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Community service order for taxpayer falsely claiming charitable donations tax deduction

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A manager convicted two weeks ago (December 7) at the Eastern Magistrates' Courts of evading salaries tax, was sentenced today (December 21) to 240 hours' community service after being remanded in custody for 14 days.

The defendant, aged 48, is a project manager. He pleaded guilty to five counts of wilfully intending to evade tax by making false statements in connection with claims for deduction of approved charitable donation in his tax returns for the years of assessment 2003-04 to 2007-08, contrary to section 82(1)(c) of the Inland Revenue Ordinance (IRO).

The court heard that in his tax returns for the five years of assessment, 2003-04 to 2007-08, the defendant claimed tax deduction of donations totalling $400,000, representing some 20% of his total salaries income.

An investigation by the Inland Revenue Department revealed that during the five years of assessment, the defendant only made two donations of $100 each. The defendant falsely claimed for deduction of approved charitable donations totalling $399,800. The total tax evaded was $16,430.

In passing the sentence, the Magistrate emphasised that tax evasion was a very serious matter. There were abundant authorities suggesting that immediate custodial sentence was the norm. However, after considering that the defendant pleaded guilty, the tax evaded had been repaid and the defendant had been remanded for 14 days, he sentenced the defendant to 240 hours of community service.

The IRO provides that donations of money made to tax-exempt charities or to the Government for charitable purposes are tax deductible. Donation receipts should be kept for seven years. The department will conduct random checks on donation claims. Taxpayers will be asked to produce supporting receipts when their cases are selected for audit.

A spokesman for the department reminds taxpayers to file correct tax returns. Tax evasion is a criminal offence. Making a false statement in a return in connection with a claim for any deduction or allowance is an offence under the IRO. The maximum penalty for each convicted offence is three years' imprisonment and a $50,000 fine, plus a further fine equivalent to three times the amount of tax evaded.

Ends/Tuesday, December 21, 2010

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