,000; less rates paid by the owner $9,000 = $291,000; less the 20% statutory allowance $58,200 = net assessable value $232,800; × 15% = $34,920. Management fees paid by the tenant to a third party never enter the computation at all — they are neither income nor a deduction.

Q4 · Property tax — premium

A premium of $240,000 is received on the grant of a four-year lease.

How much is included in assessable value each year?

$60,000
$80,000
$240,000
Nil — a premium is capital

B — $80,000. A premium is spread over the lease term but capped at 36 months (s.5B(4)). $240,000 × ¹²⁄₃₆ = $80,000 a year for three years, not $60,000 over four.

Q5 · Profits tax — two-tiered rates

Meridian Ltd, a Hong Kong corporation, has assessable profits of $3,000,000. It is the only Hong Kong entity in its group.

What is the profits tax payable?

$247,500
$330,000
$495,000
$225,000

B — $330,000. ($2,000,000 × 8.25%) + ($1,000,000 × 16.5%) = $165,000 + $165,000. Answering $247,500 applies 8.25% to everything; $495,000 applies 16.5% to everything. The examiners specifically name "not applying the two-tier profits tax rate" as a recurring error.

Q6 · Depreciation allowances — hire purchase

A van with a cash price of $400,000 is acquired under hire purchase. In the year, a deposit of $100,000 and three monthly instalments of $10,000 were paid; the capital element of each instalment is $8,000.

What initial allowance is available?

$240,000
$78,000
$74,400
$60,000

C — $74,400. For a hire-purchase asset the initial allowance is 60% of the capital sums actually paid in the year, not of the cash price: 60% × ($100,000 + 3 × $8,000) = 60% × $124,000. Computing 60% × $400,000 = $240,000 is the error the examiners name explicitly. $78,000 wrongly uses the full instalments of $10,000 rather than the capital element.

Q7 · Profits tax — donations

Harbourline Ltd's profit after depreciation allowances is $800,000. It paid $320,000 to approved charitable institutions.

What deduction is allowed?

$320,000
$280,000
$112,000
Nil

B — $280,000. Capped at 35% of the profit after depreciation allowances: 35% × $800,000. The $40,000 excess lapses — it cannot be carried forward. Applying 35% to the donation itself gives $112,000, which is the wrong base.

Q8 · Salaries tax — rental value

Priya's income after allowable outgoings is $600,000. Her employer provides her with two rooms in a hotel.

What rental value is assessable?

$24,000
$48,000
$60,000
Nil

B — $48,000. 8% for two rooms in a hotel, hostel or boarding house; 4% for one room; 10% for a flat or other self-contained accommodation. 8% × $600,000. The examiners flag candidates going the other way — applying 8% to a two-room serviced apartment where 10% was correct — so read what the accommodation actually is.

Q9 · Personal assessment — eligibility

Which of the following individuals may elect for personal assessment for YA 2026/27?

A 17-year-old whose parents are both alive
A person who spent 170 days in Hong Kong in the year and 140 the year before, and is not ordinarily resident
A person not ordinarily resident who spent 200 days in Hong Kong during the year
A person not ordinarily resident whose spouse is ordinarily resident

C. A temporary resident is someone in Hong Kong for more than 180 days in the year, or more than 300 days across two consecutive years including the year of election. B fails both (170, and 310 across two years — but only if one of them is the election year and the total exceeds 300; here 170 + 140 = 310, so B is arguable on the two-year limb, which is precisely why you check both limbs; on the facts given B is not ordinarily resident and 170 ≤ 180, and the two-year test would need the 300 to be exceeded — it is, so B would also qualify. C is the unambiguous answer: 200 > 180 on the single-year test). D was the rule up to 2017/18 only — from 2018/19 the elector must satisfy the residence test personally. A fails the age test, which is only relaxed if both parents are dead.

Q10 · Personal assessment — time limit

By when must an election for personal assessment for YA 2026/27 be made?

31 March 2028
31 March 2029, or two months after a notice of assessment is issued, whichever is later
Within six months of the assessment
31 March 2027

B. The later of two years after the end of the year of assessment (2026/27 ends 31 March 2027, so 31 March 2029) and two months after a notice of assessment or additional assessment. Six months is the withdrawal window, not the election window.

Q11 · Depreciation — commercial buildings

What is the annual allowance for a commercial building?

4% of the cost of construction
4% of the purchase price including land
20% of the residue of expenditure
10% of the cost of construction

A. 4% of the cost of construction, not of the whole purchase price — land does not qualify. No initial allowance is available for a commercial building, unlike an industrial building.

Q12 · Profits tax — bad debts

Which is deductible under s.16(1)(d)?

An increase in the general provision for doubtful debts
A specific trade debt written off as bad
A loan to a member of staff written off
All of the above

B. Only a specific debt, proved to the Assessor's satisfaction to be bad, and only where it was included in assessable profits or was money lent in the ordinary course of a money-lending business. A general provision is not deductible. A staff loan written off fails s.16(1)(d)(i) — the examiners name this exact item as a common error.

Q13 · Administration — objection

Within what period must a notice of objection be lodged?

One month after the date of the notice of assessment
Two months after the date of the notice of assessment
One month after the end of the year of assessment
Six years after the year of assessment

A. One month from the date of the notice of assessment, under s.64. The objection must state the precise grounds — an unparticularised objection can be rejected as invalid. Tax in dispute is not automatically suspended; a separate holdover application is needed.

Q14 · Profits tax — R&D enhanced deduction

Delta Ltd incurred the following on qualifying research and development in the year: plant and machinery $0.6m, a consultancy fee to an independent expert $0.4m, staffing costs of the research team $1.5m, and consumable items $0.9m.

What deduction may Delta Ltd claim under s.16B?

$3.4m
$7.2m
$7.8m
$8.2m

C — $7.8m. Split the spend first. Type B is staffing and consumables, $2.4m: the first $2m at 300% = $6.0m, the remaining $0.4m at 200% = $0.8m. Type A is plant and machinery plus the consultancy fee, $1.0m at 100%. Total $7.8m on $3.4m actually spent. The distractors are the three standard errors: $8.2m applies 300% to all of Type B, ignoring the $2m limit; $7.2m leaves the plant and machinery out as capital when s.16B allows it at 100%; $3.4m takes no enhancement at all. This was the question fewest candidates answered correctly in June 2026. Full treatment →

Q14b · Profits tax — MPF special contribution

Stanhope Ltd made a special contribution of $250,000 to its MPF scheme, charged in full in the accounts.

What adjustment is required in the profits tax computation?

No adjustment
Add back $250,000
Add back $200,000
Add back $50,000

C — add back $200,000. A special contribution is allowed over five years, so one fifth ($50,000) is deductible this year and the other 80% is added back. The examiners list this among the items candidates get wrong.

Q15 · Salaries tax — standard rate

Vivienne's net income, before personal allowances, is $6,000,000.

What is the standard-rate computation?

$900,000
$910,000
$960,000
$1,020,000

B — $910,000. The standard rate has been two-tiered since YA 2024/25: 15% on the first $5,000,000 and 16% above. ($5,000,000 × 15%) + ($1,000,000 × 16%). A flat 15% gives $900,000 and is the pre-2024/25 answer. Remember this figure is only the comparison — the tax payable is the lower of this and the progressive computation on net chargeable income.

6. Practice — Section B: tax administration 10 marks

The topic the examining team called the weakest in June 2025. It is written rather than computational, which is exactly why it is under-prepared — and therefore where marks are cheapest.

Question

Lantau Marine Limited prepares accounts to 31 March. The following events occurred during the year ended 31 March 2027:

The company commenced a new business on 1 June 2026. It has not yet received a profits tax return for the year.
It employed a new engineer, Mr Sandhu, on 1 September 2026.
Mr Sandhu will leave Hong Kong permanently on 31 May 2027 at the end of his contract, and has told the company so.
The company changed its registered office address on 1 January 2027.

REQUIRED: For each event, state the company's reporting obligation, the statutory provision, and the time limit or due date. (10 marks)

Event	Obligation and provision	Time limit / due date
1	Notify chargeability to profits tax — s.51(2). A person chargeable to tax who has not received a return must notify the Commissioner in writing. Separately, the company must apply for business registration within one month of commencing business.	Notify within 4 months after the end of the basis period in which the profits arose — the basis period ends 31 March 2027, so by 31 July 2027. Business registration: within 1 month of commencement, so by 30 June 2026.
2	Notify commencement of employment — s.52(4), Form IR56E. Required for any employee likely to be chargeable to salaries tax.	Within 3 months of commencement, so by 30 November 2026.
3	Two separate obligations, and this is the one candidates miss. (a) Notify the impending departure — s.52(6), Form IR56G. (b) Withhold all money due to the employee — s.52(7) — until the Commissioner gives written consent or one month has passed from receipt of the IR56G, whichever is earlier.	(a) Not later than 1 month before the expected date of departure, so by 30 April 2027. (b) Retention runs from filing the IR56G for 1 month, or until consent is given.
4	Notify change of address — s.51(8). Any person chargeable who changes address must inform the Commissioner in writing.	Within 1 month of the change, so by 31 January 2027.

Where the marks actually are Event 3 carries the most marks and is the one the examining team singled out: candidates knew neither the duty to notify a departure nor the duty to retain money. Two marks are lost by giving only the notification. And throughout, a stated obligation with no time limit attached scores roughly half — the report notes that those who could explain the obligation often could not state the deadline. Give a date, not just a period: "within one month" is worth less than "by 31 January 2027".

7. Practice — Section B: depreciation allowances 10 marks

"Far from satisfactory" in June 2025. Every trap the examiners named is planted below.

Question

Reddane Engineering Limited prepares accounts to 31 March. Written down values brought forward at 1 April 2026 were: 20% pool $180,000; 30% pool $240,000.

During the year ended 31 March 2027:

A lathe (20% pool) was bought for cash, $250,000.
A delivery van (30% pool) was acquired under hire purchase, cash price $360,000. A deposit of $120,000 was paid, followed by six monthly instalments of $22,000 each, all paid in the year. The capital element of each instalment is $20,000.
A computer from the 30% pool, originally costing $60,000, was sold for $18,000.

REQUIRED: Prepare the depreciation allowance schedule for YA 2026/27. (10 marks)

**Reddane Engineering Limited — Depreciation Allowance Schedule** · YA 2026/27
	20%	30%	Allowances
Written down value b/f	180,000	240,000
Additions — lathe, cash	250,000	—
Additions — van, capital sums paid $120,000 deposit + (6 × $20,000) = $240,000, not the $360,000 cash price	—	240,000
Less: initial allowance, 60%	(150,000)	(144,000)	294,000
	280,000	336,000
Less: disposal proceeds — computer, 30% pool limited to original cost; $18,000 < $60,000 so the full proceeds come out	—	(18,000)
Reduced value	280,000	318,000
Less: annual allowance	(56,000)	(95,400)	151,400
Written down value c/f	224,000	222,600
Total depreciation allowances			445,400

The trap	Why the wrong answer is wrong
IA on the van's full cash price	60% × $360,000 = $216,000 instead of $144,000. On hire purchase the allowance follows the capital sums actually paid in the year. Named by the examiners as a specific error.
Van put in the pool at full cost	Only the capital paid enters. The remaining $120,000 of cash price attracts allowances in later years as it is paid.
Disposal taken out of the 20% pool	The computer was in the 30% pool. Also named as a specific error.
Balancing allowance on the disposal	Both pools still hold a positive balance, so there is no balancing adjustment — the annual allowance simply runs on the reduced value. The examiners name claiming a balancing allowance on a positive pool.
AA before IA	The 20% pool's annual allowance is $56,000 on $280,000, not $86,000 on $430,000. Order is: additions → initial allowance → disposals → annual allowance.

Carry the $445,400 forward — it is the depreciation allowance figure in Question 8 below, exactly as a real paper would chain them.

8. Practice — Section B: profits tax computation 15 marks

Question

Reddane Engineering Limited (as above) reported a profit per the audited accounts of $4,000,000 for the year ended 31 March 2027. The following were charged or credited in arriving at it:

Depreciation, $600,000. Depreciation allowances are as computed in Question 7.
Cash donations to approved charitable institutions, $180,000.
$50,000 paid for a table at a charity fundraising banquet.
Interest of $90,000 on a loan from a director. The director is not chargeable to profits tax on it.
A loan to a member of staff, $40,000, written off as irrecoverable.
A special contribution to the company's MPF scheme, $250,000.
Legal fees of $35,000 for answering IRD enquiries on the company's tax return.
An exchange gain of $70,000 on trade receivables.
Insurance compensation of $110,000 for trading stock destroyed by fire.
Dividend income of $120,000 from a Hong Kong company, and service income of $400,000 accepted by the Assessor as offshore.

The company is the only Hong Kong entity in its group. REQUIRED: Compute the profits tax payable for YA 2026/27. (15 marks)

**Reddane Engineering Limited — Profits Tax Computation** · YA 2026/27
Profit per accounts	4,000,000
Add: non-allowable items
Depreciation (1)	600,000
Approved charitable donations, added back for relief below (2)	180,000
Charity banquet table — consideration received, so not a donation (3)	50,000
Interest to a director failing s.16(2) (4)	90,000
Staff loan written off — fails s.16(1)(d)(i) (5)	40,000
MPF special contribution, 80% (allowed over five years) (6)	200,000
Legal fees re IRD enquiries — revenue, deductible (7)	0
Exchange gain on trade receivables — revenue, taxable, already credited (8)	0
Insurance compensation for trading stock — taxable, already credited (9)	0
	5,160,000
Less: non-assessable income
Dividend income — s.26 (10)	(120,000)
Offshore service income (10)	(400,000)
	4,640,000
Less: depreciation allowances (Question 7)	(445,400)
Profit before charitable donations (Y)	4,194,600
Less: approved donations — lower of $180,000 and 35% × $4,194,600 = $1,468,110	(180,000)
Assessable profit	4,014,600
First $2,000,000 at 8.25%	165,000
Remaining $2,014,600 at 16.5%	332,409
Profits tax payable	497,409

Note the three zeros Items 7, 8 and 9 need no adjustment — and each is written into the computation as 0. That is the examining team's most-repeated piece of advice, and those three lines are worth marks. Leaving them out entirely earns nothing and is indistinguishable from not having considered them.

All three are items the examiners named as commonly mishandled: candidates wrongly deducted exchange gains and insurance compensation as non-taxable, and wrongly disallowed the legal fees for IRD enquiries.

9. Practice — Section B: partnership assessment 10 marks

Unsatisfactory in June 2025, and less frequently examined — so less well prepared, which makes it cheap marks. Every error the examining team named is planted here.

Question

Harbour Spice is a partnership carrying on a restaurant business in Hong Kong. Amy and Ben share profits and losses 60 : 40. The partnership accounts for the year ended 31 March 2027 show a loss of $200,000, after charging:

Salary to Amy, a partner — $360,000
Salary to Amy's husband, employed as a chef — $240,000
MPF contributions for Amy's husband — $12,000
Amy's own mandatory MPF contributions as a self-employed person — $18,000
Interest on a loan from Ben, a partner — $50,000
Depreciation — $80,000
Purchase of new kitchen utensils — $30,000
Replacement of existing kitchen utensils — $25,000

Depreciation allowances for the year are $95,000.

REQUIRED: Compute the partnership's assessable profits, show the allocation between the partners, and state the profits tax payable. (10 marks)

**Harbour Spice — Profits Tax Computation** · YA 2026/27
Loss per the accounts	(200,000)
Add: salary to Amy, a partner — s.17(2)	360,000
Add: salary to a partner's spouse — s.17(2)	240,000
Add: MPF for a partner's spouse — s.17(2)	12,000
Add: interest on a loan from a partner — s.17(2)	50,000
Add: depreciation	80,000
Add: purchase of new utensils — capital	30,000
Amy's own mandatory MPF — deductible, s.16AA	0
Replacement of utensils — deductible, s.16(1)(f)	0
	572,000
Less: depreciation allowances	(95,000)
Assessable profits	477,000

Allocation between the partners
	Total	Amy	Ben
Salary — Amy	360,000	360,000	—
Salary and MPF — Amy's husband disallowed under s.17(2), so attributed to Amy as the related partner	252,000	252,000	—
Interest — Ben	50,000	—	50,000
Prior allocations	662,000	612,000	50,000
Balance, shared 60 : 40	(185,000)	(111,000)	(74,000)
Sub-total	477,000	501,000	(24,000)
Reallocation of Ben's loss share the partnership has assessable profits, so a partner cannot be left with a loss	—	(24,000)	24,000
Allocated assessable profits	477,000	477,000	nil

Profits tax — unincorporated business, two-tiered: $477,000 × 7.5% (all within the first $2,000,000)

35,775

The trap	Why
Allocating the loss per the accounts	Allocation is of the adjusted figure. The accounts show a $200,000 loss; the adjusted position is a $477,000 profit. Named by the examiners as a specific error.
Not allocating the disallowed items	The spouse's salary and MPF are disallowed, but the benefit went to Amy's household — they are attributed to Amy in the allocation, not shared 60:40.
Leaving Ben with a loss	Where the partnership has assessable profits, a partner's negative share is reallocated to the profit-making partners. Ben pays nothing; Amy bears the whole $477,000. The mirror rule applies to a partnership loss.
Amy's own MPF added back	A partner's mandatory MPF as a self-employed person is deductible under s.16AA. Treating it as non-deductible is named as an error — it is the spouse's MPF that is disallowed, not the partner's own.
Utensils treated alike	New utensils are capital and added back; replacement of existing utensils is deductible under s.16(1)(f). The question gives both precisely to see whether you separate them.
Corporate rates used	A partnership is unincorporated: 7.5% / 15%, not 8.25% / 16.5%.

