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Suen Hung Shan v Commissioner Of Inland Revenue

Judgment Cited authorities 1 Cited in 1 Precedent Map Related
Vincent
Judgment Date26 June 2020
Neutral Citation[2020] HKCFI 1322
Judgement NumberHCIA1/2020
Citation[2020] 3 HKLRD 356
Year2020
Subject MatterInland Revenue Appeal
CourtCourt of First Instance (Hong Kong)
HCIA1/2020 SUEN HUNG SHAN v. COMMISSIONER OF INLAND REVENUE

HCIA 1/2020

[2020] HKCFI 1322

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

INLAND REVENUE APPEAL NO 1 OF 2020

_____________

BETWEEN
SUEN HUNG SHAN Appellant

and
COMMISSIONER OF INLAND REVENUE Respondent

_____________

Before: Hon G Lam J in Chambers
Dates of Written Statements and Submissions: 15 April, 25 May and
15 June 2020
Date of Decision: 26 June 2020

_______________

D E C I S I O N

_______________

1. This is an application by Mr Suen, a taxpayer, for leave to appeal against the decision of the Board of Review (“Board”) in Case No B/R 48/18 dated 16 March 2020 (“Decision”).

2. The decision relates to the salaries tax assessment for the year 2013/14 raised on the taxpayer. During that year of assessment from 1 April 2013 to 31 March 2014, for the first 10 days (1 to 10 April 2013) the taxpayer had been employed by Wong & Ouyang (HK) Ltd (“W&O”), a Hong Kong company, as Resident Architect to work on a Hong Kong project. That employment (“the 2012 Employment”) was terminated with effect from 11 April 2013. The assessable income from the 2012 Employment falling within the year of assessment 2013/14 was $144,166, which included salary, leave pay, payment in lieu of notice, terminal awards and gratuities. The Board held that such income was chargeable to salaries tax.[1]

3. From 27 May 2013 onwards, the taxpayer was employed by W&O again, on a contract entered into in Hong Kong, as Senior Resident Architect for the project of Galaxy Macau (“the 2013 Employment”). The total salaries or wages he received between 27 May 2013 and 31 March 2014 were $1,092,338.

4. The taxpayer argued that he should be exempt from salaries tax for the year of assessment 2013/14. He argued that s 8(1A)(b)(ii) of the Inland Revenue Ordinance (Cap 112) (“Ordinance”) applied, which excludes from assessment “income derived from services rendered by a person who … renders outside Hong Kong all the services in connection with this employment”. He also relied on s 8(1B), which provides that:

“ In determining whether or not all services are rendered outside Hong Kong for the purposes of subsection (1A) no account shall be taken of services rendered in Hong Kong during visits not exceeding a total of 60 days in the basis period for the year of assessment.”

5. The Board found that the exemption did not apply because:

(1) The taxpayer did not render all his services outside Hong Kong under the 2013 Employment, since he provided services at a meeting at W&O’s office in Hong Kong on 27 June 2013. Even if it was an ad hoc meeting lasting for only an hour, the taxpayer did provide services.[2]

(2) The relevant question was whether the taxpayer stayed, not worked, no more than 60 days in Hong Kong.[3] In computing the number of days of visits, the Board adopted the fraction‑equals‑whole approach,[4] and did not exclude any days of annual leave, Macau public holidays, sick leave and rest days.[5] On that footing, the taxpayer’s visits to Hong Kong during the year of assessment 2013/14 exceeded 60 days.

6. The taxpayer also argued that the income from the 2013 Employment was sourced outside Hong Kong. The Board rejected this argument.[6] In coming to this conclusion, the Board had not exercised its power to summon the senior director of W&O to give evidence.[7]

7. The Board held that the taxpayer was not entitled to deduct the outgoings and expenses for his 44 visits to Hong Kong during the period.[8]

8. In the result, the Board confirmed the assessment and dismissed the taxpayer’s appeal.

9. For the purposes of his application for leave to appeal to the Court of First Instance, the taxpayer has set out in his statement made under s 69(3)(a)(ii) of the Ordinance 10 grounds for his intended appeal.

10. In the statement filed on behalf of the Commissioner of Inland Revenue (“Commissioner”) pursuant to s 69(3)(b), in addition to the substantive response to the proposed grounds of appeal, a preliminary point is taken, namely, that the taxpayer’s application is out of time.

11. Having regard to the preliminary point, I consider it appropriate to determine the application without a hearing, pursuant to s 69(3)(c)(i).

12. Section 69(3)(a)‑(c) of the Ordinance provides:

“ (3) For the purposes of an application to the Court of First Instance under subsection (2)(a) for leave to appeal—

(a) the application—

(i) must be lodged with the Registrar of the High Court, and served on the other party, within 1 month after the following date—

(A) subject to sub-subparagraph (B), the date on which the Board’s decision is made;

(B) if the Board’s decision is notified to the appellant or the Commissioner by notice in writing, the date of the communication by which the decision is notified; and

(ii) must be made by a summons supported by a statement setting out—

(A) the grounds of the appeal; and

(B) the reasons why leave should be granted;

(b) if the other party intends...

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1 cases
  • Suen Hung Shan v Commissioner Of Inland Revenue
    • Hong Kong
    • Court of Appeal (Hong Kong)
    • 7 Diciembre 2020
    ...Justice of Appeal The appellant was not represented Ms Katherine Chan GC, of the Department of Justice, for the respondent 1 Decisions [2020] HKCFI 1322, 26 June 2020 and [2020] HKCFI 1972, 24 July 2020. 2 G Lam, J’s June Decision, §14. 3 Appeal to the BoR by a taxpayer against an unsuccess......

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