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Volume 17 First Supplement

Publication Date: Jan 2003

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DIGEST OF CASES REPORTED

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  Decision No. Download
PENALTY TAX    

taxpayers are obliged to submit in their returns all income they received from their employments - obligation to report one's earnings is personal to the taxpayer - delegation of such obligation is at the risk of the taxpayer - attempt to conceal earnings from the purview of the Revenue - submission of incorrect tax returns without reasonable excuse - imposition of additional tax assessments at the average rate between 66% and 74% - a norm of 100% of the tax underpaid - s 82A(4) of the Inland Revenue Ordinance ('IRO')  

D22/02 Download D22/02 (DOC) - English Download D22/02 (PDF) - English

understating income - whether penalty excessive  

D166/01 Download D166/01 (DOC) - English Download D166/01 (PDF) - English

understating income - whether penalty excessive  

D168/01 Download D168/01 (DOC) - English Download D168/01 (PDF) - English

understating profits - whether penalty excessive  

D171/01 Download D171/01 (DOC) - English Download D171/01 (PDF) - English

whether a reasonable excuse for omitting income - failure to disclose income and share option from company - duty to report the correct amount of income - whether quantum of additional tax excessive - ss 68 and 82B of the Inland Revenue Ordinance ('IRO') - unmeritorious appeal - order to pay costs  

D3/02 Download D3/02 (DOC) - English Download D3/02 (PDF) - English
PROFITS TAX    

extension of time - delay in submitting grounds of appeal - s 66(1) and 66(1A) of the Inland Revenue Ordinance ('IRO') - real property - whether the gains arising from the disposal of a property were liable for profits tax  

D7/02 Download D7/02 (DOC) - English Download D7/02 (PDF) - English

locality of profit - whether the taxpayer was a manufacturer - whether the opening of letters of credit and placing of orders were relevant and crucial factors in determining the source of profits in question - whether the preponderance of activities was concluded outside Hong Kong  

D172/01 Download D172/01 (DOC) - English Download D172/01 (PDF) - English

real property - fail to prove the 'stated intention' was in fact held - s 68(4) of the Inland Revenue Ordinance ('IRO') - costs - appeal obviously unsustainable - s 68(9) of the IRO  

D11/02 Download D11/02 (DOC) - English Download D11/02 (PDF) - English

real property - whether the gains arising from the disposal of property were liable for profits tax - ss 2, 14(1) and 68(4) of the Inland Revenue Ordinance ('IRO')  

D173/01 Download D173/01 (DOC) - English Download D173/01 (PDF) - English

real property - whether the gains arising from the disposal of property were liable for profits tax - whether the commission paid deductible - s 68(4) of the Inland Revenue Ordinance ('IRO')  

D12/02 Download D12/02 (DOC) - English Download D12/02 (PDF) - English

sale of property - whether the profits derived from the sale of the houses were capital in nature - ss 2, 14(1) and 68(4) of the Inland Revenue Ordinance ('IRO') - onus of proof on the appellant - unsustainable appeal - order to pay costs  

D28/02 Download D28/02 (DOC) - English Download D28/02 (PDF) - English

selling of industrial building - balancing allowance - moneys - s 35 of the Inland Revenue Ordinance ('IRO')  

D26/02 Download D26/02 (DOC) - English Download D26/02 (PDF) - English

whether profits are wholly derived outside Hong Kong - whether profits are derived partly from outside Hong Kong and be apportioned in that only those profits which are derived in Hong Kong should be taxed - the broad guiding principle is that one should look to see what the taxpayer has done to earn the profits in question and where he has done it - focus on what the taxpayer instead of what other person or entity has done - question of source is a practical matter of fact - must have regard to the whole of the circumstances - apportionment is not permissible - s 14 of the Inland Revenue Ordinance ('IRO')  

D20/02 Download D20/02 (DOC) - English Download D20/02 (PDF) - English

whether profits on the gains realised from disposal of listed securities chargeable to profits tax - ss 2, 14(1) and 68(4) of the Inland Revenue Ordinance ('IRO') - whether or not short term speculation - loss cannot be deducted until it is realised  