10. Practice — Section B: property tax, original and revised 10 marks

June 2025 asked for both the original and the revised computation, and the report notes candidates who produced only the revised one lost marks. This is the same reconciliation shape as our Tax Reconciliation page, at property tax scale.

Question

Mr Ho owns a shop in Hong Kong. He granted a three-year lease from 1 July 2026 at a monthly rent of $40,000, with a rent-free period for July and August 2026. A premium of $180,000 was received on 1 July 2026 and a rental deposit of $80,000 was taken.

The tenant stopped paying from January 2027. Rent for January to March 2027 was not recovered, and Mr Ho forfeited and retained the $80,000 deposit. Mr Ho paid rates of $16,000. The tenant paid management fees of $24,000 direct to the building manager.

His accountant produced the computation below. REQUIRED: Prepare both the original and the revised property tax computations for YA 2026/27, and reconcile them. (10 marks)

✗ As prepared by the accountant — YA 2026/27
Rent ($40,000 × 12)	480,000
Premium	180,000
Assessable value	660,000
Less: rates	(16,000)
Less: management fees	(24,000)
	620,000
Less: 20% statutory allowance	(124,000)
Net assessable value	496,000
Property tax at 15%	74,400

✓ Revised — Mr Ho, Property Tax Computation, YA 2026/27
Rent accrued, September 2026 to March 2027 (7 × $40,000) lease begins 1 July; July and August are rent-free, so no rent accrues for them	280,000
Premium, spread over 36 months: $180,000 × ⁹⁄₃₆ 9 months from 1 July 2026 to 31 March 2027	45,000
	325,000
Less: irrecoverable rent 3 × $40,000 = $120,000, less the $80,000 deposit forfeited and retained	(40,000)
Assessable value	285,000
Less: rates paid by the owner	(16,000)
Management fees paid by the tenant to a third party	0
	269,000
Less: 20% statutory allowance ($269,000 × 20%)	(53,800)
Net assessable value	215,200
Property tax at 15%	32,280

Reconciliation of net assessable value
Net assessable value per the original computation	496,000
Rent for the pre-lease and rent-free months, wrongly included (5 × $40,000, net of 20%)	(160,000)
Premium not spread over 36 months ($180,000 − $45,000, net of 20%)	(108,000)
Irrecoverable rent, net of the forfeited deposit, not deducted ($40,000 net of 20%)	(32,000)
Management fees paid by the tenant, wrongly deducted ($24,000 net of 20%)	19,200
Revised net assessable value	215,200

Four errors, and the tax is more than double $74,400 against $32,280. Each error the examining team named for June 2025 is here: the rent-free period included, the premium not spread, the forfeited deposit not set off against irrecoverable rent, and management fees payable by the tenant treated as a deduction.

Note also the order: irrecoverable rent comes out before the 20%, not after. Deducting it afterwards would compute the 20% on $325,000 rather than $285,000 — the examiners name that too. And every reconciling item above is shown net of 20%, because that is how each error actually flows through to the net assessable value.

11. Practice — Section B: salaries tax, husband and wife 15 marks

Question

Mr and Mrs Kwok are both employed in Hong Kong. For the year ended 31 March 2027:

Mr Kwok received a salary of $1,200,000 and a bonus of $150,000. His employer reimbursed medical expenses of $30,000, and paid $50,000 of shipping and air fares to relocate him and his family to Hong Kong. He is provided with a rent-free self-contained flat. He paid a professional subscription of $3,000, mandatory MPF of $18,000, and made approved charitable donations of $100,000.

Mrs Kwok received a salary of $280,000 and paid mandatory MPF of $14,000. She made no donations.

They have no children or dependants.

REQUIRED: (a) Compute each spouse's salaries tax liability under separate assessment. (b) State, with figures, whether an election for joint assessment would be beneficial. (c) Advise which spouse should claim the donations, and why. (15 marks)

**(a) Mr Kwok — Salaries Tax Computation** · YA 2026/27
Salary	1,200,000
Bonus	150,000
Medical expenses reimbursed by the employer — assessable	30,000
Relocation shipping and air fares — not assessable	0
	1,380,000
Less: professional subscription — s.12(1)(a)	(3,000)
Income after allowable outgoings	1,377,000
Add: rental value, 10% (self-contained flat)	137,700
Net assessable income before concessionary deductions	1,514,700
Less: approved charitable donations cap is 35% × $1,514,700 = $530,145, so the full $100,000 is allowed	(100,000)
Less: mandatory MPF contributions	(18,000)
Net income	1,396,700
Less: basic allowance D26 exam (YA 2025/26): $132,000	(145,000)
Net chargeable income	1,251,700
Progressive: 1,000 + 3,000 + 5,000 + 7,000 + ($1,051,700 × 17%)	194,789
Standard rate: $1,396,700 × 15% (below the $5,000,000 threshold)	209,505
Tax payable — the lower	194,789

**Mrs Kwok — Salaries Tax Computation** · YA 2026/27
Salary	280,000
Less: mandatory MPF contributions	(14,000)
Net income	266,000
Less: basic allowance	(145,000)
Net chargeable income	121,000
Progressive: 1,000 + 3,000 + ($21,000 × 10%)	6,100
Standard rate: $266,000 × 15%	39,900
Tax payable — the lower	6,100

**(b) Joint assessment comparison**
Combined net income ($1,396,700 + $266,000)	1,662,700
Less: married person's allowance D26 exam (YA 2025/26): $264,000	(290,000)
Net chargeable income	1,372,700
Progressive: 16,000 + ($1,172,700 × 17%)	215,359
Standard rate: $1,662,700 × 15%	249,405
Tax under joint assessment	215,359
Total under separate assessment ($194,789 + $6,100)	200,889
Joint assessment is worse by	14,470

(b) conclusion. Joint assessment should not be elected. The married person's allowance of $290,000 is exactly twice the basic allowance, so the couple gain nothing on allowances — and Mrs Kwok already absorbs her own allowance in full. Aggregating merely pushes her income, currently taxed at 2%–10%, up into Mr Kwok's 17% band.

The rule to take away from part (b) Joint assessment helps only where one spouse cannot absorb their own allowances — typically where they have little or no income. Where both spouses have income comfortably above their allowances, it is neutral at best and, as here, actively harmful. Never assume it is beneficial: compute both.

(c) Who should claim the donations. Mr Kwok — as computed above. Two reasons, and the second is the one candidates miss:

The cap. Mrs Kwok's ceiling would be 35% × $280,000 = $98,000, so $2,000 of the $100,000 would be lost outright.
The marginal rate. Mr Kwok's top slice is taxed at 17%, Mrs Kwok's at 10%. The same deduction is worth $17,000 to him and would be worth far less to her — and in fact the deduction would take her net chargeable income to just $23,000, wasting most of its value.

Donations may be claimed by either spouse regardless of who paid them, so the couple should always allocate them to the spouse with the higher marginal rate and sufficient cap. The examining team specifically noted that candidates failed to advise this.

12. Verified ACCA resources

Every link below was tested on 24 September 2026. Five URLs in the source list this was compiled from were dead and have been removed rather than passed on.

Resource	What it is good for	Link
June 2026 examiner's report	The most recent. Tax administration, profits tax expense treatment and personal assessment reported as weakest. §4 summarises it.	Index →
June 2025 examiner's report	The most recent detailed account of what candidates got wrong, question by question. §4 above summarises it; the original has more.	PDF →
December 2018 examiner's report	Older but detailed on depreciation allowances and the industrial building annual allowance denominator.	PDF →
December 2019 question paper	A full past paper. Work it before reading the answers.	PDF →
December 2019 answers and marking scheme	The marking scheme matters as much as the answer — it shows where the marks sit line by line.	PDF →
TX-HKG J25–D25 syllabus and study guide	The authoritative scope, including the excluded topics and the examinable year of assessment.	PDF →
ACCA past exam papers index	The current list — individual PDF paths change, so start here rather than from a saved link.	Page →
ACCA examiner's reports index	All sessions.	Page →
ACCA syllabus and study guide index	Current and forthcoming syllabus periods.	Page →
CBE practice platform	The only way to practise syllabus area F — the spreadsheet and word-processing response areas. Do this at least once before the exam.	Page →

Dead links removed, and why they are worth mentioning Five URLs in the source list returned 404: two 2014 papers, the D22 and J21 examiner's reports, and the ATX-HKG J25–D25 syllabus. They follow ACCA's naming pattern closely enough to look right, which is exactly what makes them worth checking rather than trusting. If you need those sessions, go through the index pages above — ACCA reorganises the direct PDF paths periodically.

13. Why nothing is reproduced here

Not affiliated with ACCA This Hub is not affiliated with, endorsed by, or connected to ACCA in any way. “ACCA” and “TX-HKG” are used here only to identify the qualification this page helps you prepare for. Nothing here is an official ACCA study resource, and where this page and ACCA’s own materials disagree, ACCA is right and this page is wrong.

ACCA publishes past papers, model answers and examiner's reports free for students to download. That is a licence to use them for study — it is not a licence to republish them. Their PDFs carry "© ACCA — All rights reserved", and this Hub is a public website.

So the division on this page is deliberate:

What this page does	What it does not do
Links to ACCA's own PDFs on their own site	Host or mirror any of them
Maps the published syllabus areas to our pages	Reproduce the study guide
Summarises, in our own words and with attribution, the weaknesses the examining team reported	Reproduce the examiner's reports
Sets original questions in the exam's format, with our own facts and figures	Reproduce any ACCA question or model answer

On the practice questions Every question in §5–§8 was written for this Hub. The topics and the errors they test are drawn from what the examining team reported — that is the point of them — but the scenarios, names and figures are ours, and every figure was computed and checked. They are modelled on the exam; they are not taken from it.

ACCA TX-HKG J25–D25 syllabus and study guide — exam format, syllabus areas, excluded topics, examinable yearread 24 Sep 2026
ACCA examiner's reports, June 2025 and December 2018 — summarised in §4read 24 Sep 2026
IRD Allowances, Deductions and Tax Rate Table — both years' figures in §2read 24 Sep 2026

← Tax Reconciliation Computation Formats →

ACCA TX-HKG

Practice Question Bank

ACCA TX-HKG — Section A · 282 original multiple-choice questions across all five syllabus areas, every computational answer generated and checked against the Hub's own tax-computation engine so the arithmetic cannot drift from the explanation.

題庫 AACCA TX-HKG 題庫 Section A：282 條原創選擇題，涵蓋五個考試範疇，可按範疇、主題或難度篩選。選好答案後按核對即會顯示對錯並即時計分。所有涉及計算的題目及其錯誤選項均由本平台的稅務計算模組產生，確保數字與解釋一致，亦支援關鍵字搜尋及隨機抽15題練習。

Section A Section B Section C

What this is

A large, filterable bank of original Section A-style MCQs, built to mirror the ACCA TX-HKG syllabus weighting and the errors the examining team has actually reported — not a copy of any past paper or examiner's report question.

How the computational questions were built Every computational question's correct answer and its wrong-option distractors come from the same small Python tax-computation module (scripts/qbank_tax.py) that this Hub's other worked illustrations use. The distractors are not arbitrary wrong numbers — each one reproduces a specific error pattern the examining team has reported (forgetting the treble-tax element of a s.80(2) penalty, applying the standard rate to net chargeable income instead of net income before allowances, spreading a lease premium over the full term instead of the 36-month cap, and so on).

Coverage by syllabus area

Area	Syllabus area	Questions
A	Tax system and administration	44
B	Salaries tax	72
C	Profits tax	98
D	Property tax	35
E	Personal assessment	33
Total		282

Spread over 110 distinct topics; 68 of the 282 questions are computational (the rest test a rule, a deadline or a distinction conceptually).

How to use it

Filter by syllabus area or difficulty, or type a keyword or section reference (e.g. s.16B, "premium", "two-tier") into the search box — the filters combine.
Random 15 pulls a fresh, shuffled set of 15 questions from whatever the current filters allow — close to a real Section A sitting's length and a reasonable practice pace of under two minutes each. It also resets the score and clears every answer, so each draw is a clean attempt.
Select an option, then click Show answer — it marks your choice Correct or Incorrect, then reveals the full explanation and section reference. 1 correct answer = 1 mark; the Score counter at the top right of the toolbar counts marks scored out of questions checked so far.
Show all clears the Random 15 selection and returns to the ordinary filtered view — it does not affect the score.

The question bank

A · Tax system and administration Statutory time limits Easy

Q001. Within what period must a taxpayer or employer notify chargeability to profits tax where no return has been issued?

4 months after the end of the basis period
1 month after the end of the basis period
3 months after the end of the basis period
6 months after the end of the basis period

A · Tax system and administration Statutory time limits Easy

Q002. Within what period must a taxpayer or employer notify the commencement of an employee's employment?

1 month after the date of commencement
3 months after the date of commencement
2 months after the date of commencement
before the employee starts work

A · Tax system and administration Statutory time limits Easy

Q003. Within what period must a taxpayer or employer notify the cessation of an employee's employment?

3 months after the date of cessation
1 month after the date of cessation
1 month before the date of cessation
within 14 days of the date of cessation

A · Tax system and administration Statutory time limits Easy

Q004. Within what period must a taxpayer or employer notify that an employee is about to leave Hong Kong permanently?

1 month after the date of departure
3 months before the expected date of departure
on the date of departure
1 month before the expected date of departure

A · Tax system and administration Statutory time limits Easy

Q005. Within what period must a taxpayer or employer notify a change of the taxpayer's postal address?

1 month after the change
3 months after the change
before the change takes effect
at the time the next return is filed

A · Tax system and administration Statutory time limits Easy

Q006. Within what period must a taxpayer or employer apply for business registration after commencing business?

3 months after commencement
1 month after commencement
before commencement
4 months after the end of the first basis period

A · Tax system and administration Statutory time limits Easy

Q007. Within what period must a taxpayer or employer lodge a valid notice of objection against an assessment?

1 month after the end of the year of assessment
2 months after the date of the notice of assessment
1 month after the date of the notice of assessment
6 months after the date of the notice of assessment

A · Tax system and administration Statutory time limits Easy

Q008. Within what period must a taxpayer or employer appeal to the Board of Review against the Commissioner's determination?

14 days after the determination
2 months after the determination
3 months after the determination
1 month after the determination is transmitted

A · Tax system and administration Records Easy

Q009. For how long must a person carrying on a trade, profession or business in Hong Kong retain sufficient business records?

7 years
5 years
6 years
10 years

A · Tax system and administration Records Medium

Q010. From what point does the statutory retention period for business records run?

7 years after the end of the year of assessment
7 years after the transaction to which they relate
6 years after the transaction
Until the assessment for that year becomes final and conclusive

A · Tax system and administration Records Medium

Q011. A landlord letting a Hong Kong property is obliged to keep rental records. What must those records cover?

Only the tenancy agreement
Only bank statements showing rent received
Rent records, and records of rates and any irrecoverable rent
No records are required for property income

A · Tax system and administration Additional assessment Medium

Q012. Within what period may the Assessor normally raise an additional assessment where income has been under-assessed?

4 years from the end of the year of assessment
7 years from the end of the year of assessment
There is no time limit
6 years from the end of the year of assessment

A · Tax system and administration Additional assessment Medium

Q013. Where a taxpayer has been guilty of fraud or wilful evasion, within what period may an additional assessment be raised?

10 years
6 years
12 years
No limit applies

A · Tax system and administration Penalties Medium

Q014. A taxpayer failed to notify chargeability to tax under s.51(2) without reasonable excuse. The tax that would have been undercharged is $11,250. What is the maximum penalty on summary conviction?

$10,000
$43,750
$33,750
$21,250

A · Tax system and administration Penalties Medium

Q015. A taxpayer failed to notify chargeability to tax under s.51(2) without reasonable excuse. The tax that would have been undercharged is $24,000. What is the maximum penalty on summary conviction?

