ACT505 Hong Kong Taxation and Tax Planning
The Complete Exam Bible · Term 1, 2026-27ACT505 Overview
- Lingnan University
- Term 1, 2026-27
- Postgraduate accounting course
- Three-hour final examination
- Restricted open book
What this course is training you to do
Hong Kong Taxation and Tax Planning is a computation-led accounting course. The published description combines the main principles and concepts of Hong Kong taxation with the calculation of liabilities for individuals and organisations.
- Assessment shape Participation, presentation and written assignments make up the coursework half, with the examination carrying the other half.
- Core method Identify the charge and assessment period before building the base, deductions and rate calculation.
- Permitted materials The final allows the original textbook and lecturer-provided PPT notes, while exercises and other materials are excluded.
What you get in the full ACT505 Exam Bible
- 10 chapters, 43 pages — every examinable topic
- 21 original practice questions, each with a model answer in the Examination format
- 10 worked examples, solved the way ACT505 marks
- 11 computed figures, redrawn from the course’s own numbers
- Exam-morning plan for the Examination (50%) — what to revise last, where marks are lost
Free on this page: assessment table, chapter map, one worked example, key terms, FAQ. The rest is in the full exam bible.
How ACT505 is assessed
| Component | Weight | Format |
|---|---|---|
| Class Participation | 20% | Preparation, class activities, class work and answering questions |
| Assignment- Presentation | 10% | Group computation and presentation, assessed for accuracy, coverage and content, and presentation style and skills |
| Assignments- Written | 20% | Individual assignment 10% and group assignments 10% |
| Examination | 50% | Three hours, all topics, restricted open book |
The published outline lists four components totaling 100%. It publishes no component hurdle or separate pass threshold, so check the live course LMS for any later condition or change.
Assessment structure
The published components total 100%, with half of the mark in the final examination.
What other students are asking about ACT505
- Where can I find lecture notes or study guides for ACT505 at Lingnan?
- The ACT505 study guide in AskSia Library covers Hong Kong Taxation and Tax Planning in 10 chapters, with the assessment table, a chapter-by-chapter topic map, key terms and a worked example, free to read on this page.
- Is there a final exam in ACT505, and how much is it worth?
- Yes. In the offering this AskSia Library guide is built from, Examination carries 50% of the ACT505 mark; the full split is Class Participation 20%, Assignment- Presentation 10%, Assignments- Written 20%, Examination 50%.
- What does ACT505 cover on property tax scope and basis period?
- In AskSia Library's ACT505 guide, the Property Tax Scope and Basis Period chapter explains owner, Hong Kong property and the assessment year from April to March.
- What does ACT505 cover on property tax net assessable value?
- In AskSia Library's ACT505 guide, the Property Tax Net Assessable Value chapter explains consideration, premiums, bad rent, owner paid rates and the statutory deduction.
- What does ACT505 cover on salaries tax income and benefits?
- In AskSia Library's ACT505 guide, the Salaries Tax Income and Benefits chapter explains salary, bonus, housing, share options, reimbursements and employment benefits.
What ACT505 covers
Ten chapters follow the published sequence from the Hong Kong tax system through property, salaries and profits tax to personal assessment and the closing administration topics.
Hong Kong Tax System and Source Rules
who is liable, which period applies and how separate Hong Kong charges are routedClassify before calculating
The course introduces tax law through three questions: who is liable, which assessment period applies and how much is payable.
- Who is liable under each charge
- Assessment period before tax rate
- Property, salaries and profits tax routes
- Territorial source as a factual test
- Direct assessment of the taxpayer
- Legislation, practice notes and cases
Property Tax Scope and Basis Period
owner, Hong Kong property and the assessment year from April to MarchStart with the charge
Property tax applies for each year of assessment to the owner of land or buildings situated in Hong Kong and uses net assessable value as its base. The year runs from 1 April to the following 31 March.
- Owner of Hong Kong land or buildings
- April to March basis period
- Lease commencement and ending dates
- Receivable rent and cash collection
- One property, one assessment
- Boundary between property and profits tax
Property Tax Net Assessable Value
consideration, premiums, bad rent, owner paid rates and the statutory deductionUse the waterfall order
Build assessable value from consideration for the right to use the property. Deduct accepted irrecoverable consideration, then owner-paid rates, then calculate the 20% statutory deduction from the remaining balance.
