[P6]ACCA P6一日一练

     Edmond,   a   US   resident,   has   recently   been   headhunted   for   a   position   with   a   foreign   investment   enterprise   (the
     company) by an international headhunting agency via their New York office. Edmond has been offered the job of
      Marketing Director. His employment with the company will commence on 1 January 2010, and he is in the process
     of finalising his employment contract. The proposed two-year employment contract contains the following terms:
     (1)   Basic salary: RMB 80,000 per month.
     (2)   Travel allowance: RMB 2,000 per month.
     (3)   Housing allowance: 20% of his monthly salary.
     (4)   Relocation allowance: a one-off lump sum of RMB 50,000.
     (5)   Home leave allowance: RMB 60,000 per year.
     (6)   Education subsidies for children: RMB 5,000 per month per child.
     (7)   Sick leave entitlement: 21 days in the first year, 90 days in subsequent years.
     (8)   Annual leave entitlement: 30 days per accounting year on a time pro-rata basis.
     (9)   Termination: notice of termination has to be submitted by either party not less than three months before the
           effective date.
      Edmond will move to a new residence in China. He will sign a tenancy agreement for the residence for the term of
     one year from 1 January 2010 at a monthly rent of RMB 15,000. His wife will join him in February 2010, but his
     only son has not yet decided whether to continue his studies in New York or in China.
     Required:
     (a)   Explain the basis and extent to which Edmond will be subject to individual income tax (IIT) in China, if he
           is paid according to the proposed contract.
           Note: you are not required to calculate the IIT payable in this part.                                               (9 marks)
     (b)   Advise Edmond how his employment contract might be restructured so as to reduce his individual income
           tax (IIT) liability, providing a calculation of his IIT payable for the month of January 2010 on the assumption
           that your advice is implemented.                                                                                    (7 marks)
     (c)   State whether or not any of the above facts will give rise to a stamp duty liability and if so, calculate the
           amount of duty payable.                                                                      

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