powerpoint%20Chapter%2002%20-%20salaries%20tax%20%28scope%29

powerpoint%20Chapter%2002%20-%20salaries%20tax%20%28scope%29...

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Unformatted text preview: (year 11/12) 14 th edition 1 Chapter 2 Salaries Tax : Scope of Charge Key points :- 1. Scope of charge 2. Locality of employment 3. Locality of office 4. Locality of Pension 5. Exempted income 6. Recognized retirement schemes (year 11/12) 14 th edition 2 Scope of charge S. 8 IRO Salaries tax is charged on every person in respect of his income arising in or derived from HK from An office (Company director/secretary) Employment (other cases) Any pension (deferred income) (year 11/12) 14 th edition 3 Employment (I) Basic test : to look at the location of employment ( NOT the place of work) Even the taxpayer has rendered some of his duties outside HK he is still chargeable to salaries tax for his Total Income There have been many BoR cases on this issue ( source of employment income ) The BoR adopted the totality-of-facts test . --- No single factor determines the case. (year 11/12) 14 th edition 4 Employment DIPN 10 As a result of Goepfert case, IRD accepts that employment is located outside HK ( non-HK employment ) if (1) contract of employment enforceable outside HK (2) The employer is resident outside HK (3) Remuneration is paid to him outside HK The second factor is more important IRD may look further other factors BOR still preferred totality-of-facts test D40/90 D59/03 (year 11/12) 14 th edition 5 BoR s Position Considering the 3 factors is only a practice of IRD In fact BoR still considered that the whole thing is a practical, hard matter of facts and ALL relevant facts must be take into account (year 11/12) 14 th edition 6 Contract negotiated and concluded A taxpayer has to provide information to IRD including Where and when the negotiation took place The persons taking part in the negotiation The matters discussed The terms agreed etc (year 11/12) 14 th edition 7 Residence of employer Case law rules that the residence of a company is where its central management and control is exercised In D32/07 the taxpayer was held HK employment as his employment was in HK and was interviewed by key personal in HK and 27 out of 30 directors of the employer had their residence in HK In D2/84, a person was employed by a branch of a multinational company and it was held that the location was IN HONG KONG (year 11/12) 14 th edition 8 Employment example 1 A HK manufacturer has established a factory in China and has recruited local workers there --- The source of the local workers wages is non-HK A foreign employer set up a branch in HK and recruited employees in HK to work for that branch --- The employees would be treated as having a HK employment (year 11/12) 14 th edition 9 Assignment/Secondment The main point is that we need to determine who is the real employer . The following points may be relevant:- (1) the contract of employment with the different employers. D67/89 and D55/91....
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This note was uploaded on 09/29/2011 for the course ACCT 3161 taught by Professor Kwong during the Spring '11 term at CUHK.

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powerpoint%20Chapter%2002%20-%20salaries%20tax%20%28scope%29...

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