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(Source : Information Services Department)

Community service order and fine for taxpayer convicted of falsely claiming deductions of expenses for self-education and approved charitable donations


    A taxpayer was convicted on June 25 at the Shatin Magistrates' Courts on six charges of evading salaries tax. He was sentenced today (July 17) to 240 hours' community service and fined $180,000, equivalent to about 230 per cent of the tax evaded.

    The defendant, aged 49, is a sales representative of a multinational company. He pleaded guilty to six 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 2005-06 to 2010-11 and 2007-08 to 2010-11 respectively, 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 2005-06 to 2010-11, the defendant claimed deduction of expenses for self-education at the statutory ceiling. For the years of assessment 2005-06 and 2006-07, the defendant claimed that he had paid course fees for some master degrees provided by the University of Hong Kong School of Professional and Continuing Education (HKU SPACE). The defendant's total deduction claims of expenses for self-education for the six years of assessment was $320,000. The defendant also claimed deduction of approved charitable donations totalling $131,000 for the years of assessment 2007-08 to 2010-11.

    An investigation by the Inland Revenue Department (IRD) revealed that the defendant had not enrolled in or paid for any course at HKU SPACE during 2005-06 and 2006-07 and that he failed to produce any details or evidence in support of his deduction claims of expenses for self-education and approved charitable donations for 2007-08 to 2010-11. The total of the false deduction claims for the six years was $451,000 and the total tax evaded was $78,670.

    The IRO provides that expenses for 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 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/Thursday, July 17, 2014
Issued at HKT 16:15