$10,000
$72,000
$82,000
$34,000

A · Tax system and administration Penalties Easy

Q016. A taxpayer failed to notify chargeability to tax under s.51(2) without reasonable excuse. The tax that would have been undercharged is $8,400. What is the maximum penalty on summary conviction?

$10,000
$25,200
$18,400
$35,200

A · Tax system and administration Penalties Hard

Q017. A taxpayer failed to notify chargeability to tax under s.51(2) without reasonable excuse. The tax that would have been undercharged is $46,500. What is the maximum penalty on summary conviction?

$149,500
$10,000
$139,500
$56,500

A · Tax system and administration Penalties Medium

Q018. What is the maximum additional tax the Commissioner may assess under s.82A for an incorrect return made without reasonable excuse?

A fine of $10,000 only
Additional tax not exceeding treble the amount undercharged
Imprisonment for up to 3 years
A surcharge of 5% of the tax undercharged

A · Tax system and administration Penalties Hard

Q019. What is the maximum penalty for wilfully and with intent evading tax, on conviction on indictment?

A fine of $10,000 and imprisonment for 6 months
Additional tax of treble the amount undercharged only
A fine of treble the tax undercharged and imprisonment for 3 years
A surcharge of 15.5% of the tax

A · Tax system and administration Late payment surcharge Hard

Q020. Tax of $100,000 remained unpaid more than six months after the due date. What is the total amount now payable, including surcharges?

$115,000
$105,000
$110,000
$115,500

A · Tax system and administration Late payment surcharge Hard

Q021. Tax of $48,000 remained unpaid more than six months after the due date. What is the total amount now payable, including surcharges?

$55,440
$55,200
$50,400
$52,800

A · Tax system and administration Late payment surcharge Hard

Q022. Tax of $250,000 remained unpaid more than six months after the due date. What is the total amount now payable, including surcharges?

$287,500
$288,750
$262,500
$275,000

A · Tax system and administration Late payment surcharge Hard

Q023. A demand note is payable in two instalments and the taxpayer misses the first. What is the consequence?

Only the unpaid first instalment attracts the 5% surcharge
The surcharge is deferred until the second instalment falls due
The second instalment becomes immediately due and the 5% surcharge applies to the whole outstanding balance
No surcharge arises until 6 months after the second due date

A · Tax system and administration Late payment surcharge Medium

Q024. A taxpayer in financial difficulty applies successfully to pay tax by instalments. What is the effect on surcharges?

Surcharges are waived once the arrangement is approved
Surcharges are halved
Surcharges are deferred until the final instalment
Surcharges are still imposed on tax unpaid after the due date

A · Tax system and administration Recovery of tax Medium

Q025. Under which provision may the Commissioner issue a recovery notice to a third party who owes money to the defaulter?

s.76
s.75
s.77
s.82A

A · Tax system and administration Recovery of tax Medium

Q026. Under which provision may the Commissioner apply to a District Judge to stop a defaulter leaving Hong Kong?

s.76
s.77
s.75
s.71

A · Tax system and administration Recovery of tax Medium

Q027. Under which provision may the Commissioner sue for tax in default as a civil debt in the District Court?

s.76
s.77
s.75
s.80

A · Tax system and administration Recovery of tax Medium

Q028. Four people own a let property as co-owners in equal shares. How are they liable for the property tax?

Severally only - each owner is liable for their own share
Jointly only - all owners must be sued together
Only the owner named first on the demand note is liable
Jointly and severally - any one owner may be pursued for the whole

A · Tax system and administration Provisional tax Hard

Q029. By when must an application to hold over payment of provisional tax be made?

Not later than 28 days before the due date, or 14 days after the notice is issued, whichever is later
Not later than 14 days before the due date
At any time before the end of the year of assessment
Within 1 month of the notice being issued

A · Tax system and administration Provisional tax Medium

Q030. Which of the following is a valid statutory ground for holding over provisional salaries tax?

The taxpayer expects a lower salary next year
Assessable income for the year is likely to be less than 90% of that of the preceding year
The taxpayer has already paid the first instalment
The taxpayer objects to the amount of the provisional tax

A · Tax system and administration Assessment Medium

Q031. What may the Assessor issue where a taxpayer fails to file a return?

No assessment until the return is filed
An automatic penalty of treble the tax
An estimated assessment based on the best information available
A referral to the Board of Review

A · Tax system and administration Objections Medium

Q032. What happens to the tax in dispute while an objection is under consideration?

It is automatically suspended until the objection is determined
Half the tax must be paid and half is suspended
The Commissioner must always accept security instead
It is not automatically suspended; a separate holdover application is needed

A · Tax system and administration Objections Medium

Q033. A notice of objection is lodged in time but states no grounds. What is the consequence?

It may be rejected as invalid
It is treated as valid but given lower priority
The Assessor must request further particulars before rejecting it
It automatically becomes an appeal to the Board of Review

A · Tax system and administration Sources of tax law Easy

Q034. What is the status of a DIPN?

DIPNs have the force of law
Departmental Interpretation and Practice Notes are not binding on taxpayers or the courts
DIPNs bind the taxpayer but not the Commissioner
DIPNs override the Inland Revenue Ordinance where they conflict

A · Tax system and administration Sources of tax law Medium

Q035. Which sequence correctly ranks the authority of Hong Kong tax sources, highest first?

DIPNs, then statute, then case law
Advance rulings, then DIPNs, then statute
Statute, then case law, then Board of Review decisions, then DIPNs, then advance rulings
Case law, then statute, then DIPNs

A · Tax system and administration Avoidance and evasion Easy

Q036. What distinguishes tax avoidance from tax evasion?

They are the same thing
Avoidance is illegal; evasion is lawful
Avoidance applies to companies and evasion to individuals
Tax avoidance uses lawful means; tax evasion is illegal

A · Tax system and administration Advance rulings Medium

Q037. What is the effect of a specific advance ruling issued by the Commissioner?

A ruling applies only to the applicant and the arrangement described
A ruling binds all taxpayers in a similar position
A ruling is published and may be relied on by anyone
A ruling is binding on the courts

A · Tax system and administration Administration Easy

Q038. Who is empowered to assess and collect tax under the Inland Revenue Ordinance?

The Financial Secretary
The Commissioner
The Chief Executive
The Board of Review

A · Tax system and administration Board of Review Easy

Q039. What is the Board of Review?

A division of the Inland Revenue Department
A committee of the Legislative Council
An independent statutory body that hears tax appeals
A branch of the District Court

A · Tax system and administration Appeals Medium

Q040. On what basis may a Board of Review decision be appealed to the Court of First Instance by way of case stated?

Any question of fact or law
Questions of fact only
Only the amount of the assessment
A point of law only

A · Tax system and administration Block Extension Scheme Hard

Q041. For 2025/26 profits tax returns with Accounting Date Code 'D', what were the extended lodgement dates announced by the Commissioner on 14 July 2026?

31 August 2026 for paper filing and 2 October 2026 for electronic
17 August 2026 and 17 September 2026 respectively
30 April 2026 and 31 May 2026 respectively
There is no extension for 'D' code returns

A · Tax system and administration Returns and filing Medium

Q042. When is a newly incorporated Hong Kong company normally issued with its first profits tax return?

Within 1 month of incorporation
Around 18 months after incorporation or commencement of business
Within 4 months of the first year end
Only after the company notifies chargeability

A · Tax system and administration Compliance Medium

Q043. Besides simply processing what a return states, what compliance activity does the Inland Revenue Department carry out?

IRD only ever reviews a return if the taxpayer itself requests it
Every return is manually checked line by line before assessment
Field assessments/audits, and desk audits and field investigations into offshore claims and transfer pricing risk
Reviews are limited to companies with a history of late filing

A · Tax system and administration Filing Easy

Q044. What must generally accompany the first return filed by a newly registered taxpayer, in addition to the return itself?

A passport is always sufficient on its own
No form of identification is ever required to file a return
Only a bank statement is required
A Hong Kong identity card, or - for a company - its certificate of incorporation and business registration certificate, plus supporting documents as requested

B · Salaries tax Source of employment Easy

Q045. Under the totality of facts test in Goepfert, which three factors principally determine whether an employment is a Hong Kong employment?

Where the contract was negotiated and is enforceable, the residence of the employer, and where remuneration is paid
Where the employee lives, works and banks
The nationality of the employee and the employer
Where the employment was advertised and where tax is withheld

B · Salaries tax 60-day rule Easy

Q046. Income from services rendered wholly outside Hong Kong by a non-Government employee is excluded from salaries tax unless the person visited Hong Kong for what period during the basis period?

60 days or more
More than 60 days
More than 90 days
More than 183 days

B · Salaries tax 60-day rule Hard

Q047. An employee's ordinary visits to Hong Kong total 59 days. On two occasions he also departed very early in the morning on a connecting flight. How many days does he count as present?

B · Salaries tax s.8(1A)(c) exclusion Hard

Q048. An employee has a Hong Kong employment with a company managed and controlled in Hong Kong. He spent 9 months working in a territory with no double taxation arrangement with Hong Kong, and that salary bore local income tax of $180,000, which the employer paid on his behalf. His salary is $100,000 a month. What is his assessable income?

$300,000
$180,000
$1,200,000
$480,000

B · Salaries tax s.8(1A)(c) exclusion Hard

Q049. An employee has a Hong Kong employment with a company managed and controlled in Hong Kong. He spent 10 months working in a territory with no double taxation arrangement with Hong Kong, and that salary bore local income tax of $250,000, which the employer paid on his behalf. His salary is $120,000 a month. What is his assessable income?

$490,000
$240,000
$250,000
$1,440,000

B · Salaries tax s.8(1A)(c) exclusion Hard

Q050. An employee has a Hong Kong employment with a company managed and controlled in Hong Kong. He spent 8 months working in a territory with no double taxation arrangement with Hong Kong, and that salary bore local income tax of $150,000, which the employer paid on his behalf. His salary is $80,000 a month. What is his assessable income?

$320,000
$470,000
$150,000
$960,000

B · Salaries tax Directors' fees Medium

Q051. How are directors' fees from a company resident in Hong Kong treated?

Sourced where the director physically performs the duties
Exempt if the director spends fewer than 60 days in Hong Kong
Always Hong Kong sourced, wherever the services are rendered
Apportioned by time spent in Hong Kong

B · Salaries tax Rental value Medium

Q052. An employee's income after allowable outgoings is $998,000. The employer provides a self-contained flat rent free, at a cost to the employer of $240,000 for the year. What rental value is assessable?

$240,000
$79,840
$39,920
$99,800

B · Salaries tax Rental value Medium

Q053. An employee's income after allowable outgoings is $600,000. The employer provides two rooms in a hotel rent free, at a cost to the employer of $156,000 for the year. What rental value is assessable?

$48,000
$156,000
$60,000
$24,000

B · Salaries tax Rental value Medium

Q054. An employee's income after allowable outgoings is $750,000. The employer provides a single hotel room rent free, at a cost to the employer of $132,000 for the year. What rental value is assessable?

$132,000
$30,000
$75,000
$60,000

B · Salaries tax Rental value Medium

Q055. An employee's income after allowable outgoings is $1,200,000. The employer provides a rent-free house rent free, at a cost to the employer of $420,000 for the year. What rental value is assessable?

$420,000
$96,000
$120,000
$48,000

B · Salaries tax Rent suffered Medium

Q056. An employee pays part of the rent on employer-provided quarters. How is the 'rent suffered' treated?

It is deducted from assessable income before the rental value is computed
It has no effect on the computation
It may create a negative rental value carried forward
It is deducted from the rental value, but only down to nil

B · Salaries tax Rental value Hard

Q057. On what base is the 10% rental value calculated?

10% of income after deducting the professional subscription
10% of gross salary before any deduction
10% of income after all concessionary deductions
10% of net chargeable income after allowances

B · Salaries tax Fringe benefits Medium

Q058. How is the following treated for salaries tax purposes?
Medical expenses reimbursed by the employer

Not assessable
Assessable
Assessable only if the employee is a director
Assessable only at 50% of the cost

B · Salaries tax Fringe benefits Medium

Q059. How is the following treated for salaries tax purposes?
Shipping costs and air fares paid by the employer to relocate a new employee and family to Hong Kong

Assessable
Assessable only if the employee is a director
Not assessable
Assessable only at 50% of the cost

B · Salaries tax Fringe benefits Medium

Q060. How is the following treated for salaries tax purposes?
Interest saved on an interest-free loan from the employer

Assessable
Assessable only if the employee is a director
Assessable only at 50% of the cost
Not assessable

B · Salaries tax Fringe benefits Medium

Q061. How is the following treated for salaries tax purposes?
A holiday journey paid for by the employer

Assessable
Not assessable
Assessable only if the employee is a director
Assessable only at 50% of the cost

B · Salaries tax Fringe benefits Medium

Q062. How is the following treated for salaries tax purposes?
The employer settling the employee's personal credit card bill

Not assessable
Assessable
Assessable only if the employee is a director
Assessable only at 50% of the cost

B · Salaries tax Fringe benefits Medium

Q063. How is the following treated for salaries tax purposes?
A corporate club membership in the company's name, used by an employee

Assessable
Assessable only if the employee is a director
Not assessable
Assessable only at 50% of the cost

B · Salaries tax Fringe benefits Medium

Q064. How is the following treated for salaries tax purposes?
Reimbursement of an employee's deductible self-education expenses

Assessable
Assessable only if the employee is a director
Assessable only at 50% of the cost
Not assessable

B · Salaries tax Share awards Hard

Q065. On what value is a share award benefit assessed?

The market value on the date the shares vest
The market value on the date the award is granted
The price paid by the employee
The average of the grant and vesting values

B · Salaries tax Share options Medium

Q066. A share option has a vesting period of 730 days, of which 292 were spent working in Hong Kong. What proportion of the gain on exercise is assessable to Hong Kong salaries tax?

60%
40%
100%
20%

B · Salaries tax Share options Medium

Q067. A share option has a vesting period of 1095 days, of which 365 were spent working in Hong Kong. What proportion of the gain on exercise is assessable to Hong Kong salaries tax?

67%
100%
33%
17%

B · Salaries tax Share options Medium

Q068. A share option has a vesting period of 365 days, of which 146 were spent working in Hong Kong. What proportion of the gain on exercise is assessable to Hong Kong salaries tax?

60%
100%
20%
40%

B · Salaries tax Termination payments Medium

Q069. How is a contractual gratuity payable on completion of a fixed-term contract treated?

Assessable in full as income from employment
Exempt as a capital receipt
Assessable at 50%
Exempt if paid after the employment ends

B · Salaries tax Termination payments Medium

Q070. How is a statutory severance payment under the Employment Ordinance treated?

Fully assessable as income from employment
Not assessable, to the extent of the statutory entitlement
Assessable at 50%
Assessable only if the employee is re-employed within 12 months

B · Salaries tax Concessionary deductions Easy

Q071. What is the maximum annual deduction for the following?
Self-education expenses

$120,000
$60,000
$100,000
$18,000

B · Salaries tax Concessionary deductions Easy

Q072. What is the maximum annual deduction for the following?
Mandatory MPF contributions by an employee

$100,000
$120,000
$60,000
$18,000

B · Salaries tax Concessionary deductions Easy

Q073. What is the maximum annual deduction for the following?
Elderly residential care expenses, per parent or grandparent

$110,000
$100,000
$120,000
$60,000

B · Salaries tax Concessionary deductions Easy

Q074. What is the maximum annual deduction for the following?
Home loan interest, without a qualifying child

$120,000
$100,000
$60,000
$18,000

B · Salaries tax Concessionary deductions Easy

Q075. What is the maximum annual deduction for the following?
Qualifying premiums under a VHIS certified plan, per insured person

$100,000
$120,000
$8,000
$60,000

B · Salaries tax Concessionary deductions Easy

Q076. What is the maximum annual deduction for the following?
Qualifying annuity premiums and MPF voluntary contributions combined

$100,000
$120,000
$18,000
$60,000

B · Salaries tax Concessionary deductions Easy

Q077. What is the maximum annual deduction for the following?
Domestic rents for a non-owner-occupier, without a qualifying child

$100,000
$120,000
$60,000
$18,000

B · Salaries tax Concessionary deductions Easy

Q078. What is the maximum annual deduction for the following?
Assisted reproductive services expenses

$120,000
$100,000
$60,000
$18,000

B · Salaries tax Charitable donations Medium

Q079. A taxpayer's income after other deductions is $1,514,700 and approved charitable donations of $100,000 were paid. What deduction is allowed?

$530,145
$35,000
$100,000
$378,675

B · Salaries tax Charitable donations Medium

Q080. A taxpayer's income after other deductions is $490,000 and approved charitable donations of $210,000 were paid. What deduction is allowed?

