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(Source : Information Services Department)

Jail sentence for taxpayer falsely claiming deductions of expenses of self-education and approved charitable donations


     A taxpayer was convicted on November 30 at Tsuen Wan Magistrates' Courts of making false statements in seven tax returns wilfully with intent to evade salaries tax. He was sentenced today (December 19) to eight weeks' imprisonment.

     The defendant, aged 54, is a former regional sales director of a property agency company in Hong Kong. He pleaded guilty to seven counts of evading tax, wilfully with intent, by making false statements in connection with claims for deduction of expenses of self-education and approved charitable donations in his tax returns for the years of assessment 2004-05 to 2010-11, contrary to section 82(1)(c) of the Inland Revenue Ordinance (Cap. 112) (IRO).

     The court heard that in each of his tax returns, the defendant claimed deduction of expenses of self-education in amounts ranging from $45,000 to $80,000 for the years of assessment 2004-05 to 2010-11, and approved charitable donations of $70,000, $95,000 and $120,000 respectively for the three years of assessment 2008-09 to 2010-11. The defendant's total deduction claims for expenses of self-education and approved charitable donations were $432,000 and $285,000 respectively. The aggregate of the two deduction claims amounted to $717,000.
     An investigation by the Inland Revenue Department (IRD) revealed that the defendant failed to produce any evidence in support of his expenses of self-education deduction claims. He alleged that the expenses of self-education claims were in relation to attending management seminars, private language courses, feng shui classes and more, and that he did not know such expenses were not tax deductible. For approved charitable donation claims, the defendant provided 10 donation receipts totalling $7,022 for the years of assessment 2008-09 to 2010-11 and alleged that the other receipts were lost. The IRD subsequently found that the defendant had made total donations of $7,602 for the said years. The total amount of the false deduction claims for the seven years was $709,398 and the total tax evaded was $110,057.
     The IRO provides that expenses of 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 of the IRO 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/Monday, December 19, 2016
Issued at HKT 15:15