- Consideration in money or money's worth
- Rent and lump-sum premiums
- Premium spread capped at 36 months
- Irrecoverable consideration and recovery
- Owner-paid rates before statutory deduction
- NAV multiplied by the standard rate
Salaries Tax Income and Benefits
salary, bonus, housing, share options, reimbursements and employment benefitsInventory the package
Salaries-tax questions combine salary, bonus, allowances, housing, share options, reimbursements, employer-paid bills and employee outgoings.
- Salary, bonus and cash allowances
- Housing and employer-provided assets
- Direct payments and reimbursements
- Share-option grant, exercise and sale
- Employment expenses kept separate
- Gross assessable income inventory
Salaries Tax Deductions and Rates
deduction limits, personal allowances, progressive bands and the standard rate comparisonKeep deductions and allowances separate
The 2025/26 course table publishes deduction maxima, personal allowances, progressive bands and the standard rate. A maximum is not automatic entitlement.
- Deduction payment and published cap
- Personal allowance eligibility facts
- Four progressive 50,000 bands
- Remainder taxed at 17%
- Standard rate comparison
- Rate table matched to year
Depreciation Allowance Schedules
opening pools, additions, hire purchase, disposals, private use and closing valuesBuild an asset register before the pools
The exercises combine opening tax written-down values, additions, hire-purchase terms, installation costs, disposals, private use and dates when assets become available.
- Opening tax written-down pools
- Qualifying asset additions
- Hire purchase cash price and finance
- Private-use adjustment
- Disposal and balancing adjustment
- Allowance and closing pool reconciliation
Profits Tax Adjustment Computations
accounting profit, item by item adjustments, tax allowances and taxpayer ratesReconcile accounting profit to the tax base
The profits-tax exercises provide accounts followed by explanatory notes.
- Accounting result as starting point
- Income source and exclusion analysis
- Expense purpose and add-backs
- Accounting depreciation reversal
- Tax depreciation allowance deduction
- Unincorporated and corporation rates
Personal Assessment Elections
separate charges, eligible transfers, losses, allowances and the final liability comparisonBuild two complete routes
Personal assessment is an election, so compute the underlying property, salaries and profits figures first. Route A totals the liabilities under separate charges.
- Eligibility to elect
- Underlying separate charge schedules
- Property and employment transfers
- Business and partnership losses
- Joint personal facts and allowances
- Final liability and saving comparison
Administration, Stamp Duty and China Tax
assessment, holdover, objection, appeal, stampable documents and wider tax scopeThree topics need three maps
Tax administration concerns Inland Revenue powers, taxpayer obligations, assessments, holdover, objections and appeals. Stamp duty begins from an instrument and asks what must be stamped, when and for how much.
- Inland Revenue powers and obligations
- Assessment and payment position
- Holdover distinguished from objection
- Objection and appeal route
- Stampable document and timing
- China individual and corporate scope
Integrated Exam Computation Method
charge, period, base, deductions, rate and reconciliation under the published exam conditionsUse six checkpoints
Every long computation can be controlled through charge, taxpayer and period, base, deductions, rate and reconciliation. Draw the required schedules before reading every narrative detail, then assign each fact to one destination.
- Charge and taxpayer identification
- Year and basis period check
- Tax base construction
- Deduction order and sign
- Rate table and taxpayer form
- Schedule transfer and reconciliation
The practical challenge is not remembering an isolated rate. It is placing every fact inside the correct charge, taxpayer and assessment period, then showing how the taxable base moves through deductions, allowances and rates.
How the chapters follow the teaching sequence
The guide begins with the Hong Kong tax system and its separate charges.
Property tax receives two chapters because the captured lecture notes provide a full scope rule, basis period, assessable-value treatment, premium spreading, bad-rent rules, owner-paid rates, statutory deduction and coordination with profits tax. Salaries tax also receives two chapters, separating the classification of remuneration and benefits from deductions, allowances and the progressive-rate comparison.
Depreciation allowances, profits-tax adjustments and personal assessment each have their own computation architecture.
Why the final topics are handled differently
The outline names administration of tax, stamp duty and China tax, but the captured files do not publish a full set of rules for those topics.
Their chapter therefore provides a rigorous retrieval and decision map without inventing deadlines, rates or detailed law. Students should populate that map from the current original textbook and lecturer PPT notes, which are also the materials permitted in the final examination.
Assessment and revision priorities
The examination is worth half of the course mark, lasts three hours and covers all topics.
It is restricted open book: the original textbook and lecturer-provided PPT notes are permitted, while exercises and other materials are not. The most valuable preparation is therefore to reproduce blank computation layouts from memory, tab the permitted materials by decision point, and practise transferring figures cleanly between supporting schedules.