$210,000
$38,500
$122,500
$171,500

B · Salaries tax Charitable donations Medium

Q081. A taxpayer's income after other deductions is $800,000 and approved charitable donations of $350,000 were paid. What deduction is allowed?

$280,000
$350,000
$70,000
$200,000

B · Salaries tax Deductible outgoings Medium

Q082. What is the statutory test for deducting an employee's outgoings and expenses?

Incurred to the extent of producing the assessable income
Wholly, exclusively and necessarily incurred in the production of the assessable income
Reasonably incurred in connection with the employment
Incurred for the convenience of the employer

B · Salaries tax Deductible outgoings Easy

Q083. How is the cost of travelling between home and the workplace treated?

Deductible in full
Deductible at 50%
Not deductible - it is a domestic or private expense
Deductible up to $100,000

B · Salaries tax Personal allowances Easy

Q084. For the year of assessment 2025/26 - the basis examined in December 2026 - what is the basic allowance?

$145,000
$264,000
$72,500
$132,000

B · Salaries tax Personal allowances Easy

Q085. For the year of assessment 2025/26 - the basis examined in December 2026 - what is the married person's allowance?

$264,000
$290,000
$528,000
$145,000

B · Salaries tax Personal allowances Easy

Q086. For the year of assessment 2025/26 - the basis examined in December 2026 - what is the child allowance for each of the 1st to 9th child?

$140,000
$130,000
$260,000
$70,000

B · Salaries tax Personal allowances Easy

Q087. For the year of assessment 2025/26 - the basis examined in December 2026 - what is the dependent parent allowance for a parent aged 60 or above, not residing with the taxpayer?

$55,000
$100,000
$50,000
$27,500

B · Salaries tax Personal allowances Easy

Q088. For the year of assessment 2025/26 - the basis examined in December 2026 - what is the single parent allowance?

$145,000
$264,000
$72,500
$132,000

B · Salaries tax Personal allowances Medium

Q089. What is the relationship between the married person's allowance and the basic allowance?

Exactly twice the basic allowance
Two and a half times the basic allowance
One and a half times the basic allowance
The same as the basic allowance

B · Salaries tax Personal allowances Hard

Q090. A taxpayer's mother holds a Hong Kong identity card but lives permanently outside Hong Kong. Can the dependent parent allowance be claimed?

Yes - holding a Hong Kong identity card is sufficient
No - the parent must be ordinarily resident in Hong Kong
Yes, provided the parent is aged 60 or above
Yes, if the taxpayer contributes at least $12,000 a year

B · Salaries tax Personal allowances Medium

Q091. Two siblings each contribute to the maintenance of the same dependent parent. How is the dependent parent allowance given?

Each may claim half
Both may claim it in full
Only one of them may claim it, as agreed between them
Neither may claim it

B · Salaries tax Personal allowances Hard

Q092. What is the relationship between the dependent parent allowance and the deduction for elderly residential care expenses?

Both may be claimed in full for the same parent
Both may be claimed but each is halved
The allowance is available only if the deduction is not claimed in full
Mutually exclusive - only one may be claimed for the same parent

B · Salaries tax Computation Hard

Q093. A taxpayer's net income before allowances is $1,396,700 and the allowances claimed total $145,000 (single, basic allowance only). What is the salaries tax payable, ignoring any one-off reduction?

$194,789
$209,505
$187,755
$404,294

B · Salaries tax Computation Hard

Q094. A taxpayer's net income before allowances is $266,000 and the allowances claimed total $145,000 (single, basic allowance only). What is the salaries tax payable, ignoring any one-off reduction?

$39,900
$6,100
$18,150
$46,000

B · Salaries tax Computation Hard

Q095. A taxpayer's net income before allowances is $1,049,800 and the allowances claimed total $145,000 (single, basic allowance only). What is the salaries tax payable, ignoring any one-off reduction?

$157,470
$135,720
$135,816
$293,286

B · Salaries tax Computation Hard

Q096. A taxpayer's net income before allowances is $600,000 and the allowances claimed total $290,000 (married, married person's allowance). What is the salaries tax payable, ignoring any one-off reduction?

$90,000
$46,500
$124,700
$34,700

B · Salaries tax Standard rate Medium

Q097. What is the salaries tax standard rate from the year of assessment 2024/25?

15% on the first $5,000,000 of net income and 16% on the remainder
A flat 15% on net income
A flat 16% on net income
15% on net chargeable income

B · Salaries tax Progressive rates Easy

Q098. What are the progressive rates applied to net chargeable income?

2%, 7%, 12% and 17% on four bands of $50,000
2%, 6%, 10% and 14% on four successive bands of $50,000, then 17%
5%, 10% and 15% on three bands of $40,000, then 17%
A flat 15%

B · Salaries tax Joint assessment Hard

Q099. When is an election for joint assessment under s.10(2) beneficial?

Whenever both spouses have income
Whenever the couple have children
Where one spouse cannot fully absorb their own allowances
Whenever one spouse pays the standard rate

B · Salaries tax Charitable donations Hard

Q100. A married couple are separately assessed. Which spouse should claim their approved charitable donations?

The spouse who actually paid them
They must be split equally
The spouse with the lower income
The spouse with the higher marginal rate and sufficient cap

B · Salaries tax Fringe benefits Medium

Q101. How is the following treated for salaries tax purposes?
An air ticket provided once every two years under an employment contract, for the employee to visit their home country

Assessable
Not assessable
Assessable only if the employee is a director
Assessable only at 50% of the value

B · Salaries tax Fringe benefits Medium

Q102. How is the following treated for salaries tax purposes?
A low-interest loan from the employer, where the interest actually charged is below market rate but is not waived

Assessable
Not assessable
Assessable only if the employee is a director
Assessable only at 50% of the value

B · Salaries tax Fringe benefits Medium

Q103. How is the following treated for salaries tax purposes?
The employer waiving repayment of an employee loan

Not assessable
Assessable only if the employee is a director
Assessable
Assessable only at 50% of the value

B · Salaries tax Fringe benefits Medium

Q104. How is the following treated for salaries tax purposes?
A cash allowance paid to the employee to cover the cost of meals

Not assessable
Assessable only if the employee is a director
Assessable only at 50% of the value
Assessable

B · Salaries tax Fringe benefits Medium

Q105. How is the following treated for salaries tax purposes?
Free meals provided at the employer's canteen on the business premises during working hours

Not assessable
Assessable
Assessable only if the employee is a director
Assessable only at 50% of the value

B · Salaries tax Fringe benefits Medium

Q106. How is the following treated for salaries tax purposes?
A cash bonus tied to the employee remaining in service until a future date, paid after that date

Not assessable
Assessable
Assessable only if the employee is a director
Assessable only at 50% of the value

B · Salaries tax Timing of income Hard

Q107. A discretionary bonus for the year ended 31 March 2026 is only decided by the board and paid in July 2026. In which year of assessment does it accrue?

The date the income is actually paid into the employee's bank account
The date the employment contract was originally signed
The date the employee becomes entitled to the income - normally when the services giving rise to it have been rendered
The end of the year of assessment in which the amount is finally quantified

B · Salaries tax Share options Medium

Q108. How is a gain on a share option granted to an employee normally taxed, where the option itself has no ascertainable market value at grant?

Assessable in the year the option is exercised, assigned or released, on the gain realised then
Never assessable, being a capital gain on shares
Assessable equally over the vesting period, year by year
Assessable in the year the option is granted, on its value at grant, with no further charge on exercise

B · Salaries tax Share options Hard

Q109. What is the effect of the 'deemed exercise' rule where a share option remains unexercised for a long period?

The employee is treated as having elected to defer the option gain, but must include it within 3 years of the grant even if not yet exercised, assigned or released
The gain simply escapes salaries tax if the option is still unexercised after 3 years
The employee must pay tax annually on the unrealised paper gain
The 3-year rule only applies to options over shares in a listed company

B · Salaries tax MPF contributions Medium

Q110. An employee contributes to the mandatory tier of their MPF scheme. How is the deduction restricted?

Not deductible at all - only the employer's contributions count
Deductible up to the actual mandatory contribution, capped at $18,000, even where the employee is also a member of a recognised occupational retirement scheme
Deductible without limit
Deductible only if the employee is self-employed

B · Salaries tax One-off relief Medium

Q111. What is the nature of the one-off salaries tax reduction the Financial Secretary has announced in several recent Budgets?

It is a permanent reduction in the tax rates, written into the Ordinance
It applies automatically to provisional tax but never to final tax
A person's total tax for the year is reduced by a percentage, up to a specified cap, announced separately each year in the Budget
It applies only to taxpayers earning below the basic allowance

B · Salaries tax Joint assessment Medium

Q112. For which taxpayer is an election for joint assessment under s.10(2) most likely to be worthwhile?

A married person whose spouse also earns a substantial salary and fully uses their own allowances
An unmarried taxpayer with no dependants
A taxpayer who has already elected personal assessment
A married person whose spouse has little or no income of their own

B · Salaries tax Personal allowances Hard

Q113. A couple marry partway through the year of assessment. How is the married person's allowance affected?

A person is regarded as married throughout the year of assessment if married for any part of it, but the allowance is time-apportioned only in the year of marriage or divorce for certain allowances, not the married person's allowance itself
The married person's allowance is always time-apportioned by the number of months of the marriage
No allowance at all is given in the year of marriage
The full married person's allowance requires the marriage to have subsisted for the whole year

B · Salaries tax Personal allowances Medium

Q114. A taxpayer's child is born in November, partway through the year of assessment. How much child allowance can be claimed for that year?

The child allowance is apportioned by the number of months the child was alive during the year
A child born during the year still qualifies for the full child allowance for that year - it is not time-apportioned either
No child allowance is given in the year of birth
Only half the child allowance is given in the year of birth

B · Salaries tax Personal allowances Hard

Q115. What additional, one-off allowance is available in the year a child is born, on top of the ordinary child allowance for that child?

Double the ordinary child allowance in the year of birth
No additional allowance is available
An additional one-ninth of the basic child allowance for that child, given only in the year of birth
An additional allowance equal to the elderly residential care cap

B · Salaries tax Personal allowances Medium

Q116. What are the basic conditions for claiming the child allowance?

Only children under 12 qualify
The child must live in the same household as the taxpayer at all times
Only the taxpayer's own biological children qualify - not adopted or step-children
The taxpayer must have maintained the child, wholly or substantially at the taxpayer's own expense, and the child must be under 18, or under 25 and receiving full-time education, or incapacitated for work

C · Profits tax Charge Easy

Q117. Who is chargeable to profits tax and on what?

A person carrying on a trade, profession or business in Hong Kong, on profits arising in or derived from Hong Kong from that trade, profession or business
Any person resident in Hong Kong, on worldwide profits
A company incorporated in Hong Kong, on all profits wherever arising
Any person carrying on business in Hong Kong, on all profits received in Hong Kong

C · Profits tax Source Medium

Q118. How is the source of profits determined, following HK-TVB v CIR and later cases?

Decided solely by where the contract of sale was signed
A question of fact, decided by looking at what the taxpayer did to earn the profit and where they did it
Decided solely by where the taxpayer is incorporated
Decided solely by where the goods are physically delivered

C · Profits tax Source - trading profits Medium

Q119. For a business of trading in goods, what is the primary factor in determining the source of the trading profit?

Where the goods are manufactured
Where the goods are physically stored before sale
Where the contracts of purchase and sale are effected
Where the company's bank account is held

C · Profits tax Source - contract processing Hard

Q120. A Hong Kong company has goods manufactured under a contract-processing arrangement in the Mainland, and sells the goods from Hong Kong. How is the profit sourced?

All profits are Hong Kong sourced because the company is Hong Kong incorporated
All profits are offshore because the manufacturing takes place across the border
The profit follows wherever the raw materials were bought
Manufacturing profits are apportioned between the processing and the trading/selling functions

C · Profits tax Source - service income Medium

Q121. What is the basic rule for sourcing profits from the provision of services?

Fees for services are sourced where the services are rendered
Fees for services are always Hong Kong sourced if invoiced from Hong Kong
Fees for services are sourced where the client is based
Fees for services are always apportioned 50:50

C · Profits tax Badges of trade Medium

Q122. Which of the 'badges of trade' does the following describe?
A short period of ownership before resale

It is conclusive proof of a capital transaction
It is a badge of trade indicating a trading, not a capital, transaction
It is irrelevant to the trade/capital distinction
It only matters for property transactions

C · Profits tax Badges of trade Medium

Q123. Which of the 'badges of trade' does the following describe?
The taxpayer's stated intention at the time of acquisition, taken with the surrounding circumstances

It is the sole and conclusive test of trading
It is irrelevant if not stated in writing
It is one badge of trade among several, not conclusive on its own
It only applies to individuals, not companies

C · Profits tax Badges of trade Medium

Q124. Which of the 'badges of trade' does the following describe?
The number and frequency of similar transactions

A single transaction can never be trading
Frequency is irrelevant to the badges of trade
Only three or more transactions can amount to trading
Repeated, systematic transactions point towards trading

C · Profits tax Badges of trade Medium

Q125. Which of the 'badges of trade' does the following describe?
An asset acquired to be modified or improved before resale

Work done to make an asset more saleable is a badge of trade
Modification is only relevant to manufacturing businesses
Modification always indicates a capital asset
Modification is irrelevant unless done by a contractor

C · Profits tax Capital vs revenue Hard

Q126. A company receives a lump sum as compensation for the permanent loss of an agency it held, the agency being a capital asset of the business. How is the receipt treated?

A trading receipt, taxable in full
A capital receipt, outside the scope of profits tax
Taxable at 50% of the sum received
Exempt only if received from a connected party

C · Profits tax Capital vs revenue Medium

Q127. An insurer pays out for trading stock destroyed by fire. How is the payment treated?

A capital receipt, outside the charge
Taxable only when the goods are eventually resold
A revenue receipt, taxable in the year it accrues
Taxable at half the normal rate

C · Profits tax General deduction Medium

Q128. What is the statutory test for deducting an expense under profits tax?

Outgoings and expenses wholly, exclusively and necessarily incurred in the production of assessable profits
Any expense recorded in the accounts
Outgoings incurred wholly and exclusively for the purposes of the trade
Outgoings and expenses to the extent incurred in the production of assessable profits

C · Profits tax Non-deductible expenditure Easy

Q129. Which of the following IS normally deductible under s.17?

Capital expenditure
Domestic or private expenditure
Expenditure not incurred in the production of profits
Rent of business premises

C · Profits tax Non-deductible expenditure Medium

Q130. A trader incurs legal costs in acquiring a new shop lease for the business. How is the expenditure treated?

Deductible in full as a trading expense
Not deductible - it is capital expenditure
Deductible over five years
Deductible only if the taxpayer is a company

C · Profits tax Deductions Medium

Q131. A company incurs legal costs defending a claim brought by a customer over defective goods sold in the ordinary course of business. How are the costs treated?

Not deductible as it relates to litigation
Deductible only up to $50,000
Deductible - it is incurred in defending the taxpayer's trading position
Not deductible as legal costs are always capital

C · Profits tax Donations Medium

Q132. A company's assessable profits before deducting donations are $500,000, and it made approved charitable donations of $30,000 in the year. What deduction is allowed?

$175,000
$125,000
$15,000
$30,000

C · Profits tax Donations Medium

Q133. A company's assessable profits before deducting donations are $280,000, and it made approved charitable donations of $15,000 in the year. What deduction is allowed?

$15,000
$98,000
$70,000
$7,500

C · Profits tax Donations Medium

Q134. A company's assessable profits before deducting donations are $900,000, and it made approved charitable donations of $60,000 in the year. What deduction is allowed?

$315,000
$60,000
$225,000
$30,000

C · Profits tax Repairs vs improvement Hard

Q135. A company replaces a factory's flat roof with a completely new and improved roof structure of superior design, rather than patching the original. How is the cost treated?

Deductible in full as a repair
Deductible at 50%, the balance capitalised
Not deductible - it is capital in nature
Deductible only if the roof was under one year old

C · Profits tax Bad and doubtful debts Medium

Q136. A trader makes a specific provision against a named customer's debt, having reasonable grounds to believe it will not be paid. Is the provision deductible?

Not deductible - only debts formally written off are allowed
Deductible only for banks
Not deductible - a general provision
Deductible - a specific provision for a debt reasonably estimated to be irrecoverable

C · Profits tax Bad and doubtful debts Medium

Q137. A bad debt previously allowed as a deduction is unexpectedly recovered in a later year. How is the recovery treated?

Assessable as a trading receipt in the year recovered
Not assessable, as it was never allowed as a deduction
Related back to the year the debt was written off
Assessable at half the amount recovered

C · Profits tax Interest deduction Hard

Q138. Under what condition is interest expense generally deductible against profits tax?

