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Volume 18

Publication Date: Oct 2003

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DIGEST OF CASES REPORTED

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  Decision No. Download
PENALTY TAX    

appellant's failure to comply with the requirements of the notice given to him under s 51(1) of the Inland Revenue Ordinance ('IRO') - any reasonable excuse - history of additional tax - references of 100% of the tax involved as the starting point for imposition of additional tax are not intended to substitute the proper approach which is to consider whether the amount of additional tax is excessive by reference to the amount of tax undercharged - the circumstances of each particular case must be examined bearing in mind that the maximum penalty is 300% - s 82A makes no distinction between the five categories of transgressions - the exposure to treble the amount of tax undercharged is applicable to each - factors that affect the level of penalty - length and nature of the delay - unblemished record of the appellant in submitting his returns for the preceding years - the Board's comment on the penalty loading statement issued by the Revenue - an assessment at 20% of the tax involved was reasonable in the circumstances - ss 51(1), 51(8), 80(2), 82 and 82A of the IRO  

D118/02 Download D118/02 (DOC) - English Download D118/02 (PDF) - English

assets betterment statement - agreement on tax undercharged - ss 80(5) and 82A(4) of the Inland Revenue Ordinance ('IRO')  

D127/02 Download D127/02 (DOC) - English Download D127/02 (PDF) - English

failure to report part of income - reasonable excuse  

D129/02 Download D129/02 (DOC) - English Download D129/02 (PDF) - English

failure to report part of income - reasonable excuse  

D138/02 Download D138/02 (DOC) - English Download D138/02 (PDF) - English

incorrect tax return - whether the appellant can use 'carelessness' as a reasonable excuse for the provision of incorrect tax return - whether the mistake of the appellant was obvious negligence - s 82A of the Inland Revenue Ordinance - whether quantum of additional tax was excessive. [Decision in Chinese]  

D105/02 Download D105/02 (DOC) - Traditional Chinese Download D105/02 (PDF) - Traditional Chinese

salary income omitted from return - s 82A of the Inland Revenue Ordinance ('IRO'). [Decision in Chinese]  

D101/02 Download D101/02 (DOC) - Traditional Chinese Download D101/02 (PDF) - Traditional Chinese
PERSONAL ASSESSMENT    

deduction of salary of father 'employee' - loss sustained in the course of share dealing - ss 16, 17, 68(4) and 87 of the Inland Revenue Ordinance ('IRO')  

D115/02 Download D115/02 (DOC) - English Download D115/02 (PDF) - English
PROFITS TAX    

company set up to 'interpose' between Chinese suppliers and a UK company - whether carrying on business in Hong Kong - whether profits derived in Hong Kong - s 68(4) of the Inland Revenue Ordinance ('IRO')  

D109/02 Download D109/02 (DOC) - English Download D109/02 (PDF) - English

sale and purchase of a property - whether profits tax should be assessed - depends on whether the sale of a property was trading in nature - it was crucial to ascertain the intention of the appellant at the time of acquisition of the property - mere declaration of intention was of limited value - subjective intention has to be tested against objective facts and circumstances - burden of proof on the appellant - ss 14(1) and 68(4) of the Inland Revenue Ordinance ('IRO'). [Decision in Chinese]  

D130/02 Download D130/02 (DOC) - Traditional Chinese Download D130/02 (PDF) - Traditional Chinese

sale of property - intention at the time of acquisition - whether a property is a capital asset or a trading asset - s 68(4) of the Inland Revenue Ordinance ('IRO') - badges of trade  

D128/02 Download D128/02 (DOC) - English Download D128/02 (PDF) - English

sale of residential properties - whether investment or trade  

D104/02 Download D104/02 (DOC) - English Download D104/02 (PDF) - English

whether the sale of a property was trading in nature - it is crucial to ascertain the intention of the appellant at the time of acquisition of the property - the stated intention of the taxpayer was not decisive - actual intention had to be determined objectively - direct evidence of those involved at the time of the acquisition would be highly relevant - burden of proof on the appellant - incumbent on the appellant to substantiate its contention - s 68(4) of the Inland Revenue Ordinance ('IRO')  

D116/02 Download D116/02 (DOC) - English Download D116/02 (PDF) - English
PROPERTY TAX    

exemption to property tax - meaning of 'corporation' and 'business' - whether business registration certificate proves the carrying on of business - ss 2, 2(1), 5(1), 5(2), 5(2)(a), 25 and 68(4) of the Inland Revenue Ordinance ('IRO') - ss 2(1A) and 6(6) of the Business Registration Ordinance ('BRO') - costs - frivolous and vexatious and abuse of the process - s 68(9) of the IRO  

