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Volume 18 Second Supplement

Publication Date: Apr 2004

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DIGEST OF CASES REPORTED

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  Decision No. Download
PENALTY TAX    

incorrect returns — re-opening an issue — whether assessment excessive — whether unco-operative attitude — s 70 of the Inland Revenue Ordinance ("IRO")  

D69/03 Download D69/03 (DOC) - English Download D69/03 (PDF) - English

the appellant omitted to report 41.64% of her total income for six years of assessment from 1993/94 to 1998/99 — attempt to conceal earnings from the purview of the Revenue — submission of incorrect tax returns without reasonable excuse — imposition of additional assessments at the average rate of 73.85% of the tax undercharged — it is the basic obligation of every taxpayer to report all income to the Revenue — such basic obligation was personal to taxpayers — such obligation cannot be compromised by pretending that its non-fulfillment might be of benefit to the Revenue — claim to rely on the advice of a professional accountant as a reasonable excuse — need proof to substantiate such claim — relatively small amount of incomes received was not a reasonable excuse for their omissions — little co-operation of the appellant in the course of the Revenue's investigation — adopted a wait and see attitude even after being reminded of the basic obligation — time consuming investigation — ample justification for adopting a higher rate of additional assessments  

D40/03 Download D40/03 (DOC) - English Download D40/03 (PDF) - English

whether or not reasonable excuse for filing late returns — penalty tax was assessed regardless of whether tax was assessed and duly paid under estimated assessments raised on the appellant — penalty tax need not be restricted to compensation or commercial restitution for late payment — whether or not appellant's ability to pay penalty tax is relevant to the level of penalty assessed — whether or not 14% is well within the norm of penalty cases for persistent delays in lodging profits tax returns — whether or not good faith of appellant by submitting fairly accurate management accounts to the assessor within ten days of the due date for filing profits tax returns before any estimated assessment was issued by the assessor is a mitigating circumstance  

D67/03 Download D67/03 (DOC) - English Download D67/03 (PDF) - English
PROFITS TAX    

appeal hearing — adjournment granted once — appellant remained out of the jurisdiction — appeal hearing resumed after two years — appellant's failure to attend — no other reasonable cause — application for stay of proceedings — discretionary — purpose of staying civil proceedings pending the resolution of parallel criminal proceedings — ensure a suspect has a fair criminal trial — not to encourage him to stay away from any criminal trial — nor to protect a suspect from arrest — no reason for further stay of this appeal — s 68(2B) of the Inland Revenue Ordinance ("IRO")  

D46/03 Download D46/03 (DOC) - English Download D46/03 (PDF) - English

disposition of units in small house — whether the units were capital or trading assets  

D53/03 Download D53/03 (DOC) - English Download D53/03 (PDF) - English

real property — whether profits were capital in nature and were not assessable to profits tax — ss 2, 14, 61, 61A and 68(4) of the Inland Revenue Ordinance ("IRO") — ss 26 and 28(3) of the Buildings Ordinance ("BO") — costs — appeal obviously unsustainable — s 68(9) of the IRO  

D55/03 Download D55/03 (DOC) - English Download D55/03 (PDF) - English

real property — whether profits were capital in nature and were not assessable to profits tax — ss 2, 14, 61, 61A and 68(4) of the Inland Revenue Ordinance ("IRO") — ss 26 and 28(3) of the Buildings Ordinance ("BO") — costs — appeal obviously unsustainable — s 68(9) of the IRO  

D56/03 Download D56/03 (DOC) - English Download D56/03 (PDF) - English

real property — whether profits were capital in nature and were not assessable to profits tax — ss 2, 14, 61, 61A and 68(4) of the Inland Revenue Ordinance ("IRO") — ss 26 and 28(3) of the Buildings Ordinance ("BO") — costs — appeal obviously unsustainable — s 68(9) of the IRO  

D57/03 Download D57/03 (DOC) - English Download D57/03 (PDF) - English

real property — whether profits were capital in nature and were not assessable to profits tax — ss 2, 14, 61, 61A and 68(4) of the Inland Revenue Ordinance ("IRO") — ss 26 and 28(3) of the Buildings Ordinance ("BO") — costs — appeal obviously unsustainable — s 68(9) of the IRO  