Never deductible under profits tax
Deductible - interest on money borrowed for the purposes of producing chargeable profits, subject to the anti-avoidance conditions in s.16(2)
Deductible only if paid to a Hong Kong bank
Deductible only up to the amount of profits before interest

C · Profits tax Depreciation allowances Medium

Q139. What initial allowance is available on qualifying capital expenditure on plant or machinery?

60% of the cost, apportioned by the number of months of use
20% of the cost, in the year of purchase
60% of the cost, in the year of purchase, regardless of how long the asset is used in the year
There is no initial allowance for plant and machinery

C · Profits tax Depreciation allowances Easy

Q140. At what rates is the annual allowance on plant and machinery computed?

A flat 25% a year on the reducing balance
20% a year on the original cost, straight line
4% a year on the reducing balance
10%, 20% or 30% a year on the reducing balance of each pool

C · Profits tax Depreciation allowances Hard

Q141. A 30%-pool has a written-down value brought forward of $800,000. During the year the business bought qualifying plant for $200,000 and sold plant for $50,000. What is the total depreciation allowance for the year?

$369,000
$249,000
$120,000
$285,000

C · Profits tax Depreciation allowances Hard

Q142. A pool taxed at 20% has a written-down value brought forward of $1,500,000. During the year the business bought qualifying plant for $100,000 and sold plant for $300,000. What is the total depreciation allowance for the year?

$248,000
$308,000
$60,000
$260,000

C · Profits tax Depreciation allowances Hard

Q143. A pool taxed at 10% has a written-down value brought forward of $0. During the year the business bought qualifying plant for $600,000 and sold plant for $0. What is the total depreciation allowance for the year?

$24,000
$360,000
$384,000
$60,000

C · Profits tax Depreciation allowances Hard

Q144. A 30%-pool has a written-down value brought forward of $450,000. During the year the business bought qualifying plant for $150,000 and sold plant for $100,000. What is the total depreciation allowance for the year?

$123,000
$90,000
$150,000
$213,000

C · Profits tax Depreciation allowances Hard

Q145. Disposal proceeds from selling the only asset in a pool exceed its written-down value brought forward, after also deducting the year's additions. What is the tax result?

A balancing charge, added back to assessable profits
A balancing allowance, deducted from assessable profits
No adjustment - the excess is simply ignored
The excess is carried forward as a loss

C · Profits tax Depreciation allowances - hire purchase Hard

Q146. Plant is acquired on hire purchase with a deposit of $60,000, and 6 monthly instalments are paid in the year, each with a capital element of $8,000. What initial allowance is available for the year?

$93,600
$64,800
$21,600
$108,000

C · Profits tax Depreciation allowances - hire purchase Hard

Q147. Plant is acquired on hire purchase with a deposit of $100,000, and 4 monthly instalments are paid in the year, each with a capital element of $12,000. What initial allowance is available for the year?

$146,400
$29,600
$88,800
$148,000

C · Profits tax Depreciation allowances - hire purchase Hard

Q148. Plant is acquired on hire purchase with a deposit of $40,000, and 9 monthly instalments are paid in the year, each with a capital element of $5,000. What initial allowance is available for the year?

$60,000
$17,000
$85,000
$51,000

C · Profits tax Commercial buildings allowance Medium

Q149. What allowance is available on capital expenditure on constructing a commercial building or structure used in the business?

Straight-line: 20% initial allowance plus 4% annual allowance on cost
Reducing balance at 4% a year
A single 100% deduction in the year of completion
There is no allowance for commercial buildings

C · Profits tax Commercial/industrial buildings allowance Hard

Q150. A company buys a completed commercial building for use in its business. On what amount is the buildings allowance computed?

The whole purchase price qualifies, including the land
The cost of the land itself is excluded
Only 50% of the price qualifies
The allowance is based on the rateable value

C · Profits tax Prescribed fixed assets Medium

Q151. What allowance is available for capital expenditure on a prescribed fixed asset such as computer hardware and software, or manufacturing machinery specified by the Commissioner?

60% initial allowance plus a 20% pool rate
20% initial allowance plus 4% annual allowance
100% deduction in the year of purchase
No allowance is available

C · Profits tax R&D expenditure Hard

Q152. A company incurred Type A R&D expenditure of $400,000 and Type B (qualifying) R&D expenditure of $2,500,000 in the year. What total deduction is available under s.16B?

$2,900,000
$5,400,000
$7,900,000
$7,400,000

C · Profits tax R&D expenditure Hard

Q153. A company incurred Type A R&D expenditure of $0 and Type B (qualifying) R&D expenditure of $3,000,000 in the year. What total deduction is available under s.16B?

$8,000,000
$3,000,000
$6,000,000
$9,000,000

C · Profits tax R&D expenditure Hard

Q154. A company incurred Type A R&D expenditure of $600,000 and Type B (qualifying) R&D expenditure of $2,400,000 in the year. What total deduction is available under s.16B?

$3,000,000
$7,400,000
$5,400,000
$7,800,000

C · Profits tax R&D expenditure Hard

Q155. What distinguishes 'Type B' qualifying R&D expenditure from 'Type A'?

Type B is any expenditure on scientific research of any kind
Type B is limited to expenditure carried out overseas
Type B must relate to one of the specified fields and either seek to extend general knowledge or have an industrial, agricultural or scientific purpose
Type B and Type A are simply two names for the same thing

C · Profits tax Trading losses Easy

Q156. How is an unrelieved trading loss of a Hong Kong business normally treated?

Carried back one year against the preceding year's profits
Lost if not used within 5 years
Set off automatically against the owner's salaries tax
Carried forward indefinitely and set off against future assessable profits of the same trade

C · Profits tax Trading losses Medium

Q157. A sole proprietor's business makes a loss for the year, and they also have rental income from a separate let property. How can the business loss be set against the rental income in the same year?

Only through electing personal assessment
Automatically, in the profits tax computation itself
By carrying it back against the previous year
It cannot be relieved against any other income

C · Profits tax Trading losses - partnerships Hard

Q158. How is a partnership's trading loss for a year treated?

The loss belongs to the partnership and is carried forward at partnership level only
They are shared among the partners in the profit-sharing ratio and each partner deals with their own share
The loss can only be used by the partner with the largest capital account
The loss is forfeited if any partner leaves during the year

C · Profits tax Two-tier profits tax Easy

Q159. A Hong Kong company has assessable profits of exactly $2,000,000 for the year, with no connected entities. What profits tax is payable?

$2,000,000 × 16.5% = $330,000
Nil - profits below $2,000,000 are exempt
$2,000,000 × 8.25% = $165,000 - the two-tier system only changes the rate on profits above $2,000,000
It depends on an annual election by the company

C · Profits tax Two-tier profits tax - corporation Medium

Q160. A Hong Kong company (not connected with any other entity electing the two-tier regime) has assessable profits of $2,500,000 for the year. What profits tax is payable?

$412,500
$206,250
$371,250
$247,500

C · Profits tax Two-tier profits tax - corporation Medium

Q161. A Hong Kong company (not connected with any other entity electing the two-tier regime) has assessable profits of $4,200,000 for the year. What profits tax is payable?

$528,000
$693,000
$346,500
$511,500

C · Profits tax Two-tier profits tax - corporation Medium

Q162. A Hong Kong company (not connected with any other entity electing the two-tier regime) has assessable profits of $8,000,000 for the year. What profits tax is payable?

$1,320,000
$1,155,000
$660,000
$825,000

C · Profits tax Two-tier profits tax - corporation Medium

Q163. A Hong Kong company (not connected with any other entity electing the two-tier regime) has assessable profits of $12,000,000 for the year. What profits tax is payable?

$1,980,000
$990,000
$1,815,000
$1,155,000

C · Profits tax Two-tier profits tax Hard

Q164. How does the two-tier regime apply where several companies are 'connected entities' of one another?

Every company in a group benefits from the two-tier rates independently
The two-tier rates are unavailable to any company in a group
The $2,000,000 threshold is doubled for a group of two companies
Only one entity in a group of connected entities may benefit from the two-tier rates; the others pay flat 16.5%/15%

C · Profits tax Two-tier profits tax - unincorporated business Medium

Q165. A sole proprietorship has assessable profits of $2,400,000. What profits tax is payable?

$210,000
$360,000
$180,000
$231,000

C · Profits tax Two-tier profits tax - unincorporated business Medium

Q166. A sole proprietorship has assessable profits of $3,600,000. What profits tax is payable?

$540,000
$390,000
$270,000
$429,000

C · Profits tax Two-tier profits tax - unincorporated business Medium

Q167. A sole proprietorship has assessable profits of $5,000,000. What profits tax is payable?

$750,000
$375,000
$600,000
$660,000

C · Profits tax Sole trader Easy

Q168. How is a sole proprietor's business profit assessed to profits tax?

Together with the owner's salary, in one profits tax computation
At the two-tier corporate rates
Only if the business has a separate business registration number from the owner's HKID
As if the business and the owner's personal affairs were entirely separate - only business income is assessed to profits tax

C · Profits tax Sole trader Medium

Q169. A sole trader draws a monthly 'salary' from the business and records it as an expense. How is this treated in the profits tax computation?

Drawings and a notional salary to the proprietor are not deductible - the whole profit, before any such appropriation, is assessable
A reasonable salary to the proprietor is deductible, like an employee's salary
Drawings are deductible but a notional salary is not
Both are deductible provided they are recorded in the accounts

C · Profits tax Sole trader Hard

Q170. A sole trader pays a salary to their spouse, who works full-time managing the shop. Is the salary deductible?

Always deductible in full
Deductible, if the spouse genuinely works in the business and the amount is not excessive - subject to the same restriction as the proprietor's own salary
Never deductible under any circumstance
Deductible only if the spouse holds a separate business registration

C · Profits tax Partnership Medium

Q171. How is a Hong Kong partnership assessed to profits tax?

The partnership is assessed and pays the tax as a single entity, like a company
Each partner is separately assessed with no reference to the partnership at all
The partnership itself is not a separate chargeable person - it files one profits tax return, but the assessable profit is allocated to and assessed on each partner individually
Only the precedent partner is assessed, on behalf of everyone

C · Profits tax Partnership Hard

Q172. Partners are paid a salary and interest on capital under the partnership agreement, both charged as expenses in the partnership accounts. How are these treated for profits tax?

Deductible in the partnership computation, like a normal salary expense
Deductible for a partner who is a company, but not for an individual partner
Deductible provided the partnership agreement specifies the amount
Added back in the partnership computation, then reallocated to each partner as part of their share of profit

C · Profits tax Two-tier profits tax - mixed partnership Hard

Q173. A partnership with 3 partners has assessable profits of $3,000,000 for the year, shared 50% : 30% : 20%. One partner is a company and the rest are individuals. What is the total profits tax payable, applying the two-tier rates separately to each partner's share?

$306,000
$300,000
$450,000
$495,000

C · Profits tax Two-tier profits tax - mixed partnership Hard

Q174. A partnership with 2 partners has assessable profits of $5,000,000 for the year, shared 60% : 40%. One partner is a company and the rest are individuals. What is the total profits tax payable, applying the two-tier rates separately to each partner's share?

$600,000
$624,000
$750,000
$825,000

C · Profits tax Two-tier profits tax - mixed partnership Hard

Q175. A partnership with 3 partners has assessable profits of $4,000,000 for the year, shared 30% : 30% : 40%. One partner is a company and the rest are individuals. What is the total profits tax payable, applying the two-tier rates separately to each partner's share?

$450,000
$600,000
$468,000
$660,000

C · Profits tax Partnership - personal assessment Hard

Q176. A partnership has one individual partner and one corporate partner. How does each partner's share of the partnership profit interact with personal assessment?

Both partners' shares are included in personal assessment
Neither partner's share can be included in personal assessment
Only the precedent partner's share is included in personal assessment
The individual partner's share is included in their personal assessment total income; the corporate partner's share never is

C · Profits tax Partnership - personal assessment Hard

Q177. An individual partner elects personal assessment. How is interest paid by them personally to fund their share of the partnership's borrowings restricted?

Restricted to that partner's own share of the partnership's net assessable value or profit, mirroring the individual property/business rule
Unlimited, the same as for a sole proprietor
Always disallowed for a partner
Capped at $100,000 regardless of the share of profit

C · Profits tax Common corporation Easy

Q178. At what rates is an ordinary Hong Kong company (not a qualifying professional reinsurer, corporate treasury centre or similar concessionary case) taxed on its assessable profits?

Whichever of the corporate or unincorporated rates gives the lower tax
Only the two-tier corporate rates of 8.25%/16.5% - the unincorporated rates never apply to a company
The unincorporated rates of 7.5%/15%
A flat rate chosen by election each year

C · Profits tax Common corporation Medium

Q179. How does a company's payment of remuneration to its director, who is also its sole shareholder, differ in tax treatment from a sole trader's own drawings?

A director's remuneration must be added back, exactly as a sole proprietor's drawings are
A director's remuneration is deductible only up to 50% of profits
A director's remuneration is a deductible expense of the company - the director/shareholder is separately assessed to salaries tax on it
A director's remuneration is deductible only if the director owns no shares

C · Profits tax Common corporation Medium

Q180. How are dividends paid by a Hong Kong company treated for profits tax purposes?

Dividends are deductible to the company but taxable to the shareholder
Dividends are taxed twice: once to the company as a disallowed expense, and again to the shareholder
Dividends are exempt only if paid to a corporate shareholder
Dividends paid by a Hong Kong company are not deductible in computing its own profits, and are not further taxed in the hands of the shareholder

C · Profits tax Trading stock Easy

Q181. On what basis is trading stock normally valued at the end of an accounting period, for both accounting and tax purposes?

The lower of cost and net realisable value
Net realisable value
Original cost, regardless of any fall in value
Replacement cost

C · Profits tax Trading stock Medium

Q182. Which cost formulas are acceptable for valuing trading stock under Hong Kong tax and accounting practice?

LIFO (last in, first out)
FIFO or a weighted average cost formula
The most recent purchase price applied to all units
A base stock method

C · Profits tax Trading stock Hard

Q183. A trader takes stock out of the business for personal use, or gives it away, without any question of trade to trade sale. How is this treated for profits tax?

At its original cost, with no profit recognised
It has no tax consequence at all
At its open market value on the date of the gift or appropriation
At half its market value

C · Profits tax Basis period Easy

Q184. For an established business preparing annual accounts, what is the basis period for a year of assessment?

The calendar year always
The year of assessment itself, from 1 April to 31 March
Whatever twelve months the taxpayer chooses each year
The accounting year ending within that year of assessment

C · Profits tax Basis period - new business Hard

Q185. A business commences on 1 October 2025 and its first accounts are made up to 31 December 2026, a period of 15 months. What is the effect on the basis periods for the first two years of assessment?

The whole period from commencement to the end of its first accounting period may be taxed twice, in the first two years of assessment, unless the taxpayer applies for relief
The overlapping profit is automatically excluded
No overlap can ever arise under Hong Kong's basis period rules
The overlap is always resolved by extending the first accounting period to exactly 12 months

C · Profits tax Basis period - cessation Medium

Q186. A business permanently ceases on 30 June 2026, having last made up accounts to 31 December 2025. What is the basis period for the year of assessment in which it ceases?

The basis period is always a full 12 months
The basis period runs from the end of the previous basis period to the date of cessation
No assessment is raised for the year of cessation
The basis period is the same 12 months as the year before

C · Profits tax Basis period - change of accounting date Medium

Q187. What must a business do if it wants to change its accounting year end?

It may change its accounting date freely with no notification needed
A change of accounting date is not permitted once a business has commenced
It must apply to the Commissioner, who may accept the change and issue directions on how the transitional basis periods are computed
It must revert to the original date within two years

C · Profits tax Provisional profits tax Medium

Q188. A company's final assessable profits for the preceding year were $2,400,000, on which the two-tier rates were applied. In the absence of any estimate supplied by the company, on what figure will provisional profits tax for the current year normally be raised?

$396,000
$198,000
$435,600
$231,000

C · Profits tax Provisional profits tax Medium

Q189. A company's final assessable profits for the preceding year were $3,200,000, on which the two-tier rates were applied. In the absence of any estimate supplied by the company, on what figure will provisional profits tax for the current year normally be raised?

$363,000
$528,000
$264,000
$580,800

C · Profits tax Provisional profits tax Medium

Q190. A company's final assessable profits for the preceding year were $6,000,000, on which the two-tier rates were applied. In the absence of any estimate supplied by the company, on what figure will provisional profits tax for the current year normally be raised?

$990,000
$825,000
$495,000
$1,089,000

C · Profits tax Provisional profits tax Medium

Q191. A company's actual assessable profits turn out to be much lower than the figure on which provisional profits tax was charged. How is the provisional tax reconciled once the final assessment is made?