D1/02 Download D1/02 (DOC) - English Download D1/02 (PDF) - English

whether the sale of a property was trading in nature - definitions of 'trade' and 'trading asset' are well settled - necessary to ascertain the intention of the taxpayer at the time of acquisition of the property - mere declaration of intention is of limited value - subjective intention has to be tested against objective facts and circumstances - a quick sale of an asset at a substantial profit is per se indicative of a trading activity - no supporting documentary evidence - the circumstances and facts of the case cast doubt on the veracity of the taxpayer - burden of proof on the taxpayer - ss 2, 14(1) and 68(4) of the Inland Revenue Ordinance ('IRO')  

D13/02 Download D13/02 (DOC) - English Download D13/02 (PDF) - English

whether the taxpayer has changed its intention and has embarked upon a trade or conduct in the nature of trade in the redevelopment and disposal of the properties - intention may change - an asset hitherto held as a capital investment can by reason of a change in intention be turned into a trading asset - making of a real profit - whether the profit is a realization of capital investment or a trading profit - description and classification of properties in the company's accounts, annual reports or the public documents are highly significant - not much weight on hearsay evidence - clear expression of intention in the public statements of the holding company of the taxpayer - the failure of the relevant chief executive officer or chairman or the then directors of the taxpayer to give evidence on appeal - burden of proof on the taxpayer - ss 14 and 68(4) of the Inland Revenue Ordinance ('IRO')  

D21/02 Download D21/02 (DOC) - English Download D21/02 (PDF) - English
PROPERTY TAX    

net assessable value - management fee - s 5(1A) of the Inland Revenue Ordinance ('IRO')  

D17/02 Download D17/02 (DOC) - English Download D17/02 (PDF) - English
SALARIES TAX    

computation of gain arising from the exercise of right to acquire shares - ss 9(4)(a) and 68(4) of the Inland Revenue Ordinance ('IRO')  

D6/02 Download D6/02 (DOC) - English Download D6/02 (PDF) - English

employment - source of income - ss 8(1), 8(1A), 8(1B), 61, 68(4) and 70 of the Inland Revenue Ordinance ('IRO') - costs - frivolous and vexatious - s 68(9) of the IRO  

D10/02 Download D10/02 (DOC) - English Download D10/02 (PDF) - English

employment - source of income - whether liable to salaries tax - s 8(1), 8(1A) and 8(1B) of the Inland Revenue Ordinance ('IRO')  

D15/02 Download D15/02 (DOC) - English Download D15/02 (PDF) - English

home loan interest deduction - home purchase loan scheme - s 26E of the Inland Revenue Ordinance ('IRO')  

D5/02 Download D5/02 (DOC) - English Download D5/02 (PDF) - English

location and source of employment - whether all the services are rendered outside Hong Kong - no provision for apportionment under the Inland Revenue Ordinance ('IRO') - artificial employment - whether the impugned transaction is commercially unrealistic - 'visits' - imposition of additional salaries tax assessments - ss 8(1), 8(1B), 61 and 68(4) of the IRO  

D25/02 Download D25/02 (DOC) - English Download D25/02 (PDF) - English

single parent allowance - predominant care - s 32 of the Inland Revenue Ordinance. [Decision in Chinese]  

D169/01 Download D169/01 (DOC) - Traditional Chinese Download D169/01 (PDF) - Traditional Chinese

whether acquisition of shares under a share option scheme chargeable to salaries tax - whether the person rendered services in the year of exercise of option relevant - additional salaries tax assessment - ss 8, 9 and 68(4) of the Inland Revenue Ordinance ('IRO')  

D4/02 Download D4/02 (DOC) - English Download D4/02 (PDF) - English

whether certain amount of a loan falls within the 'home loan' definition of s 26E of the Inland Revenue Ordinance ('IRO') - unreasonable to treat the full amount of a subsequent loan as a home loan given the amount of that subsequent loan was in excess of the purchase price of the property and the outstanding principal of the original loan - unreasonable to treat a subsequent loan as having replaced the original loan at the original rate of interest - taxation is assessed on an annual basis - no justification in law for granting the home loan interest deduction by adopting historical facts - s 26E of the IRO  

D18/02 Download D18/02 (DOC) - English Download D18/02 (PDF) - English

 

Note: The latest position of unsettled appeals is shown in either (a) Table of Appeals to Court of First Instance or (b) Table of Appeals to Court of Appeal/Court of Final Appeal. When the final outcome of an appeal is known, the position is set out in either table and will disappear in the next issue of Board of Review Decisions.

To view "Table of Appeals to Court of First Instance/Court of Appeal/Court of Final Appeal" (position as at 30.11.2002), please click here.

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