Decision No
 

PENALTY TAX -
 

submission of incorrect tax returns for four years of assessment without reasonable excuse - standard practice to use as a starting point penalty equivalent to 100% of the tax underpaid - s 82A of the Inland Revenue Ordinance ('IRO')
 

submission of incorrect tax returns and failure to file any tax return for several years of assessment without reasonable excuse - serious case of understatement - repeat offender - the weight to be attached to a relevant factor depends on the facts of each particular case - the degree of lateness was the primary consideration for a late but correct return - 100% is the appropriate percentage for cases where the taxpayer has filed no return for a number of years - no reason to restrict citation of authorities to cases reported in the past four years as long as it is relevant - maximum penalty was 300% of the amount of tax undercharged or which would have been undercharged - penalty imposed ranged from 106.7% to 150% of the tax undercharged - ss 51(4)(a), 68(4), 82A, 82B(2)(c) and 82B(3) of the Inland Revenue Ordinance ('IRO')
 

whether a reasonable excuse for omission in returns - whether risk of offence being repeated factor for reduction - least serious category for additional tax
 

accounting adjustment - whether error - managing fee - whether having commercial basis - s 70A of the Inland Revenue Ordinance ('IRO')
 

property - whether investment or trade
 

property - whether for the purpose of trade
 

whether decoration expenses deductible. [Decision in Chinese]
 

real property - whether the gains arising from the disposal of properties were liable for profits tax - ss 2, 14(1) and 68(4) of the Inland Revenue Ordinance ('IRO')
 

sale of property - whether profits derived from the sale of the property assessable to profits tax - intention at the time of acquisition - whether previous sales transactions indicative of trading intention - whether financial ability as sole factor to test the trading intention. [Decision in Chinese]
 

intention at the time of purchase - whether or not subsequent purchase relevant to determining the intention - s 68(4) of the Inland Revenue Ordinance ('IRO') - onus of proof on the taxpayers
 

whether the sale of a property was trading in nature - absence of taxpayers in the hearing - three options available to the Board under such circumstances - ss 68(2B) and 68(2D) of the Inland Revenue Ordinance ('IRO')
 

single parent allowance - ss 2(3), 32(1), 32(2) and 68(4) of the Inland Revenue Ordinance ('IRO')
 

property agent - whether independent contractor carrying on his own business
 

s 8(1) of the Inland Revenue Ordinance ('IRO') - two-contract arrangement - whether an employment income arose in or was derived from Hong Kong - s 61A of the IRO - whether the Board a proper forum to consider the refusal to accept late objection - s 9(1)(d) of the IRO - whether the exercise of share option is liable to tax
 

income - lump sum received from employer on cessation of employment - ss 8(1), 9(1)(a), 11D and 68(4) of the Inland Revenue Ordinance ('IRO') - rental allowances - ss 8(1), 9(1)(b), 9(1)(c), 9(1A), 9(2), 61 and 68(4) of the IRO
 

employment - source of income - whether liable to salaries tax - ss 8(1), 8(1A), 8(1B) and 68(4) of the Inland Revenue Ordinance ('IRO') - costs - frivolous and vexatious and abuse of the process - s 68(9) of the IRO
 

failure to report additional earnings - whether or not employer's agreement to pay tax for the taxpayer relieved the taxpayer of his responsibility to pay tax on his earnings - s 68(4) of the Inland Revenue Ordinance ('IRO') - onus of proof
 

whether the long service payment forms part of the gratuity payment - ss 31V and 31Y of the Employment Ordinance ('EO') - whether long service payment should be exempted from salaries tax under the EO
 

whether 'prevented' from giving the requisite notice of appeal - what are the conclusive factors in determining the location of an employment - the 60-day rule - ss 8(1)(a), 8(1A)(b)(ii), 8(1A)(c), 8(1B), 66(1A) and 68(4) of the Inland Revenue Ordinance ('IRO')
 

whether a sum was severance payment - a sum paid to the taxpayer on termination of his employment does not necessarily follow that the amount cannot be liable to salaries tax - test for salaries tax liability was whether the sum arose from the employment for services past, present or future - whether ex gratia payment or 'gratuity' - whether arose from the employment - whether being made for past services - an extra emolument paid upon the conclusion of a contract of employment - ss 8(1) and 9(1) of the Inland Revenue Ordinance ('IRO')