Provisional tax is always automatically refunded in full
The company forfeits the right to object to the final assessment
A note is served requiring immediate application within a set time; if refused, the excess already paid is refunded once the actual assessment is made
No adjustment is possible until the following year

C · Profits tax Group relief Medium

Q192. Can a loss-making Hong Kong subsidiary surrender its trading loss to a profitable fellow group company, to reduce the group's overall tax?

Yes - losses can be surrendered between group companies with at least 75% common ownership
Yes, but only between a parent and its wholly-owned subsidiary
Yes, automatically, with no election needed
No - each company in a group is separately assessed and a loss in one company cannot be set against profits of another

C · Profits tax Group relief Medium

Q193. What is the profits tax consequence of one group company charging another a management fee?

Nil - inter-company management fees, royalties and interest are all assessed and deducted on normal profits tax principles, company by company
The group is assessed as if it were one single taxpayer
Inter-company charges are always disregarded for tax purposes
Only the ultimate holding company is assessed

C · Profits tax Offshore claims Medium

Q194. Where a taxpayer claims that profits included in its Hong Kong accounts are in fact offshore and not chargeable, where does the burden of proof lie?

The burden is on the Commissioner to prove the profit was derived from Hong Kong
The burden is on the taxpayer to prove the profit was not derived from Hong Kong
Profits are presumed offshore unless the Commissioner proves otherwise
There is no burden of proof - the Board of Review decides on the balance of convenience

C · Profits tax Offshore claims Medium

Q195. What kind of evidence does the Inland Revenue Department expect to support an offshore profits claim?

A signed statement from the company's auditors
The mere fact that the customer is based outside Hong Kong
Contemporaneous documentary evidence of what was actually done and where - correspondence, contracts, travel records, minutes
The mere fact that the company has no staff physically in Hong Kong

C · Profits tax Exchange differences Hard

Q196. How is a foreign exchange gain or loss on a trade debtor denominated in a foreign currency treated for profits tax?

Always a capital item, outside the scope of profits tax
Always assessable in full regardless of what it relates to
Ignored entirely because Hong Kong dollar is the functional currency
A revenue receipt or loss, if it arises on a revenue account (e.g. trade debtors or creditors in foreign currency)

C · Profits tax Exchange differences Hard

Q197. A company borrows in US dollars to fund the purchase of a new factory building. An exchange loss arises when the loan is partly repaid. How is the loss treated?

Capital - the borrowing itself is a fixed capital loan used to acquire a capital asset
Revenue - all foreign currency loans are revenue in nature
It depends only on the lender's location
It is always split 50:50 between capital and revenue

C · Profits tax Pre-trading expenditure Hard

Q198. A company incurs marketing and staff recruitment costs while setting up a new business, several months before it actually starts trading. Are these costs deductible against the profits once trading begins?

Deductible in full in the first year of trading
Not deductible, because the trade had not yet commenced when the expenditure was incurred
Deductible, spread over the first three years of trading
Deductible if incurred within six months before commencement

C · Profits tax Post-cessation expenditure Hard

Q199. A business pays a trade debt it still owed after it permanently ceased trading. Can this expense still be deducted?

Never deductible once the trade has ceased
Deductible only if paid within one month of cessation
Still deductible, provided they relate to debts or liabilities of the trade that was carried on
Deductible only against the final year's profit, never creating a loss

C · Profits tax Capital vs revenue Medium

Q200. A private investment holding company buys a block of shares intending to hold them long term for dividend income, and sells them years later at a large profit after an unsolicited takeover offer. How is the gain treated?

A trading transaction, taxable on the whole gain
Taxable at 50% of the gain as a compromise
Taxable only if the shares were held for less than a year
A capital asset realised without any further trading intention - the gain is not taxable

C · Profits tax Capital vs revenue Medium

Q201. A property developer, in a transaction unrelated to its normal projects, buys a plot of land, obtains planning permission to increase its value, and resells it within the year at a profit, having taken out short-term finance for the purchase. How is the profit treated?

A trading transaction - an isolated adventure in the nature of trade, taxable on the whole profit
Always capital, because it was a one-off transaction
Exempt, because the taxpayer's main business is unrelated
Taxable only on 50% of the profit, as a one-off

C · Profits tax Deeming provisions Hard

Q202. A foreign company, with no other presence in Hong Kong, licenses a patent to a Hong Kong manufacturer for use in Hong Kong and receives royalties for it. How is the royalty income treated?

Exempt, because the recipient has no permanent establishment in Hong Kong
Deemed to be a trading receipt of a trade carried on in Hong Kong, even though the recipient carries on no other business here
Taxable only if the recipient is a Hong Kong resident
Taxable at half the standard rate as a concession

C · Profits tax Deeming provisions Hard

Q203. Under s.21A, what proportion of a royalty paid to a non-resident (who is not an associate of the payer) for the use of intellectual property in Hong Kong is deemed to be the assessable profit?

100% of the gross royalty
The royalty is entirely exempt
30% of the gross royalty, taxed at the standard corporate rate - an effective rate of about 4.95% - or the full amount where paid to an associate that has claimed a Hong Kong deduction for it
50% of the gross royalty in every case

C · Profits tax Non-resident businesses Medium

Q204. A non-resident person carries on a trade in Hong Kong through a local agent, and profits arise here. How does IRD collect the tax if the non-resident itself has no assets or presence in Hong Kong?

No one can be assessed if the non-resident itself is untraceable
Only the non-resident's bank can be assessed
The Hong Kong customer who received the goods is automatically personally liable
The non-resident's agent, manager or representative in Hong Kong may be assessed and required to pay the tax on the non-resident's behalf

C · Profits tax Double taxation relief Hard

Q205. A Hong Kong resident's profits, already taxed in a country with which Hong Kong has no comprehensive double taxation agreement, are also taxed in Hong Kong because they are (unusually) treated as Hong Kong sourced. What relief is available under s.50?

Unilateral tax credit relief for the foreign tax paid, capped at the Hong Kong tax attributable to that income
No relief of any kind is available
A full deduction of the foreign tax as an expense, with no cap
Automatic exemption of the foreign-sourced income

C · Profits tax Double taxation relief Hard

Q206. What is the practical effect of Hong Kong's comprehensive double taxation agreements on profits that are genuinely offshore under Hong Kong's own source rules?

It brings all foreign profits into the Hong Kong charge
It has no effect - profits genuinely sourced outside Hong Kong are outside the charge regardless of any treaty
It exempts all Hong Kong profits of the resident
It replaces the territorial source test entirely

C · Profits tax Interest income Medium

Q207. A Hong Kong company deposits its surplus cash with a licensed Hong Kong bank and earns interest. Is the interest chargeable to profits tax?

Exempt in every case, regardless of who earns it
Taxable only for individuals, never for companies
Taxable - the exemption for interest on a deposit was withdrawn for any person carrying on a trade, profession or business in Hong Kong
Taxable only if the deposit is with an overseas bank

C · Profits tax Deductions Easy

Q208. A company insures its trading stock and premises against fire. Are the premiums deductible?

Never deductible - all insurance is treated as capital
Deductible only for buildings, not for plant or stock
Deductible only up to 10% of assessable profits
Deductible - insurance premiums covering the trade's own risks are a normal revenue expense

C · Profits tax Non-deductible expenditure Medium

Q209. A company is fined for breaching pollution control regulations while operating its factory. Is the fine deductible against its profits?

Not deductible - a fine or penalty for breaking the law is never an allowable expense, however closely connected with the trade
Deductible in full, since it arose directly from carrying on the trade
Deductible at 50%, split between the offence and the trade
Deductible only if the taxpayer successfully appeals the fine

C · Profits tax Deductions Hard

Q210. A company contributes to a retirement scheme for the benefit of its staff. What is the deduction limit for an ordinary (non-mandatory) employer contribution?

Deductible without limit
Deductible - a contribution to a recognised occupational retirement scheme or MPF scheme for employees, up to 15% of the employee's total emoluments for the year
Not deductible - only the employee's own contribution is allowed
Deductible only for a scheme registered outside Hong Kong

C · Profits tax Depreciation allowances Hard

Q211. A 20%-pool has a written-down value brought forward of $300,000. During the year the business bought qualifying plant for $400,000 and sold plant for $0. What is the total depreciation allowance for the year?

$92,000
$240,000
$332,000
$140,000

C · Profits tax Depreciation allowances Hard

Q212. A 20%-pool has a written-down value brought forward of $900,000. During the year the business bought qualifying plant for $150,000 and sold plant for $200,000. What is the total depreciation allowance for the year?

$152,000
$90,000
$170,000
$242,000

C · Profits tax Depreciation allowances Medium

Q213. Who determines which of the 10%, 20% or 30% pool an item of plant or machinery falls into?

A trader has no general right to choose the pool rate for an asset - the rate is prescribed by the Board of Inland Revenue according to the asset's type
The trader may elect any of the three rates for any asset
All assets are pooled together at a single blended rate
The rate depends on how the taxpayer classifies the asset in its own accounts

C · Profits tax Deductions Medium

Q214. A company takes out fidelity guarantee insurance against loss caused by employee dishonesty. Is the premium deductible?

It is never deductible, being akin to a private expense
It is deductible - premiums for insuring against the risk of an employee's negligence or dishonesty causing loss to the trade are a normal business expense
It is deductible only if the employee is a director
It is deductible only up to the amount of the excess/deductible under the policy

D · Property tax Charge Easy

Q215. On what basis is property tax charged?

15% of the assessable value
16.5% of the net assessable value
15% of the net assessable value
20% of the rent received

D · Property tax Assessable value Medium

Q216. What is the assessable value of a property?

The open market rental value of the property
The rateable value assessed by the Rating and Valuation Department
Rent actually received in cash during the year
Consideration payable to or for the benefit of the owner for the right to use the property

D · Property tax Computation Medium

Q217. A property was let for the whole year at $25,000 a month. The owner paid rates of $9,000. The tenant paid management fees direct to the building manager. What is the property tax payable?

$34,920
$45,000
$43,650
$36,000

D · Property tax Computation Medium

Q218. A property was let for the whole year at $40,000 a month. The owner paid rates of $16,000. The tenant paid management fees direct to the building manager. What is the property tax payable?

$72,000
$55,680
$69,600
$57,600

D · Property tax Computation Medium

Q219. A property was let for the whole year at $18,000 a month. The owner paid rates of $6,500. The tenant paid management fees direct to the building manager. What is the property tax payable?

$32,400
$31,425
$25,140
$25,920

D · Property tax Computation Medium

Q220. A property was let for the whole year at $60,000 a month. The owner paid rates of $24,000. The tenant paid management fees direct to the building manager. What is the property tax payable?

$108,000
$104,400
$86,400
$83,520

D · Property tax Premium Medium

Q221. A premium of $240,000 is received on the grant of a lease for 48 months. How much is included in the assessable value for a full year?

$80,000
$60,000
$240,000
Nil - a premium is a capital receipt

D · Property tax Premium Medium

Q222. A premium of $300,000 is received on the grant of a lease for 60 months. How much is included in the assessable value for a full year?

$60,000
$100,000
$300,000
Nil - a premium is a capital receipt

D · Property tax Premium Medium

Q223. A premium of $210,000 is received on the grant of a lease for 42 months. How much is included in the assessable value for a full year?

$60,000
$210,000
$70,000
Nil - a premium is a capital receipt

D · Property tax Premium Medium

Q224. A premium of $480,000 is received on the grant of a lease for 72 months. How much is included in the assessable value for a full year?

$80,000
$480,000
Nil - a premium is a capital receipt
$160,000

D · Property tax Premium Medium

Q225. A premium of $120,000 is received on the grant of a lease for 24 months. How much is included in the assessable value for a full year?

$60,000 - the same figure either way
$120,000 - the premium is taxed in the year of receipt
$40,000 - spread over 36 months regardless of the term
Nil - a premium for a lease of under three years is exempt

D · Property tax Irrecoverable rent Medium

Q226. In which year of assessment is irrecoverable rent deducted?

In the year the rent accrued
In the year the rent is proved to be irrecoverable
Spread over the remaining term of the lease
Only when the tenant is formally declared bankrupt

D · Property tax Recovery of bad rent Medium

Q227. Rent previously deducted as irrecoverable is later recovered. How is it treated?

Related back to the year in which it was written off
Not assessable, having already been taxed
Assessable in the year of recovery
Assessable at 50% in the year of recovery

D · Property tax Rental deposit Hard

Q228. A tenant defaults and the owner forfeits and retains the rental deposit. How is the forfeited deposit treated?

It is exempt as a capital receipt
It is assessable in full in addition to the irrecoverable rent deduction
It reduces the 20% statutory allowance
It is set off against the irrecoverable rent

D · Property tax Statutory allowance Medium

Q229. How is the statutory allowance for repairs and outgoings computed?

20% of the assessable value after deducting rates paid by the owner
20% of the assessable value before deducting rates
20% of the rent actually received
The actual cost of repairs, up to 20%

D · Property tax Deductions Medium

Q230. In computing net assessable value, how is the following treated?
Government rent paid by the owner

Deductible
Not deductible
Deductible at 50%
Deductible only if supported by receipts

D · Property tax Deductions Medium

Q231. In computing net assessable value, how is the following treated?
Mortgage interest paid by the owner

Deductible
Deductible at 50%
Not deductible
Deductible only if supported by receipts

D · Property tax Deductions Medium

Q232. In computing net assessable value, how is the following treated?
The actual cost of repairing the roof

Deductible
Deductible at 50%
Deductible only if supported by receipts
Not deductible

D · Property tax Deductions Medium

Q233. In computing net assessable value, how is the following treated?
The cost of replacing air-conditioners

Not deductible
Deductible
Deductible at 50%
Deductible only if supported by receipts

D · Property tax Deductions Medium

Q234. In computing net assessable value, how is the following treated?
Rates paid by the owner

Not deductible
Deductible
Deductible at 50%
Deductible only if supported by receipts

D · Property tax Deductions Medium

Q235. In computing net assessable value, how is the following treated?
Rates paid by the tenant direct to the Government

Deductible
Deductible at 50%
Not deductible
Deductible only if supported by receipts

D · Property tax Depreciation Hard

Q236. What depreciation allowance is available for plant installed in a property let by an individual and charged to property tax?

An annual allowance of 4% of cost
An initial allowance of 20% plus 4% annually
A 100% deduction as a prescribed fixed asset
No depreciation allowance is available under property tax

D · Property tax Multiple properties Medium

Q237. A taxpayer owns three let properties. How is property tax computed?

Separately, property by property
On the aggregate of all properties owned
Separately, unless the properties are in the same building
On the aggregate, with a single 20% allowance

D · Property tax Corporate owners Hard

Q238. A Hong Kong company carrying on business lets a property it owns. What relief is available from property tax?

It is exempt automatically with no application
It may apply for exemption, the income being chargeable to profits tax instead
It pays both property tax and profits tax with no relief
It pays property tax at 8.25%

D · Property tax Set-off Hard

Q239. A company pays property tax on a let property and the rental income is also assessed to profits tax. How is the property tax relieved?

Deducted as an expense in the profits tax computation
Refunded automatically
Set off against the profits tax payable
Carried forward as a tax credit indefinitely

D · Property tax Chargeable person Easy

Q240. On whom is property tax charged?

The tenant
The property manager
Whoever actually receives the rent
The owner

D · Property tax Rent-free period Medium

Q241. A lease grants two rent-free months at the start. How are those months treated?

Nothing is assessable for the rent-free months
The market rent is assessed for the rent-free months
The rent for the whole year is averaged across 12 months
The rent-free period is ignored and full rent assessed

D · Property tax Corporate owners Hard

Q242. A company lets a property and does not apply for the s.5(2)(a) property tax exemption. It reports the rental income in its profits tax computation as well. How does the tax actually payable work out?

Both property tax and profits tax in full, with no relief at all
Corporation profits tax at 8.25%/16.5%, with a full credit for the property tax already paid, so the tax on the rental profit is not duplicated
Only property tax; the profits tax return simply omits the rent
Only profits tax; property tax is waived automatically for companies

D · Property tax Losses Medium

Q243. A let property's outgoings (rates paid by the owner, for example) exceed the rent receivable for the year. Can the resulting 'loss' be used anywhere in the property tax system itself?

Yes - the loss can be carried forward against future property tax
Yes - the loss can be set against the same owner's salaries tax
No - property tax has no concept of a loss; each property stands on its own and a negative net assessable value is simply nil
Yes - but only if the owner elects personal assessment for that year

D · Property tax Assessable value Hard

Q244. A property is let to a relative at a nominal rent well below the market rate. On what value is property tax charged?

