2014 Self reading materials - Important cases

After the shipment was made directly from the

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Unformatted text preview: ders from overseas The sub-agents purchasers & transmitted them to the principal who would fulfill them principal after acceptance. after The shipment was made directly from the principal to The principal the purchasers purchaser CIR v International Wood Products Ltd CIR Held: The work done by the overseas subThe work overseas agents was vital to the generation of the commission & commission The commission was derived outside The HK HK CIR v. Hang Seng Bank (1990) PC CIR The 1st case on “source of trading profits” decided by the Privy Council (PC) (the former court of final appeal) (PC) Facts: – T carried on business in HK & had carried no overseas branches no Hang Seng Bank case Hang – T acquired a large quantity of foreign acquired currencies from depositors in HK currencies – T used the funds to purchase & sell used bonds, securities & other securities in London & Singapore London Hang Seng Bank case Hang Held: Profits or losses on trading in marketable securities Profits marketable arose in the markets where they were traded markets traded The profits in question were held not taxable The not Now, profits from sale of certificates of deposits & Now, bills of exchange by financial institutions may be taxable under s.15 (1)(l) (enacted after the years of assessment to which this case related) assessment Significance of Hang Seng Bank case Hang Reaffirms the 2-limb approach under s.14 i.e. Reaffirms – merely carrying on a business in Hong Kong is not merely enough to subject the profits to tax, – the profits concerned must have a Hong Kong source the before the same is taxable before Provides a broad guiding principle and guidelines Provides for determining the source of different types of income income Hang Seng Bank case Hang PC: The broad guiding principle for PC: determining the locality of profit is “one determining one looks to see what the the taxpayer has done to earn the profits in question”. done ”. Hang Seng Bank case Hang General rules for the determination of source as follow...
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