1. Rates and Property Tax

2. Rates = rateable value  rates percentage charge
The tax which an owner or occupier of a property needs to pay to the government is called rates.
Rates = rateable value  rates percentage charge
Note: (1) For the financial year 2008/09, rates are charged at 5% p.a.
(2) Rates are to be paid quarterly in advance.

3. Rates payable per quarter = $6000 ÷ 4
For example,
the rateable value of a flat is $ and the rates are charged at 5% p.a.
∴ Rates for a year =
$  5%
Rates =
rateable value 
rates percentage charge
= $6000
Rates payable per quarter =
$6000 ÷ 4
There are 4 quarters in a year.
= $1500

4. Follow-up question
The rateable value of a flat is $ If the rates are charged at 5% p.a., find the rates payable per quarter.
Solution
Rates for a year = $  5%
= $4000
Rates payable per quarter = $4000 ÷ 4
= $1000

5. Follow-up question (cont’d)
2. Cynthia pays $1200 per quarter for the rates of her flat and the rates are charged at 5% p.a. What is the rateable value of her flat?
Solution
Rates payable per year = $1200  4
= $4800
Rateable value of the flat = $4800 ÷ 5%
= $96 000

6. Property Tax
An owner of a property needs to pay property tax to the government if he rents out the property.
Property tax = annual rental income  80%  property tax rate
Note: For the financical year 2008/09, the property tax rate is 15%.

7. the annual rental income of a flat is $240 000 and the
For example,
the annual rental income of a flat is $ and the
property tax rate is 15%.
Property tax that the owner should pay for a year =
$  80%  15%
Property tax
= annual rental income 80%  property tax rate
= $28 800

8. Follow-up question
1. The annual rental income of a flat is $ If the property tax rate is 15%, how much property tax should the owner pay for a year?
Solution
Property tax that the owner should pay for a year
= $  80%  15%
= $18 000

9. Follow-up question (cont’d)
2. The owner of a flat pays a property tax of $ for a year. If the property tax rate is 15%, what is the monthly rental income of the flat?
Solution
Let $x be the monthly rental income of the flat,
then the annual rental income of the flat is $12x.
= 12x  80%  15%
x = 9600
∴ The monthly rental income of the flat is $9600.

10. Salaries Tax

11. Salaries tax based on the net chargeable income (2008/09)
People who earn an income from their employment are required to pay salaries tax to the government. The calculation is based on the net chargeable income and the progressive tax rates.
Salaries tax based on the net chargeable income (2008/09)
Net chargeable income
Tax rate
Salaries tax
On the first $40 000 2%
On the next $40 000 7%
12%
Remainder
17%
$  2%
= $800
$  7%
= $2800
$  12%
= $4800
----
Note: net chargeable income = total income – total allowance

12. the net chargeable income of Mr Chan is $90 000.
For example,
the net chargeable income of Mr Chan is $
$ = $ $ $10 000
Tax rate 2% 7%
12%
Mr Chan’s salaries tax payable
= $(  2%  7%  12%)
= $( )
= $4400

13. Follow-up question
Mr Leung’s total annual income for the year 2008/09 is $ If his salaries tax allowance is $ , how much salaries tax should he pay?
Solution
Net chargeable income =
$( – )
Net chargeable income
= total income – total allowance
= $

14. Follow-up question (cont’d)
∵ $ = $( )
∴ According to the progressive tax rate,
Net chargeable income
On the first $40 000
On the next $40 000
Remainder $22 000
Tax rate 2% 7%
12%
17%
∴ Mr Leung’s salaries tax payable
= $(  2%  7%  12%  17%)
= $( )
= $12 140