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04_Salary tax exemption - s - Unit 4 Salaries Tax Exemption...

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1 Unit 4 - Salaries Tax: Exemption
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2 LEARNING OBJECTIVES After this lecture, you should be able to: state the conditions of exclusion of employment income under s8(1A)(b) and s8(1A)(c) of the IRO understand the 60 days rule use the exemption rule applicable to seamen and aircrew apply other 8(2) exemptions understand the exemption rule for lump sum received under MPF scheme & recognised occupational retirement scheme (RORS)
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3 Exemption of Employment Income S8(1A)(b) excludes from charge if all services under the employment are rendered outside Hong Kong S8(1B) - “60 days rule” 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
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4 60 days rule those service rendered in HK during visits not exceeding 60 days NOT counted as services rendered in HK– s.8(1B) i.e. income fully exempt if: ALL services are rendered outside HK or Services are rendered in HK during visits not exceeding 60 days
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5 Conditions for 60 Days Rule Exemption (1) presence in Hong Kong must constitute a “visit” (2) services rendered must be performed during the visits (3) total period of visits in the year of assessment must not be more than 60 days Note: No exemption granted if failure to satisfy (1) (2) & (3)
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6 What Constitutes a Visit? short or temporary stay No permanent base in HK not coming to set up a permanent establishment , e.g. setting up an office total length of visits are counted no matter services performed or not (CIR v So Chak Kwong, Jack) Visits for any purpose are aggregated, not just days on which duties are performed
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7 NOT Constitutes Visit if: 1. come near the end of a year of assessment to commence a long period of residence or employment, e.g. moving to HK 2. leave Hong Kong near the beginning of the year after completion of an employment in Hong Kong 3. overseas employee comes to stay permanently in Hong Kong is not regarded as visit even they stay less than 60 days 4. employee’s work base is in HK even he/she stay less than 60 days
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8 HK employment Income is fully assessable if: ALL services are rendered in HK or Services are rendered in HK not during visits (even for 1 day) Services are rendered in HK for more than 60 days (visit or not) 60 days rule does not apply to government employees, seamen and aircrews
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9 Hong Kong Government Employees S8(1A)(b) exemption specifically excludes Hong Kong Government employees even all their services are rendered outside Hong Kong, their full employment income is taxable However, s8(1A)(c) double taxation relief still apply
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10 Income is assessable under s.8(1A)(a) only for services rendered in HK “services rendered in HK” does NOT include those services rendered in HK during visits not exceeding 60 days-- s8(1B) Foreign employment :
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11 Foreign employment i.e. Income fully exempt if: ALL services are rendered outside HK or Services are rendered in HK during visits not exceeding 60 days
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