Worked example · free
Compute property tax from rent, premium and owner-paid rates
- 3Build assessable value from rent and premium.
- 4Deduct owner-paid rates and the statutory deduction in order.
- 3Apply the standard rate and reconcile the result.
Key terms
- Assessable Value
- The consideration in money or money's worth payable for the right to use a property before the permitted property-tax deductions.
- Net Assessable Value
- The property-tax base after irrecoverable consideration, owner-paid rates and the statutory deduction are applied in order.
- Year of Assessment
- The tax period used to place income, deductions and rates into the correct computation.
- Territorial Source
- The principle that directs attention to the operations or asset producing income and whether that source is in Hong Kong.
- Irrecoverable Rent
- Consideration accepted as uncollectable and deducted under the property-tax sequence, with later recovery returning to assessable value.
- Statutory Deduction
- The prescribed property-tax deduction calculated after irrecoverable consideration and owner-paid rates.
- Progressive Rate
- A rate structure in which successive slices of net chargeable income are taxed at increasing percentages.
- Standard Rate
- The published flat rate used in property tax and in the relevant salaries-tax comparison.
- Tax Written Down Value
- The remaining tax value carried in a depreciation pool after qualifying movements and allowances.
- Assessable Profits
- The profits-tax base reached after reconciling the accounting result for tax adjustments and allowances.
- Personal Assessment
- An elective computation that combines eligible figures and is compared with liabilities under separate charges.
- Holdover
- An administrative route concerning payment of an assessment while the relevant conditions and dispute process are considered.
- Objection
- The formal merits challenge to an assessment, distinct from a request concerning payment timing.
ACT505 FAQ
How much is the final examination worth?
The published course outline assigns 50% to the examination. The other 50% is divided among class participation, a group presentation and written assignments, so exam preparation should not displace the assessed class and assignment work that builds the same computation skills.
What is the published examination format?
The source states a three-hour examination covering all topics. It does not publish a section count, question count or finer paper structure, so prepare the calculation methods and use the marks shown on the actual paper to allocate time.
What materials are allowed in the examination?
The course outline permits only the original textbook and PPT notes provided by the lecturer. It expressly excludes exercises and other materials. Check the live LMS before the examination in case the course publishes a later operational update.
Which tax computation should I learn first?
Property tax is the best first model because the captured notes publish its whole sequence: assessable value, irrecoverable consideration, owner-paid rates, the statutory deduction, net assessable value and the standard-rate calculation.
How should I use the rate table?
Write the year of assessment beside the table, then copy only the matching allowances, limits and rates. Progressive bands apply to successive slices, while a standard-rate or election comparison should be completed as its own route before choosing the result.
When is personal assessment useful?
It is useful only when a complete election computation produces a lower final liability than the total under separate charges. Build both routes from the same classified facts and name the loss, interest, deduction or allowance that creates any saving.
Are past examination papers included in the captured folder?
No past examination or sample final appears in the captured course folder. The exam tax-rate table is a reference artifact rather than a paper. All practice in this guide is newly authored from the question types shown in the course materials.
Questions students ask in each ACT505 chapter
- Why can I not add all receipts together first?
- Hong Kong uses separate charges with different taxpayers, bases and deductions. Adding cash receipts first destroys the distinctions needed for property tax, salaries tax and profits tax, and makes a later personal-assessment comparison impossible to audit. Instead, label each receipt with the person, activity, location, period and possible charge. Complete the source computation under that charge, then preserve its supported total. If personal assessment is relevant, transfer the completed figures into a separate comparison. This sequence keeps ownership and source visible and lets you trace any later relief back to the schedule where it began. Chapter 01 · Hong Kong Tax System and Source Rules
- Who begins the property-tax computation?
- Begin with the owner identified by the facts and the scope rule. The person who collects or benefits from rent is not automatically the taxpayer if ownership has not changed. Write an ownership timeline before calculating when the narrative includes a sale, transfer, joint interest or rent paid around a change date. Match every receipt to the relevant property and period, and distinguish the legal owner from an agent, manager or recipient. Only then build the assessable-value schedule for the correct taxpayer and basis period. Chapter 02 · Property Tax Scope and Basis Period
- What is the correct property-tax deduction order?
- Start with assessable value, deduct irrecoverable consideration, deduct owner-paid rates, then apply the 20% statutory deduction. The resulting NAV is multiplied by the standard rate. Keep each step on its own line and show the subtotal before applying the percentage. Check that any rates deduction reflects the facts about who paid it, and do not insert general repair or financing costs into this compact statutory route. A reverse bridge from the final NAV to assessable value catches a deduction used twice or taken in the wrong order. Chapter 03 · Property Tax Net Assessable Value
- Why classify benefits before calculating them?