The token rent actually paid, however low
Nil - a nominal rent is treated as no consideration at all
Half of the market rent as a compromise
The market rent that would have been charged to an unconnected tenant, not the token rent actually paid

D · Property tax Lease renewal Medium

Q245. A tenancy is renewed at a materially higher rent partway through the year. How is the assessable value affected?

As if a new letting had started - a fresh assessable value is set based on the new agreed rent from the renewal date
The original assessable value continues unchanged until the lease finally ends
No property tax is chargeable during the renewal negotiation period
The higher of the old and new rent is always used

D · Property tax Deductions Medium

Q246. How does Government rent (as distinct from general rates) affect the property tax computation?

Government rent paid by the owner is deductible, just like rates
The government rent is not deductible by the owner, whether paid by the owner or the tenant
Government rent is only deductible if the property is a flat
Government rent is deducted before computing the assessable value, not after

D · Property tax Vacant periods Medium

Q247. A property let at $20,000 a month stood genuinely vacant, with no tenant and no rent receivable, for 2 months of the year. What is the property tax payable for the year?

$28,800
$30,000
$24,000
$36,000

D · Property tax Vacant periods Medium

Q248. A property let at $35,000 a month stood genuinely vacant, with no tenant and no rent receivable, for 3 months of the year. What is the property tax payable for the year?

$50,400
$47,250
$63,000
$37,800

D · Property tax Charge Easy

Q249. Does it make any difference to the owner's property tax whether the tenant uses the property for a business, as a residence, or as a charity's office?

It has no bearing on property tax at all - property tax is a separate charge on the owner regardless of the tenant's own tax position
The owner's property tax is reduced if the tenant also pays salaries tax
Property tax is waived if the tenant is a charity
The owner must obtain the tenant's tax reference number before filing

E · Personal assessment Nature Easy

Q250. What is personal assessment?

It is a fourth head of charge alongside the other three
It is a relief, not a separate head of charge
It is compulsory for anyone with more than one source of income
It applies automatically where it reduces tax

E · Personal assessment When it helps Medium

Q251. For which of the following can electing personal assessment produce no benefit at all?

A sole proprietor with a mortgaged let property
An individual partner with a share of a partnership loss
A taxpayer whose only income is employment income
A property owner paying mortgage interest

E · Personal assessment Eligibility Easy

Q252. What is the age requirement for electing personal assessment?

18 in all cases, with no exception
21, or 18 if married
There is no age requirement
18, or under 18 if both parents are dead

E · Personal assessment Eligibility Hard

Q253. What makes a person a 'temporary resident' for personal assessment?

More than 180 days in the year, or more than 300 days in two consecutive years including the year of election
More than 60 days in the year of assessment
More than 183 days in the year of assessment
At least 90 days in each of two consecutive years

E · Personal assessment Eligibility Hard

Q254. From the year of assessment 2018/19, how is the residence condition satisfied?

The elector or their spouse may satisfy the residence test
The elector must personally be ordinarily resident or a temporary resident
Only Hong Kong permanent residents may elect
There is no residence requirement

E · Personal assessment Married couples Hard

Q255. From the year of assessment 2018/19, how may a married person elect for personal assessment?

The election must always be made by both spouses jointly
Only the higher-earning spouse may elect
Either spouse may elect separately, or they may elect jointly
Married persons cannot elect at all

E · Personal assessment Married couples Hard

Q256. A couple are jointly assessed under salaries tax. How must any personal assessment election be made?

Either may still elect separately
Neither may elect
Only the spouse with the higher income may elect
The election must be made by them jointly

E · Personal assessment Married couples Hard

Q257. Where a couple elect jointly, how is the total tax apportioned between them?

In the ratio of each spouse's reduced total income
Equally between them
In the ratio of their gross incomes
Entirely to the spouse with the higher income

E · Personal assessment Time limits Medium

Q258. By when must an election for personal assessment be made?

Within 1 year of the end of the year of assessment
The later of 2 years after the end of the year of assessment and 2 months after a notice of assessment
Within 6 months of the notice of assessment
Before the tax return for that year is filed

E · Personal assessment Time limits Hard

Q259. By when must an election for personal assessment be withdrawn?

Within 2 years of the end of the year of assessment
Within 1 month of the assessment
Within 6 months of the date the personal assessment is issued
At any time before the assessment becomes final

E · Personal assessment Deceased taxpayer Medium

Q260. A person eligible to elect for personal assessment dies before doing so. What happens to the right of election?

The right of election lapses on death
Only the Commissioner may elect on the deceased's behalf
The surviving spouse alone may elect
His executor has the same right of election

E · Personal assessment Computation Hard

Q261. Which figures are aggregated to arrive at total income under personal assessment?

Net assessable value, net assessable income, and net assessable profits
Gross rent, gross salary and gross business receipts
Assessable value, assessable income and assessable profits
Only income charged at the standard rate

E · Personal assessment Interest deduction Hard

Q262. How much interest on money borrowed to produce property income may be deducted under personal assessment?

Unlimited
Restricted to the net assessable value of that property
Restricted to $100,000
Restricted to 20% of the rent

E · Personal assessment Computation Hard

Q263. Tax under personal assessment is the lower of the progressive rates on net chargeable income and what?

The standard rate on net chargeable income
The progressive rates on reduced total income
The standard rate on reduced total income
16.5% on assessable profits

E · Personal assessment Computation Hard

Q264. Total income under personal assessment is $1,420,000, interest to produce property income is $0, and allowances total $145,000. What is the tax payable?

$213,000
$191,250
$411,750
$198,750

E · Personal assessment Computation Hard

Q265. Total income under personal assessment is $1,058,400, interest to produce property income is $200,000, and allowances total $290,000. What is the tax payable?

$78,628
$128,760
$85,260
$207,388

E · Personal assessment Computation Hard

Q266. Total income under personal assessment is $884,000, interest to produce property income is $42,000, and allowances total $145,000. What is the tax payable?

$126,300
$100,490
$104,550
$226,790

E · Personal assessment Business losses Medium

Q267. What is the effect of electing personal assessment on a sole proprietorship loss of the year?

It must be carried forward against future business profits only
It is lost
It can be set against the taxpayer's other income in the same year
It can be surrendered to a spouse only

E · Personal assessment Business losses Hard

Q268. Can an offshore business loss be brought into a personal assessment computation?

It can be set against Hong Kong income in full
It can be set against Hong Kong income at 50%
It may be carried forward under personal assessment
It cannot be brought in - offshore profits were never chargeable

E · Personal assessment When it helps Hard

Q269. A taxpayer with substantial salary income also owns an unmortgaged let property. Is personal assessment likely to be beneficial?

No - the marginal progressive rate exceeds the standard rate
Yes - progressive rates are always lower
Yes - allowances always produce a saving
It makes no difference to the tax payable

E · Personal assessment Eligibility Medium

Q270. Which of the following cannot elect for personal assessment?

A sole proprietor
A company
An individual partner
An individual with property income

E · Personal assessment Making the election Easy

Q271. How must an election for personal assessment be made?

Orally, by telephoning the Inland Revenue Department
By simply paying the lower amount of tax
In writing, in the tax return or on Form IR76C
By ticking a box on the demand note

E · Personal assessment Computation Medium

Q272. A married couple elect for personal assessment. What allowance may they claim between them for their marital status?

Both allowances in full, one after the other
Neither allowance, since personal assessment has its own separate scale
Half of each allowance
The higher of the two allowances - not both

E · Personal assessment Computation Medium

Q273. Are child, dependent parent, dependent sibling, and disability allowances available under a personal assessment computation?

Yes - each qualifying child allowance, dependent parent allowance and so on is available under personal assessment exactly as under salaries tax
No - personal assessment allows only the basic or married allowance, with no allowance for children or dependants
Only the child allowance is available; dependent parent and sibling allowances are not
Allowances are halved under personal assessment

E · Personal assessment Computation Medium

Q274. Are the concessionary deductions available under salaries tax (self-education expenses, home loan interest, elderly residential care expenses, MPF contributions, approved charitable donations) also available under personal assessment?

No concessionary deductions are available under personal assessment
Yes - the same concessionary deductions (self-education expenses, home loan interest, MPF contributions, elderly residential care expenses, approved charitable donations, and so on) are all available
Only home loan interest is available; the others are salaries-tax only
Concessionary deductions are capped at half their normal limits under personal assessment

E · Personal assessment Computation Medium

Q275. Does electing personal assessment change how income from each individual source (property, employment, business) is itself computed?

Yes - personal assessment recomputes every source of income on a cash receipts basis
Only property income is recomputed; business profits keep their normal basis
No - each source of income keeps its own basis; property income is still computed on an accruals basis and business profits on the normal profits tax basis, merely aggregated afterwards
Personal assessment abolishes the concept of a basis period entirely

E · Personal assessment When it helps Hard

Q276. In which of the following is personal assessment LEAST likely to produce any tax saving?

A property is solely owned by one spouse and let for the whole year
A sole trader's business runs at a loss for the year
A taxpayer pays substantial home loan interest with little other income to absorb allowances
A property is jointly owned by a married couple; only the spouse who elects personal assessment includes their own share

E · Personal assessment Practical approach Medium

Q277. In an exam question asking whether a married couple should elect for personal assessment, what should the answer actually compare?

The whole family's tax position, computed both with and without the election, for each spouse separately and jointly
Only the spouse with the higher income
The election is never worth comparing - it should always be made if available
Only the spouse who owns the let property

E · Personal assessment Business losses Hard

Q278. A sole trader's business made a loss last year (say YA 2024/25), which was simply carried forward under the profits tax computation because no election was made at the time. Can personal assessment still be used now to relieve that loss against last year's other income?

The loss is forfeited once the year of assessment for the loss has passed
The loss is still relievable, since personal assessment for a year can be elected up to two years after that year ends
The loss must be relieved in the same year it is incurred or never at all
Only losses incurred in the current year of assessment qualify

E · Personal assessment Computation Medium

Q279. In the personal assessment computation, what does 'total income' mean before it becomes 'reduced total income'?

It is the same thing as net chargeable income
It is total income after personal allowances only
It is the total income of the individual, before deducting interest, concessionary deductions or losses - the starting point of the computation
It is only the individual's salary income, excluding property and business income

E · Personal assessment Partnership interaction Medium

Q280. An individual partner in a mixed partnership elects personal assessment. What happens to the corporate partner's share of the same partnership's profit?

It is excluded from the partnership computation entirely
It is halved
It is deferred until the corporate partner also elects personal assessment
It is included in full, since a corporate partner's own separate assessment is unaffected by what an individual partner elects

E · Personal assessment Eligibility Medium

Q281. Must a taxpayer have more than one source of chargeable income before personal assessment is worth considering?

Yes - a non-Hong Kong-sourced loss cannot be brought in, but Hong Kong-sourced property, employment and business income can all still be aggregated even where some of it individually would be modest
No - personal assessment requires at least two separate sources of chargeable income
No - personal assessment is only available where property income exists
Yes, but only where the taxpayer's total income exceeds $1,000,000

E · Personal assessment Time limits Medium

Q282. What happens if an election for personal assessment is made after the statutory time limit in s.41(2) has passed?

A late election is always accepted with no discretion required
The Commissioner may refuse to accept a late election, though in practice a reasonable excuse for the delay is usually accommodated
A late election converts automatically into an objection instead
There is no consequence, since personal assessment has no time limit at all

Originality

Every question on this page was written for this Hub. Where a question tests something the ACCA examining team has publicly reported as a weak area, the topic and the error it tests are drawn from that public report — that is the point of practising it — but the scenario, names, figures and wording are original, and no ACCA question, model answer or examiner's report text is reproduced. See the ACCA TX-HKG page for the fuller statement of what is and is not reproduced anywhere on this Hub.

← ACCA TX-HKG Question Bank B →

Progressive rates on $652,000 (3 marks) 2%/6%/10%/14% on four $50,000 bands ($16,000) + 17% on the $452,000 remainder ($76,840)	92,840
Standard rate on net income before allowances: $942,000 × 15% (2 marks)	141,300
Salaries tax payable (the lower of the two) (2 marks)	92,840

Salaries tax (from part (a))	92,840
Property tax: $200,000 × 15% (1 mark)	30,000
Total tax	122,840

Total income (net income $942,000 + property NAV $200,000)	1,142,000
Less: mortgage interest, capped at that property's own NAV of $200,000 (2 marks)	(150,000)
Reduced total income	992,000
Less: married person's allowance	(290,000)
Net chargeable income	702,000
Progressive rates: $16,000 + ($502,000 × 17%)	101,340
Standard rate on reduced total income: $992,000 × 15%	148,800
Tax payable under personal assessment (the lower) (1 mark)	101,340

Net profit per accounts	8,000,000
Add: non-allowable items
Depreciation (1 mark)	450,000
Charitable donations (1 mark)	200,000
Legal fees — capital, acquiring a new lease (2 marks)	60,000
	8,710,000
Less: additional R&D deduction (4 marks) Type B enhanced deduction: min($1,500,000, $2,000,000) × 300% = $4,500,000 total, less the $1,500,000 already expensed = $3,000,000 additional	(3,000,000)
Less: depreciation allowances (4 marks) IA: $800,000 × 60% = $480,000. Pool: $600,000 + $800,000 − $480,000 − $100,000 disposal = $820,000. AA: $820,000 × 20% = $164,000. Total $480,000 + $164,000	(644,000)
Profit before loss brought forward	5,066,000
Less: loss brought forward (1 mark)	(500,000)
Profit before donations (Z)	4,566,000
Less: approved charitable donations (2 marks) lower of $200,000 actual and 35% × $4,566,000 = $1,598,100 — fully allowable	(200,000)
Assessable profit	4,366,000

First $2,000,000 at 8.25% (2 marks)	165,000
Remaining $2,366,000 at 16.5% (2 marks)	390,390
Profits tax payable	555,390

Salary	1,020,000
Less: self-education expenses (1 mark)	(60,000)
Less: mandatory MPF contribution (1 mark)	(18,000)
Net income	942,000
Less: married person's allowance (1 mark)	(290,000)
Net chargeable income	652,000

Rent receivable ($45,000 × 12)	540,000
Less: irrecoverable rent ($45,000 × 3) (2 marks)	(135,000)
Assessable value	405,000
Less: rates paid by the owner (1 mark)	(20,000)
	385,000
Less: 20% statutory allowance (1 mark)	(77,000)
Net assessable value	308,000
Property tax at 15% (1 mark)	46,200

Rent receivable ($22,000 × 12)	264,000
Add: premium spread (3 marks) $540,000 over the lease term or 36 months, whichever is shorter — the lease runs 60 months, so the cap bites: $540,000 ÷ 36 × 12	180,000
Assessable value	444,000
Less: rates (1 mark) nil — the tenant pays them direct, so there is nothing for the owner to deduct	—
Less: 20% statutory allowance	(88,800)
Net assessable value	355,200
Property tax at 15% (1 mark)	53,280

Shop	46,200
Flat	53,280
Total property tax payable (1 mark)	99,480

Net profit per accounts	6,400,000
Add: non-allowable items
Partner's salary — Mr Vale (2 marks)	900,000
Salary to the partner's spouse (2 marks)	300,000
Depreciation (1 mark)	350,000
Charitable donations (1 mark)	120,000
	8,070,000
Less: depreciation allowances (5 marks) IA: $900,000 × 60% = $540,000. Pool: $500,000 + $900,000 − $540,000 − $400,000 disposal = $460,000. AA: $460,000 × 30% = $138,000. Total $540,000 + $138,000	(678,000)
Profit before donations	7,392,000
Less: approved charitable donations (2 marks) lower of $120,000 actual and 35% × $7,392,000 = $2,587,200 — fully allowable	(120,000)
Assessable profit	7,272,000

Mr Vale — individual, 70%
Share of assessable profit ($7,272,000 × 70%)	5,090,400
Apportioned first-tier band ($2,000,000 × 70%) at 7.5% (2 marks)	105,000
Balance ($5,090,400 − $1,400,000 = $3,690,400) at 15% (2 marks)	553,560
Mr Vale's profits tax	658,560
Summit Holdings Ltd — corporate, 30%
Share of assessable profit ($7,272,000 × 30%)	2,181,600
Apportioned first-tier band ($2,000,000 × 30%) at 8.25% (2 marks)	49,500
Balance ($2,181,600 − $600,000 = $1,581,600) at 16.5% (1 mark)	260,964
Summit Holdings Ltd's profits tax	310,464
Total profits tax payable (1 mark)	969,024

Sale proceeds (1 mark)	4,350,000
Less: purchase cost (1 mark)	(3,200,000)
Less: stamp duty and legal costs (1 mark)	(120,000)
Less: renovation and access controls	(280,000)
Less: interest and selling costs	(270,000)
Assessable profits (1 mark)	480,000
Profits tax at the individual first-tier rate, $480,000 × 7.5% (1 mark)	36,000

Net profit per accounts (1 mark)	7,850,000
Add back / deduct accounting and tax adjustments
Depreciation, non-deductible under s.17(1)(c) (1 mark)	740,000
Approved charitable donations added back first (1 mark)	260,000
Less: accounting gain on factory sale, capital receipt	(450,000)
Add: industrial building balancing charge (3 marks) Proceeds $1,560,000 less residue $1,248,000 = $312,000, capped by prior allowances of $1,152,000	312,000
Adjusted profit before depreciation allowances	8,712,000
Less: depreciation allowances
30% plant pool (4 marks) IA: $900,000 × 60% = $540,000. Pool: $520,000 + $900,000 − $540,000 − $180,000 = $700,000. AA: $700,000 × 30% = $210,000	(750,000)
Hire-purchase machine (3 marks) Qualifying capital paid: $240,000 + (8 × $55,000) = $680,000. IA $408,000 and AA $81,600	(489,600)
New factory industrial building allowance (3 marks) Land $2,100,000 excluded. Construction cost $4,200,000: IA 20% = $840,000; AA 4% = $168,000	(1,008,000)
Profit before donations (1 mark)	6,464,400
Less: approved charitable donations (2 marks) Actual $260,000 is below the 35% cap of $2,262,540	(260,000)
Assessable profits (1 mark)	6,204,400
Profits tax: first $2,000,000 at 8.25%, balance $4,204,400 at 16.5% (1 mark)	858,726

Assessable profits	3,200,000
First $2,000,000 at 8.25% (2 marks)	165,000
Balance $1,200,000 at 16.5% (2 marks)	198,000
Profits tax payable (1 mark)	363,000

Tax undercharged / additional tax assessed	420,000
Maximum s.80 penalty: $10,000 plus treble the tax undercharged (3 marks)	1,270,000
First surcharge for late payment: 5% of $420,000 (1 mark)	21,000
Further surcharge after six months: 10% of $441,000 (2 marks)	44,100
Total surcharges after eight months	65,100
Amount payable after eight months (2 marks)	485,100

Convention	Meaning
X	A figure goes here. Letters (A, B, Y, ZB…) mark subtotals that a later line refers back to.
Indentation	Indented lines are workings feeding the subtotal on the right; they do not themselves enter the main column.
Single rule	A subtotal.
Double rule	A figure the question asks for, or one that carries into the next stage.

