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PRESS RELEASE

(Source : Information Services Department)

Suspended jail sentence and fine for two taxpayers convicted of falsely claiming deductions of expenses of self-education

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     A couple were convicted today (July 7) at the Kwun Tong Magistrates' Courts of evading salaries tax.

    The first defendant was convicted on nine charges of evading salaries tax. He was sentenced to two months' imprisonment, suspended for three years, and fined $90,000 ($10,000 for each charge). The second defendant was convicted on seven charges of evading salaries tax. She was sentenced to two months' imprisonment, suspended for three years, and fined $70,000 ($10,000 for each charge).

    The first defendant, aged 48, is a company's general manager. He pleaded guilty to nine counts of evading tax, wilfully with intent, by making false statements in connection with claims for deduction of expenses of self-education in his tax returns for the years of assessment 2002-03 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 2002-03 to 2010-11, the first defendant claimed deduction of expenses of self-education at the statutory ceiling of $40,000 for the years of assessment 2002-03 to 2006-07 and of $60,000 for 2007-08 to 2010-11. An investigation by the Inland Revenue Department (IRD) revealed that the first defendant failed to produce any details or evidence in support of his deduction claims for expenses of self-education. He alleged that the expenses of self-education claimed were paid for personal tuition fees related to job enhancement and that he did not know such fees were not deductible. The total amount of the false deduction claims for the nine years was $440,000 and the total tax evaded was $78,407.

    The second defendant, aged 44, pleaded guilty to seven counts of evading tax, wilfully with intent, by making false statements in connection with claims for deduction of expenses of self-education in her tax returns for the years of assessment 2002-03 to 2007-08 and 2010-11, contrary to section 82(1)(c) of the IRO.

    The court heard that the second defendant claimed in her tax returns deduction of expenses of self-education at the statutory ceiling of $40,000 for each of the years of assessment 2002-03 to 2006-07, and the amounts of $29,600 and $22,000 for 2007-08 and 2010-11 respectively. An investigation by the IRD revealed that the second defendant failed to produce any details or evidence in support of her deduction claims for expenses of self-education. She alleged that some of the expenses of self-education were private tuition fees, and that she did not know such fees were not deductible. The total amount of the false deduction claims for the seven years was $251,600 and the total tax evaded was $42,456.

    The IRO provides that expenses of self-education paid for prescribed courses or examination fees paid to specified education providers or associations 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/Tuesday, July 7, 2015
Issued at HKT 17:09

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