D58/03 Download D58/03 (DOC) - English Download D58/03 (PDF) - English

royalty income — whether profits arising in or derived from business carried on in Hong Kong — apportionment of profits derived — powers of assessor under s 60 — ss 14, 15(1)(b), 59 and 60 of the Inland Revenue Ordinance ("IRO")  

D45/03 Download D45/03 (DOC) - English Download D45/03 (PDF) - English

source of profits — whether profits arising in or derived from Hong Kong — whether transaction artificial or fictitious — s 61 of the Inland Revenue Ordinance ("IRO")  

D76/03 Download D76/03 (DOC) - English Download D76/03 (PDF) - English

ss 14(1) and 68(4) of the Inland Revenue Ordinance — intention at the time of acquisition — onus of proof on the appellant to show that the intention to invest on capital asset was genuinely held, realistic and realizable — whether or not decoration expenses should be deducted. [Decision in Chinese]  

D52/03 Download D52/03 (DOC) - Traditional Chinese Download D52/03 (PDF) - Traditional Chinese

ss 2, 14(1) and 68(4) of the Inland Revenue Ordinance ("IRO") — sale of property — intention at the time of acquisition — onus of proof on the taxpayer to show that the intention to invest on capital asset was genuinely held, realistic and realizable — whether or not a quick sale of an asset at a substantial profit is per se indicative of a trading activity  

D61/03 Download D61/03 (DOC) - English Download D61/03 (PDF) - English

whether or not net commission and brokerage income from dealings on behalf of its customers of stocks traded on stock exchanges outside Hong Kong and income arising from margin facilities granted by the appellant to customers for trading on overseas stock exchanges were incomes sourced from Hong Kong — ss 14(1) and 68(4) of the Inland Revenue Ordinance ("IRO")  

D72/03 Download D72/03 (DOC) - English Download D72/03 (PDF) - English
SALARIES TAX    

dependent parent allowance — two or more persons being eligible to claim such allowance but without reaching an agreement — powers exercised by the Commissioner — s 33 of the Inland Revenue Ordinance. [Decision in Chinese]  

D51/03 Download D51/03 (DOC) - Traditional Chinese Download D51/03 (PDF) - Traditional Chinese

every employee is responsible to get himself from his home to his place of work — a fundamental rule in tax law — travelling expenses — personal and private expenditure — whether partial reimbursement from an employer of taxi fares incurred by an employee travelling in early morning hours from his home to his place of work was taxable as part of the employee's assessable income — crucial to ascertain the duty of the appellant  

D47/03 Download D47/03 (DOC) - English Download D47/03 (PDF) - English

salaried partner — whether partner or employee  

D68/03 Download D68/03 (DOC) - English Download D68/03 (PDF) - English

salaries tax is chargeable in respect of income arising in or derived from Hong Kong from any employment — source of income — the place where the services were performed is irrelevant — statutory 60 day grace period — the test to apply — "totality of facts" test — the "three factors" test as provided in the Departmental Interpretation and Practice Notes No 10 (Revised) ("DIPN 10 (Revised)") — onus of proof on the taxpayer — the taxpayer failed to prove that his employment was a non-Hong Kong source employment — time basis assessment not applicable — validity of determination — ss 8(1), 8(1A), 8(1B), 63, 64(4), 66(1) and 68(4) of the Inland Revenue Ordinance ("IRO")  

D59/03 Download D59/03 (DOC) - English Download D59/03 (PDF) - English

ss 9A, 61 and 61A of the Inland Revenue Ordinance ("IRO") — whether or not the carrying out of the services was in substance holding by him of an office or employment of profit  

D62/03 Download D62/03 (DOC) - English Download D62/03 (PDF) - English

whether a sum received by an appellant upon termination of his service was chargeable to salaries tax — reason for the payment — substantial element of the payment — a mixed purpose case — apportionment of the sum between the different elements of the payment  

D38/03 Download D38/03 (DOC) - English Download D38/03 (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 29.2.2004), please click here.

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