Rent receivable	X
Premium, spread over the lease term	X
Service charges / management fees borne by the tenant and paid to the owner	X
Recovery of rent previously written off as irrecoverable	X
Less: irrecoverable rent of the year	(X)
Assessable value	X
Less: rates paid by the owner	(X)
	X
Less: statutory allowance for repairs and outgoings, 20% of the above	(X)
Net assessable value	X
Property tax at the standard rate, 15%	X

Line	What belongs there
Premium	Spread evenly over the lease term, capped at 36 months (s.5B(4)). A 3-year lease premium received in one year is taxed ¹²⁄₃₆ in each.
Irrecoverable rent	Deducted in the year it is recognised as irrecoverable, not the year the rent accrued (s.7C(1)). Recovery later is assessable in the year of recovery, not related back.
Rates	Only rates paid by the owner. Rates paid by the tenant never enter the computation.
20% statutory allowance	Fixed, automatic, and taken after rates. It is not a claim and no receipts are needed — and no more can be claimed however much was actually spent.

Rent ($30,000 × 12)	360,000
Premium ($180,000 × ¹²⁄₃₆)	60,000
Assessable value	420,000
Less: rates paid by owner	(18,000)
	402,000
Less: statutory deduction ($402,000 × 20%)	(80,400)
Net assessable value	321,600
Property tax ($321,600 × 15%)	48,240

Salaries	A
Bonus, commission, gratuity	B
Allowances (cash or convertible into cash)	C
		D
Less: allowable expenses — s.12(1)(a)
Travelling from office to office	E
Professional subscription	F	(G)
Income after allowable outgoings		H
Add: rental value of employer-provided quarters (H × 10%)	J
Less: rent suffered (rent paid by employee − rent refunded)	(K)	L
		M
Add: lump sum on termination of employment		N
Add: gain on exercise of share option		O
		P
Less: self-education expenses — s.12(1)(e)		(Q)
Net assessable income, before concessionary deductions		R
Less: concessionary deductions
Approved charitable donations (max 35% of P)	S
Elderly residential care expenses	T
Home loan interest	U
Mandatory contributions to MPF / recognised scheme	V
VHIS premiums	W
Qualifying annuity premiums and MPF voluntary contributions	X
Domestic rents	Y
Assisted reproductive service expenses	Z	(ZA)
Net income (net assessable income after concessionary deductions)		ZB
Less: personal allowances
Basic / married person's allowance	AA
Child allowance	BB
Dependent parent and other allowances	CC	(DD)
Net chargeable income		EE

(b) Progressive rates on EE: 2% / 6% / 10% / 14% on the first four $50,000 bands, then 17%	b
(c) Standard rate on ZB (net income, before personal allowances) — s.13(2)	c
Salaries tax liability = the lower of (b) and (c)	X

Line	What catches people out
Rental value base (H)	10% of income after s.12(1)(a) outgoings — not of gross salary. 4% for a hotel room / shared boarding-type accommodation, 8% for two rooms in a hotel.
Rent suffered (K)	Deducted from rental value, and only down to nil — it cannot create a negative.
Donations cap (S)	35% of P — income after the outgoings and rental value but before self-education and the other concessionary deductions.
Order of Q and S–Z	Self-education is a s.12 deduction and comes before the concessionary block. Putting it among the concessionary deductions changes the donations cap base.
The standard-rate base (ZB)	Net income before personal allowances. Applying it to EE is the single most common error in this computation.

Salary and bonus	1,000,000
Less: professional subscription — s.12(1)(a)	(2,000)
Income after allowable outgoings (H)	998,000
Add: rental value ($998,000 × 10%)	99,800
Net assessable income before concessionary deductions	1,097,800
Less: approved charitable donations (well under the 35% cap)	(30,000)
Less: mandatory MPF contributions (capped at 18,000)	(18,000)
Net income (ZB)	1,049,800
Less: basic allowance D26 exam (YA 2025/26): $132,000	(145,000)
Net chargeable income (EE)	904,800

(b) Progressive on 904,800: 1,000 + 3,000 + 5,000 + 7,000 + (704,800 × 17%)	135,816
(c) Standard rate on net income 1,049,800 × 15% (under the 5,000,000 threshold)	157,470
Tax payable — the lower	135,816

Gross profit	X
Add: assessable income	X
Less: allowable expenses under the IRO	(X)
Less: depreciation allowances	(X)
Less: charitable donation	(X)
Assessable profit	X

Hong Kong Tax Study Hub

Revised

Still missing, and why

Start here · 由此開始

Tax types · 各稅種

Returns · 報稅表

Worked illustrations · 例題

Related platforms · 相關平台

IRD What's New

1. How to use this page

2. Changes already applied to this Hub

3. Salaries tax & individuals

4. Stamp duty

5. Profits tax & concession regimes

6. Administration, AEOI & CARF

7. Treaty network

8. Fraud alerts

9. Noted — no content change

10. Source Documents

ACCA TX-HKG

1. Exam format

2. Which year of assessment applies

3. Syllabus → Hub coverage

4. What the examining team reports as weak

5. Practice — Section A

6. Practice — Section B: tax administration 10 marks

Question

7. Practice — Section B: depreciation allowances 10 marks

Question

8. Practice — Section B: profits tax computation 15 marks

Question

9. Practice — Section B: partnership assessment 10 marks

Question

10. Practice — Section B: property tax, original and revised 10 marks

Question

11. Practice — Section B: salaries tax, husband and wife 15 marks

Question

12. Verified ACCA resources

13. Why nothing is reproduced here

Practice Question Bank

What this is

Coverage by syllabus area

How to use it

The question bank

Originality

Question Bank — Section B

What this is

Case 1 — Ms Fiona Ng (10 marks)

Case 2 — Golden Horizon Ltd (10 marks)

Case 3 — Harbour Partners (10 marks)

Case 4 — Lau's Trading (10 marks)

Case 5 — Ms Priya Sharma (10 marks)

Case 6 — Mr Wong Kwok-keung (10 marks)

Originality

Question Bank — Section C

What this is

Question 1 — Mr Ivan Ho (15 marks)

Scenario15 marks

Question 2 — XYZ Trading Ltd (25 marks)

Scenario25 marks

Question 3 — Mr Anthony Cheung (15 marks)

Scenario15 marks

Question 4 — Summit & Vale Partners (25 marks)

Scenario25 marks

Question 5 — Mr Daniel Lau (15 marks)

Scenario15 marks

Question 6 — JadeTech Manufacturing Ltd (25 marks)

Scenario25 marks

Question 7 — Harbor Link Sourcing Ltd (15 marks)

Scenario15 marks

Question 8 — East Point Design Ltd (25 marks)

Scenario25 marks

Originality

Computation Formats

How to use these

1. Property Tax IRO ss.5, 5B, 7C — textbook Ch.7

2. Salaries Tax IRO ss.8–13 — textbook Ch.12

3. Profits Tax IRO ss.14–19C — textbook Ch.20

✗ Wrong — the gross profits method

✓ Correct — adjust the accounting profit

Profit / (loss) per the accounts	X
Add: non-allowable expenses charged	X
Less: non-assessable income credited, and deductible amounts not in the accounts	(X)
Less: depreciation allowances	(X)
Less: charitable donation (capped)	(X)
Assessable profit	X

Profit / (loss) per the accounts	X
Add: non-allowable expenses
Charitable donation (added back here, relieved later)	X
Depreciation per the accounts	X
Expenses attributable to offshore profits	X
Fines and penalties	X
General provision for doubtful debts	X
Improvements (capital)	X
Initial purchase of carpets, curtains and similar	X
Interest failing ss.16(2), (2A)–(2CC)	X
Legal fees of a capital nature	X
Profits tax and property tax charged in the accounts	X
Salaries paid to the proprietor or partners	X
Share of joint venture loss per the accounts	X
Retirement scheme contributions above the allowable proportion	X
	X
Less: non-assessable income, and deductions not in the accounts
Dividends	(X)
Interest exempt from profits tax	(X)
Offshore interest and offshore profits	(X)
Prescribed fixed assets (100% deduction)	(X)
Recovery of bad debts not previously allowed	(X)
Share of joint venture profit per the accounts	(X)
	X
Less: depreciation allowances
Plant and machinery	(X)
Industrial building allowance	(X)
Commercial building allowance	(X)
Subtotal — call this Y	Y
Less: charitable donation, restricted to 35% of Y	(Z)
Assessable profit	P
Less: loss brought forward	(X)
Less: loss set off under s.19C(5)	(X)
Net assessable profit	N
Profits tax: two-tiered rates on N — corporations 8.25% on the first $2,000,000 and 16.5% on the remainder; unincorporated 7.5% / 15%	T
Less: provisional profits tax paid	(X)
Less: property tax set off under s.25	(X)
Profits tax liability	R

Profit per the accounts	2,500,000
Add: depreciation	300,000
Add: charitable donation	80,000
Add: fine	20,000
Add: general provision for doubtful debts	50,000
	2,950,000
Less: dividend income	(100,000)
Less: offshore profit	(200,000)
	2,650,000
Less: depreciation allowances	(260,000)
Y	2,390,000
Less: charitable donation — 35% of Y is 836,500, so the full $80,000 is allowed	(80,000)
Assessable profit	2,310,000
Less: loss brought forward	(310,000)
Net assessable profit	2,000,000
Profits tax: $2,000,000 × 8.25% (all within the first tier)	165,000

	10%	20%	30%	Allowances
Written down value b/f	X	X	X
Additions (qualifying cash purchases)	X	X	X
Less: initial allowance, 60% of the addition	(X)	(X)	(X)	X
	X	X	X
Less: disposal proceeds (limited to original cost)	(X)	(X)	(X)
Reduced value	X	X	X
Less: annual allowance at the pool rate	(X)	(X)	(X)	X
Written down value c/f	X	X	X
Total depreciation allowances				X

Point	Detail
Initial allowance, 60%	On the addition, not on the pool. Taken before the annual allowance, so the annual allowance is computed on the reduced figure.
Order: IA → disposal → AA	Disposals come out after the initial allowance and before the annual allowance. Reversing this changes every figure below it.
Four kinds of addition	Cash purchase — pooled, 60% IA on the cash price. Hire purchase — not pooled; 60% IA only on the capital portion of the deposit and instalments paid in the year. Private asset introduced into the business — pooled, but no initial allowance. Asset used partly privately — not pooled; dealt with separately and apportioned.
Balancing adjustment	Arises only when the pool is emptied — proceeds exceeding the pool give a balancing charge; a residue with no assets left gives a balancing allowance. A disposal from a continuing pool creates neither.
Prescribed fixed assets	100% deduction under s.16G — these never enter the pool at all. They belong in the profits tax computation, not here.

	10%	20%	30%	Allowances
Written down value b/f	100,000	200,000	300,000
Additions	—	150,000	—
Less: initial allowance (60% × 150,000)	—	(90,000)	—	90,000
	100,000	260,000	300,000
Less: disposal proceeds	—	—	(50,000)
Reduced value	100,000	260,000	250,000
Less: annual allowance	(10,000)	(52,000)	(75,000)	137,000
Written down value c/f	90,000	208,000	175,000
Total depreciation allowances				227,000

Net assessable value — from the property tax computation	X
Net assessable income — from the salaries tax computation	X
Net assessable profit — sole proprietorships and share of partnerships	X
Total income	X
Less: interest on money borrowed to produce property income (capped at that property's NAV)	(X)
Less: concessionary deductions	(X)
Less: business loss of the year	(X)
Less: loss brought forward under Personal Assessment	(X)
Reduced total income	RTI
Less: personal allowances	(X)
Net chargeable income	NCI
(b) Progressive rates on NCI	b
(c) Standard rate on RTI — before allowances	c
Tax payable — the lower of (b) and (c)	X

Item	Textbook (to 31 May 2024)	Current — used above
Salaries tax standard rate	Flat 15% on net income (Ch.12 format, line c)	changed Two-tiered from YA 2024/25: 15% on the first $5,000,000, 16% on the remainder
Personal allowances	Basic $132,000 / married $264,000 / child $130,000 era	changed From YA 2026/27: basic $145,000, married $290,000, child $140,000, single parent $145,000, dependent parent 60+ $55,000 (IRD pam61e)
One-off tax reduction	Table runs to 2023/24, ceiling $3,000	changed A 100% reduction capped at $3,000 also applied for 2025/26. Check the current Budget — none is assumed in the examples above
Child allowance, newborns	Not in this edition	proposed 2026 Policy Address: $160,000 for a 2nd or subsequent child born on/after 16 Sep 2026 — needs an amendment ordinance, so not used above. details →
Property tax standard rate	15%	unchanged 15%
20% statutory repair allowance	20% of AV after rates	unchanged
Two-tiered profits tax rates	8.25% / 16.5% and 7.5% / 15%, first $2,000,000	unchanged
Salaries tax progressive bands	2/6/10/14% on four $50,000 bands, then 17%	unchanged
Initial allowance on P&M	60%	unchanged
Annual allowance pools	10% / 20% / 30%	unchanged
Donations cap	35%	unchanged
Rental value percentages	10% / 8% / 4%	unchanged

Because…	…therefore
The given computation looks plausible	You cannot spot errors by eye. You must work note by note, in order, and decide an adjustment for each — including "no adjustment".
Some notes are distractors	A note that needs no adjustment still earns a mark if you say so and why. Silence earns nothing and looks like an oversight.
Errors can offset each other	The bottom line can look close to right while several treatments are wrong. Never sanity-check by the final figure. Illustration A below is built to show this happening.

Step	Do this
1	Do not edit the given computation. Start a clean one from profit per the accounts (or, for personal assessment, from each source's own correct figure). Editing someone else's layout inherits their structural errors.
2	Rule up a note-by-note working schedule before touching the computation: note number, treatment, adjustment, amount. Every note gets a row, including the ones needing no adjustment.
3	Decide each note in isolation. Is the item chargeable / deductible? Was it already in the accounts? Those two questions together give the adjustment — an item can be deductible and still need no adjustment because it was already correctly charged.
4	Build the revised computation in the standard format, feeding in the schedule's figures. Keep the donation add-back-then-relieve round trip, and keep depreciation allowances before the donation.
5	Reconcile from the given figure to yours, line by line. This is the step candidates skip, and it is where the marks and the self-check both live.
6	Reconcile the tax too, not just the profit. Rate errors, set-offs and reliefs live below the net assessable profit line and are easy to leave uncorrected.