D122/02 Download D122/02 (DOC) - English Download D122/02 (PDF) - English
SALARIES TAX    

directors' fees - whether sourced outside Hong Kong  

D123/02 Download D123/02 (DOC) - English Download D123/02 (PDF) - English

home loan interest allowance - whether a question of estoppel arose on an earlier acceptance by the Commissioner that the appellant was using the property as her place of residence - definition of 'place of residence' - whether the appellant was entitled to deduct home loan interest - whether the appellant could enjoy full benefit from the home loan interest allowance - whether 'owner' under s 26E included a beneficial owner - ss 26E and 68 of the Inland Revenue Ordinance ('IRO') - onus of proving assessment excessive or incorrect on the appellant  

D108/02 Download D108/02 (DOC) - English Download D108/02 (PDF) - English

income - loans by employer subsequently waived  

D119/02 Download D119/02 (DOC) - English Download D119/02 (PDF) - English

perquisite - payment in lieu of notice by new employer - deductible expenses - payment in lieu of notice  

D124/02 Download D124/02 (DOC) - English Download D124/02 (PDF) - English

single parent allowance - re-married and living with spouse during the year of assessment - s 32(2)(a) of the Inland Revenue Ordinance. [Decision in Chinese]  

D100/02 Download D100/02 (DOC) - Traditional Chinese Download D100/02 (PDF) - Traditional Chinese

whether a sum received by the taxpayer is income derived from an 'office or employment of profit' and taxable under s 8 of the Inland Revenue Ordinance ('IRO') - the principles applicable in determining whether a payment received by an employee upon termination of his service is taxable under s 8(1) of the IRO - the label attached to the payment is not decisive - the Board does not have the review jurisdiction enjoyed exclusively by the High Court - the Board has serious doubts whether it is open in law to the Commissioner to re-open the agreement reached with other taxpayers - the agreement would prima facie be binding at common law and it would not be open to either party to renege on the agreement unless such power has been expressly reserved under the agreement - ss 8(1), 64(3) and 70 of the IRO  

D126/02 Download D126/02 (DOC) - English Download D126/02 (PDF) - English

whether income derived from Hong Kong from a source of employment - ss 8, 8(1), 8(1A) and 52(3) of the Inland Revenue Ordinance ('IRO') - Departmental Interpretation and Practice Note No 10 (Revised) ('the Practice Note')  

D125/02 Download D125/02 (DOC) - English Download D125/02 (PDF) - English

whether salaries tax is chargeable on the notional gain realized by an employee's exercise of his or her right to acquire shares at a discount offered by his or her employer - what is the relevant time in determining the amount which a person might reasonably expect to obtain from a sale in the open market - two conflicting lines of authorities - what is the time the appellant had acquired the shares - the distinction between a share certificate and a share - absence of any share certificate does not negate the acquisition of the shares - the notional sale relates to the bundle of rights which the employee obtained by virtue of his or her employment - once it is concluded that the employee did acquire rights on a particular day, he is deemed by s 9(4)(a) to have disposed of those rights - the nature of the rights (together with the restrictions attached thereto) would of course be relevant in determining the amount 'which a person might reasonably expect to obtain from a sale in the open market' - s 9(1)(d) and 9(4)(a) of the Inland Revenue Ordinance ('IRO')  

D120/02 Download D120/02 (DOC) - English Download D120/02 (PDF) - English

whether the assessment based on the proposal submitted by the appellant excessive - meaning of the words 'return' and 'statement' in s 70A of the Inland Revenue Ordinance ('IRO') - whether a compromise necessarily excludes the operation of s 70A - frivolous and vexatious appeal - order to pay costs  

D137/02 Download D137/02 (DOC) - English Download D137/02 (PDF) - English

whether the Board could or should do when the taxpayer cannot be effectively served with a notice of hearing - reasonable attempts had been made to communicate the hearing date to the taxpayer - whether the Board has the power to dismiss the appeal under s 68(2B)(c) - the Chinese version of the Inland Revenue Ordinance ('IRO') has equal status as the English version - it is incumbent upon a party who has commenced an appeal under the IRO to take active steps to prosecute the appeal - meaning of having 'failed' to attend any meeting of the Board - non-communication for four years with the Board regarding the appeal - ss 58(2), 58(3), 66(1), 68(1) and 68(2B)(c) of the IRO  

D135/02 Download D135/02 (DOC) - English Download D135/02 (PDF) - English

whether the location and source of the appellant's employment was in Hong Kong - s 8(1) of the Inland Revenue Ordinance ('IRO')  

D106/02 Download D106/02 (DOC) - English Download D106/02 (PDF) - English

whether the sum payable to the taxpayer was severance payment and should be exempt from salaries tax  

D107/02 Download D107/02 (DOC) - English Download D107/02 (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 31.8.2003), please click here.

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