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PRESS RELEASE

(Source : Information Services Department)

Suspended jail sentence for taxpayer convicted of falsely claiming deductions of expenses for self-education and approved charitable donations

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     A taxpayer was convicted today (November 19) at the Kwun Tong Magistrates' Courts on eight charges of evading salaries tax. He was sentenced to two months' imprisonment, suspended for three years.

    The defendant, aged 41, is a managerial staff member at a hotel in Hong Kong. He pleaded guilty to eight counts of evading tax, wilfully with intent, by making false statements in connection with claims for deductions of expenses of self-education and approved charitable donations in his tax returns for the years of assessment 2003-04 to 2010-11, contrary to section 82(1)(c) of the Inland Revenue Ordinance (Cap. 112) (IRO).

    The court heard that in each of his tax returns for the years of assessment 2003-04 to 2010-11, the defendant claimed deduction of expenses of self-education and approved charitable donations. For the years of assessment 2008-09 to 2010-11, he alleged that the expenses of self-education were paid to assist his relative's education and that the charitable donations were given to a family member to distribute to various charities. The defendant's total deduction claims for expenses of self-education and approved charitable donations for the eight years of assessment were $699,150 and $58,000 respectively.

    An investigation by the Inland Revenue Department (IRD) revealed that the defendant failed to produce any details or evidence in support of his deduction claims for expenses of self-education and approved charitable donations. The total amounts of the false deduction claims for the years of assessment 2003-04 to 2010-11 were $757,150 and the total tax evaded was $82,285.

    The IRO provides that expenses of self-education paid for prescribed courses or examination fees paid to specified education providers or associations and a donation of money to any charitable institution or trust of a public character which is exempt from tax under section 88 of the IRO or to the Government for charitable purposes are tax deductible. Documentary evidence in support of deduction claims should be retained for seven years (i.e. six years after the expiration of the relevant year of assessment). The IRD will conduct random checks on deduction claims. Taxpayers will be asked to produce supporting documents when their cases are selected for audit.

    A spokesman for the IRD reminded taxpayers that tax evasion is a criminal offence under the IRO. Upon conviction, the maximum penalty for each charge is three years' imprisonment and a fine of $50,000 plus a further fine of three times the amount of tax evaded.

Ends/Wednesday, November 19, 2014
Issued at HKT 16:04

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