Jerome made the following gifts to family members during the tax year 2014–15:（1) On 28 Ma

tration of Taxation (State Tax Bureau)?

A.Enterprise income tax (EIT)

B.Individual income tax (IIT)

C.Land appreciation tax (LAT)

D.Business tax (BT)

James died on 22 January 2015. He had made the following gifts during his lifetime:

(1) On 9 October 2007, a cash gift of ￡35,000 to a trust. No lifetime inheritance tax was payable in respect of this gift.

(2) On 14 May 2013, a cash gift of ￡420,000 to his daughter.

(3) On 2 August 2013, a gift of a property valued at ￡260,000 to a trust. No lifetime inheritance tax was payable in respect of this gift because it was covered by the nil rate band. By the time of James’ death on 22 January 2015, the property had increased in value to ￡310,000.

On 22 January 2015, James’ estate was valued at ￡870,000. Under the terms of his will, James left his entire estate to his children.

The nil rate band of James’ wife was fully utilised when she died ten years ago.

The nil rate band for the tax year 2007–08 is ￡300,000, and for the tax year 2013–14 it is ￡325,000.

Required:

(a) Calculate the inheritance tax which will be payable as a result of James’ death, and state who will be responsible for paying the tax. (6 marks)

(b) Explain why it might have been beneficial for inheritance tax purposes if James had left a portion of his estate to his grandchildren rather than to his children. (2 marks)

(c) Explain why it might be advantageous for inheritance tax purposes for a person to make lifetime gifts even when such gifts are made within seven years of death.

Notes:

1. Your answer should include a calculation of James’ inheritance tax saving from making the gift of property to the trust on 2 August 2013 rather than retaining the property until his death.

2. You are not expected to consider lifetime exemptions in this part of the question. (2 marks)

earlier.

What is the correct treatment of the estate income for individual income tax purposes?

A.The estate income is not taxable

B.The estate income will be taxed as occasional (ad hoc) income

C.The estate income will be taxed as other income

D.The estate income will be taxed as service income

urnal. The total fee was RMB20,000 and the publisher agreed to pay Mr Li by two instalments, one of RMB18,000 in June 2014 and the balance of RMB2,000 in August 2014. The same photos were republished by the government in a promotion brochure in August 2014 and Mr Li was paid a further fee of RMB3,000 by the government.

What is the total amount of individual income tax (IIT) which Mr Li will pay on the above incomes?

A.RMB2,492

B.RMB2,576

C.RMB2,548

D.RMB3,680

lue added tax (VAT) and enterprise income tax (EIT). In 2014, the taxpayer was charged by the tax authority with committing an act of tax evasion in 2002.

Which of the following statements is correct?

A.The taxpayer must pay the additional taxes due, plus a late payment surcharge and a penalty

B.There is no need for the taxpayer to pay any additional taxes, late payment surcharge or penalty as the statute of limitation is ten years

C.The taxpayer must pay the additional taxes, but no late payment surcharge or penalty as the statute of limitation is ten years for late payment surcharge and penalties

D.The taxpayer must pay the additional taxes and a late payment surcharge but not a penalty as the statute of limitation is five years for penalties

rty landlords, of which RMB100,000 was for the water and electricity allocated to the landlords and RMB120,000 was for the salaries of the security guards.

How much business tax (BT) should the property management company pay in June 2014?

A.RMB12,500

B.RMB7,500

C.RMB6,500

D.RMB1,500

Which of the following authorities promulgates the Tax Collection and Administrative Law?

A.The National People’s Congress

B.The State Council

C.The Ministry of Finance

D.The State Administration of Taxation

an is accrued and paid annually at the rate of 12% per annum. The relevant business tax rate is 5% and neither surcharges nor treaty relief apply.

What is the amount of enterprise income tax (EIT) the Chinese borrower needs to withhold from the annual interest paid to the overseas bank?

A.USD6,000

B.USD15,000

C.USD5,700

D.USD14,250

You should assume that today’s date is 1 March 2014.

George, a software developer, was born on 11 June 1986. He has accepted a one-year contract to update software for Xpee plc.

(1) The contract will run from 6 April 2014 to 5 April 2015, with a fee of ￡40,000 payable for the entire year of the contract. A condition of the contract is that George will have to do the work personally and not be permitted to sub-contract the work to anyone else.

(2) George will work from home, but will have to attend weekly meetings at Xpee plc’s offices to receive instructions regarding the work to be performed during the following week.

(3) George will not incur any significant expenses in respect of the contract apart from the purchase of a new laptop computer for ￡3,600 on 6 April 2014. This laptop will be used 100% for business purposes.

(4) During the term of the contract, George will not be permitted to work for any other clients. He will therefore not have any other income during the tax year 2014–15.

(5) George’s tax liability for the tax year 2013–14 was collected through PAYE, so he will not be required to make any payments on account in respect of the tax year 2014–15.

George has several friends who are also software developers. He understands that his employment status is not clear cut but that his income tax liability for the tax year 2014–15 will be the same regardless of whether he is treated as employed or as self-employed. However, George appreciates that there are advantages to being classed as self-employed.

Required:

(a) List FOUR factors which are indicators of George being treated as an employee in relation to his contract with Xpee plc rather than as self-employed. Note: You should confine your answer to the information given in the question. (2 marks)

(b) Calculate George’s income tax liability and national insurance contributions for the tax year 2014–15 if he is treated as self-employed in respect of his contract with Xpee plc. (4 marks)

(c) If George is treated as being an employee of Xpee plc instead of self-employed:

(i) Explain why his income tax liability will be payable earlier. (2 marks)

(ii) Calculate the additional amount of national insurance contributions which he personally will suffer for the tax year 2014–15. (2 marks)

tax (LAT)?

A.Company P contributed the land use right for the construction of a new factory as capital to its new subsidiary

B.Company D contributed the land use right for the construction of a shopping mall as capital to its new subsidiary

C.Company X which owned an office tower was merged by absorption with Company Y. Company X was dissolved after the merger

D.The local government transferred the land use right for the construction of a hotel to Company K