- Different payment routes can carry different valuation and timing rules. Sorting salary, allowances, housing, reimbursements and employer-paid bills first prevents one intuitive label from controlling several legally distinct items. Build a benefits register showing payer, recipient, payment route, purpose, date, stated amount and the course rule to be applied. Keep cash remuneration apart from an employer meeting an employee expense, and isolate housing facts before valuation. The register turns a long employment narrative into auditable rows and reveals any benefit that has not yet reached the main income schedule. Chapter 04 · Salaries Tax Income and Benefits
- How do progressive bands work?
- Apply each percentage only to the slice inside its band. Reaching a higher band does not re-tax the earlier slices at the higher percentage, so preserve every marginal slice. Draw one row for every band used, record the amount of income falling within that row, then multiply by that row's rate. Sum the slice tax and compare the result with the standard-rate route using the same supported base. This layout exposes a missing band, a repeated slice or an incorrect ceiling without requiring the whole computation to be reconstructed. Chapter 05 · Salaries Tax Deductions and Rates
- Why not use accounting depreciation?
- The tax computation uses depreciation allowances and tax written-down values. Accounting depreciation may be reversed in profits tax, but it does not replace the tax pool schedule. Begin from the opening tax values supplied, classify each addition and disposal, and keep any private-use restriction visible. The resulting allowance is the figure that transfers into the profits-tax adjustment. Accounting net book value may help explain the accounts, but substituting it for a tax pool breaks both the roll-forward and the closing reconciliation. Chapter 06 · Depreciation Allowance Schedules
- Why do explanatory notes matter more than account names?
- The same heading can contain items with different sources, purposes or legal character. The detailed note supplies the facts needed to decide each adjustment and its direction. Split the disclosed total into its components and reconcile those components back to the account before applying tax treatment. For every row, state what the accounts already did, the supported tax conclusion and the resulting add-back or deduction. That sequence prevents a correct rule from producing the wrong sign and makes omissions easy to identify during review. Chapter 07 · Profits Tax Adjustment Computations
- When is personal assessment beneficial?
- Only when the completed personal-assessment liability is lower than the total under separate charges. The calculation must use the same classified facts and explain the relief producing the difference. Finish property, salaries and profits schedules first, then build both routes through final liability. Preserve the named owner or taxpayer for each originating amount and mark every transfer. A smaller intermediate base is not enough to conclude that the election helps; the answer should compare final totals, quantify the saving and identify the supported loss, deduction or allowance that creates it. Chapter 08 · Personal Assessment Elections
- Is an objection the same as a holdover?
- No. An objection challenges the assessment on its merits, while holdover concerns payment timing under the applicable conditions. Keep the routes, authorities and deadlines separate in writing. Start by naming the procedural stage and the event that triggered it, then locate the responsible person, required action, current time condition and next forum in the permitted course material. Do not borrow a deadline from a different stage or rely on an unsourced remembered number. A short process table makes the distinction visible and supports accurate retrieval during the restricted open-book exam. Chapter 09 · Administration, Stamp Duty and China Tax
- What should I write in the first minute?
- Write the tax charge, taxpayer, period and required schedules. Add headings for base, deductions, rate and final check before placing any number into the working. Scan the narrative once for ownership, source, dates and explicit instructions, and give each fact one destination. Mark any uncertain item for later rule retrieval instead of forcing it into a convenient row. This first-minute architecture reduces duplicate use, keeps supporting schedules connected to the main answer and creates a clear route for the final sign, year and transfer review. Chapter 10 · Integrated Exam Computation Method
How to study for the exam
Build a blank template for each calculation before attempting more questions. For property tax, draw the assessment-year timeline and NAV waterfall. For salaries tax, use a remuneration inventory followed by deductions, allowances and the rate comparison. For depreciation allowances, prepare an asset register and pool roll-forward. For profits tax, begin with accounting profit and give every adjustment a reason and direction.
For personal assessment, preserve the separate schedules and compare two finished liabilities. Once each template can be reproduced without notes, tab the original textbook and lecturer PPTs by the point where a rule is needed.
During revision, recompute every numerical anchor from the printed steps and keep a log of errors by type: wrong taxpayer, wrong period, wrong base, wrong deduction order, wrong rate year, sign reversal or duplicated transfer. That log is more useful than rereading a solved question because it tells you which checkpoint fails under time pressure.
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