Determine the basis periods of co-a for the years

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Reference no: EM132805774

Jack is the sole shareholder of Co-A, a company incorporated and carrying on business in Hong Kong. Co-A commenced business on 1 September 2017 and closes its accounts on 31 December each year. Co-A closed its first and second accounts on 31 December 2018 and 31 December 2019, respectively.

Jack intends to acquire all of the shares in another Hong Kong-incorporated company, Co-B from an independent seller. Co-B holds an immovable property ("the Property") in Hong Kong, which is an office building leased out for rental income.

It has been agreed between Jack and the seller that the consideration for all the shares in Co-B will be $20M. In addition, Jack will pay the seller $1 SM for an assignment of a shareholder's loan which the seller has made to Co-B. A separate assignment deed will be executed for the assignment of the shareholder's loan.

Jack has appointed Chan & Wang, a tax consultancy firm to advise the tax implications on the respective tax issues.

Required:

Problem (a) Determine, with explanation in support, the basis periods of Co-A for the years of assessment 2017/ 18, 2018/19 and 2019/20.

Problem (b) Explain with calculation the Hong Kong stamp duty implications arising from the acquisition of the shares in Co-B by Jack.

Problem (c) Explain the respective ethical considerations of Chan & Wang to be undertaken:

(i) before accepting the tax service engagement with Jack, and

(ii) during the provision of the tax services to Jack.

Reference no: EM132805774

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