F6 (HKG) Taxation - June 2016 Examiner’s Report - Specific Comments and Question Review

Aug 29, 2026

Uploaded by Eliana

June 2016 examiner’s report for F6 (HKG) Taxation outlines examination structure, coverage, and scoring emphasis. Section A uses compulsory multiple-choice questions across the syllabus, while Section B focuses on deeper understanding and application through short and longer problems, with most marks allocated to computations. Specific comments review question types, highlight common mistakes such as misunderstanding consignment profits tax principles and appeal hearing rules, and reinforce revision of all syllabus areas plus careful reading of requirements.

LanguageEnglish

CategoryExam

FormatPDF

Pages4

Reading Time10 min

AccessFree to download

General Comments

Specific Comments

Section A

Question One

Question Two

Section B

Question One

Examiner’s report F6 (HKG) Taxation June 2016 General Comments There were two sections to the examination paper and all of the questions were compulsory. Section A consisted of 15 multiple choice questions of two marks each, which covered a broad range of syllabus topics. Section B had four questions worth 10 marks each and two longer questions worth 15 marks, each testing the candidates’ understanding and application of taxation in more depth. Specific Comments Section A Section A questions aimed to provide a broad coverage of the syllabus. Almost all candidates attempted all of the questions. The following two questions are reviewed with the aim of giving future candidates an indication of the types of questions asked, guidance on dealing with exam questions and to provide a technical debrief on the topics covered by the specific questions selected. Candidates preparing for the next examination of F6 (HKG) should aim to revise all areas of the syllabus, and are advised to work through the pilot paper and the questions discussed here and in the examiner’s reports for the past diets and to carefully review how each of the correct answers were derived. Question One Designer Ltd, an Italian company manufactures furniture. Designer Ltd. Consigns furniture to Deco Ltd. for sale in Hong Kong and an inventory of this furniture is stored in Deco Ltd’s warehouse in Hong Kong. The sales made by Deco Ltd. on behalf of Designer Ltd. for the year of assessment 2015/16 amounted to $38 million. What is Designer Ltd’s profits tax liability for the year of assessment 2015/16? A. Nil B. $380,000 C. $190,000 D. $1,881,000 This question tested candidates’ understanding of the non-resident’s profits tax liability arising from sales of goods on consignment in Hong Kong. Although Designer [Ltd. is](Ltd. is) an Italian company, its profits earned from sales of furniture in Hong Kong will still be subject to tax in Hong Kong if (1) the company is carrying on business in Hong Kong and (2) the profit is sourced in Hong Kong. In ascertaining condition (1), a company will be deemed as carrying on business in Hong Kong through a ‘permanent establishment’ (PE) in Hong Kong. In this case, Deco Ltd. keeps an inventory of Designer Ltd’s furniture in Hong Kong and is authorised to agree the sales and fill the sales orders in Hong Kong on behalf of Designer Ltd. As a result, Deco Ltd. is Designer Ltd’s PE in Hong Kong (IRR 5), leading to the conclusion that Designer Ltd is deemed as carrying on business in Hong Kong. As for condition (2), as the sales are agreed and concluded in Hong Kong, the profits arising from the sales are sourced in Hong Kong. As a result, profits from the sales of the furniture in Hong Kong are subject to profits tax in Hong Kong. For convenience sake, Examiner’s report – F6 (HKG) June 2016 1 0.5%(by law, it’s 1%) of the sales proceeds would be deemed as the profits tax liability on the related sales, i.e. $38 million x 0 .5% = $190,000 . The correct answer was therefore C. A number of candidates selected answer A which was not correct. This was perhaps due to candidates failing to acknowledge that Designer [Ltd. is](Ltd. is) also deemed as carrying on business in Hong Kong through the PE ‘Deco Ltd’. Question Two What actions can the Board of Review take if an appellant or his authorised representative fails to appear before the Board of Review at the time for the hearing of an appeal? (1) Adjourn the hearing (2) Dismiss the appeal (3) Summon the appellant or his authorised representative to attend before the Board of Review (4) Hear the appeal in the absence of the appellant or his authorised representative A. 1 & 3 only B. 2 & 4 only C. 1, 2 and 3 D. 1, 2 and 4 This question tested candidates’ understanding of the hearing rules in an appeal case heard by the Board of Review. The correct answer was D but a number of candidates gave C as their answer. The difference between D an

FAQs

How is the F6 (HKG) Taxation examination structured in June 2016?

The paper has two compulsory sections. Section A contains 15 two-mark multiple-choice questions, and Section B has four 10-mark questions plus two longer 15-mark questions.

Why were profits from consignment sales subject to profits tax in Question One?

Because the non-resident company was deemed to carry on business in Hong Kong through a permanent establishment, and profits were sourced in Hong Kong where sales were agreed and concluded.

In the Board of Review hearing rules (Question Two), what makes answers differ between choices?

The difference lies in whether the Board can summon the appellant/representative (statement 3) or hear the appeal in their absence (statement 4). Many candidates expected attendance by summons and missed that a hearing without them is acceptable.

Aug 29, 2026

Uploaded by Eliana