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Taxpayer jailed for false claims of dependent parent allowances

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A taxpayer convicted today (May 11) at Kowloon City Magistrates' Court of evading salaries tax has been jailed for two months.

The defendant, aged 58, pleaded guilty to six charges of wilfully, with intent, evading tax by making false statements in connection with claims for Dependent Parent Allowances (DPA) and Additional Dependent Parent Allowances (ADPA) under the Inland Revenue Ordinance (IRO) for the years of assessment 1998/99 to 2003/04, contrary to section 82(1)(c) of the IRO.

The court heard that the defendant made the relevant claims either in his tax returns or in his letters to the Inland Revenue Department (IRD) for the years of assessment 1998/99 to 2003/04. In his returns or letters, he made false statements that his parents were living with him continuously throughout the years of assessment in question. In accordance with statements made in the returns and the letters, allowances were granted to the defendant in respect of his parents.

Departmental investigations revealed that the defendant's parents were not ordinarily living in Hong Kong at all material times. During the six years of assessment 1998/99 to 2003/04, the defendant's father stayed in Hong Kong for only four days and his mother for only six days. However, one of the requisite criteria for claiming DPA under the IRO was that the parent must ordinarily reside in Hong Kong. The additional requirement for claiming ADPA is that the parent must be residing with the claimant continuously throughout the year of assessment and the parent must not be paying the claimant in full for his or her care, either in money or in kind.

For the six years of assessment 1998/99 to 2003/04, the defendant had made false claims of $330,000 for DPA and $330,000 for ADPA. The total tax undercharged was $42,794.

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

Ends/Thursday, May 11, 2006

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