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Property owners convicted for tax evasion sentenced to suspended imprisonment

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Two owners of a property were each sentenced to six months of imprisonment, suspended for two years and fined a total of $1,100,000 odd for charges of tax evasion by Judge H C Wong today (October 18). The fine is equivalent to 150% of the total tax undercharged.

In passing sentence, Judge Wong said that tax evasion is a serious offence, which affected both the Government's revenue income and the general public, and immediate custodial sentence should be considered by court. The above sentence had taken into account the defendants' background, probation reports, the guilty plea, the time span of the offences and the tax undercharged that had been duly paid.

The first defendant, aged 57, had been charged with wilfully with intent to evade tax by making a false statement or entry in the Property Tax Return - Individuals in respect of the propety for the five years of assessment from 1995/96 to 1999/2000, contrary to section 82(1)(b) of the Inland Revenue Ordinance.

Her younger sister, the second defendant, aged 49, had been charged with wilfully with intent to evade tax by making use of fraud, art or contrivance to understate the rental income of the premises for the five years of assessment from 1995/96 to 1999/2000, contrary to section 82(1)(g) of the Inland Revenue Ordinance.

The Court heard that investigation by the Inland Revenue Department (IRD) revealed that the defendants received and shared the total rental income of $6.9 million from the letting of the property during the relevant five years of assessment. However, the defendants, wilfully with intent, created two sham head tenants for the property and treated part of the property's rental income as that of the said sham head tenants. Two joint name savings accounts, in name of the first defendant and each of the two sham head tenants, were operated and controlled by the first defendant to place the property's genuine rental income. The monies deposited were withdrawn by the first defendant and then shared between the defendants.

The defendants had understated the assessable value of the property by $5,947,663 in the Property Tax Return - Individuals for the five years of assessment. The resultant tax undercharged was $347,949 in total for the first defendant and $389,727 in total for the second defendant.

A spokesman for the IRD reminded members of the public that tax evasion is a criminal offence. The maximum sentence is three years of imprisonment and a fine of $50,000 for each charge, plus a further fine of treble the amount of tax undercharged.

End/Friday, October 18, 2002

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