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(Source : Information Services Department)

High Court upholds tax evasion jail sentence

     The High Court today (April 21) dismissed a taxpayer's appeal against a two-month jail sentence in respect of a tax evasion conviction. The taxpayer was jailed immediately.

     The appellant, aged 49, was convicted by Kwun Tong Magistrates' Courts on July 7, 2015 of nine counts of evading salaries tax, wilfully with intent, by making false statements in connection with claims for deduction of self-education expenses 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). He was sentenced to two months' imprisonment, suspended for three years, and fined $90,000 ($10,000 for each charge). The Secretary for Justice subsequently made an application for a review of the sentence which was heard on December 4, 2015 and the appellant was sentenced to two months' imprisonment, and fined $90,000 ($10,000 for each charge) plus a further fine of $78,407 (equivalent to 100 per cent of the tax evaded). The appellant appealed to the High Court against the sentence.

     The court heard that in each of his tax returns for the years of assessment 2002-03 to 2010-11, the appellant claimed deduction of self-education expenses at $40,000 for each of the years of assessment 2002-03 to 2006-07 and $60,000 for each of 2007-08 to 2010-11. An investigation by the Inland Revenue Department (IRD) revealed that the appellant failed to produce any details or evidence in support of his deduction claims for self-education expenses. He alleged that the self-education expenses 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 IRO provides that self-education expenses 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.

     The IRD welcomes the verdict and reminds 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, April 21, 2016
Issued at HKT 17:14