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Property owners fined for failure to notify chargeability

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Two property owners were fined today (April 8) by Eastern Magistrates' Court after pleading guilty to charges of failing to inform the Commissioner of Inland Revenue in writing of their chargeability to Property Tax for the years of assessment 1997/98 to 2000/2001, contrary to section 80(2)(e) of the Inland Revenue Ordinance.

Each defendant was fined $10,000 and also further fine of $490,000, making a total fine of $1,000,000 (which represents about 290% of the total tax undercharged).

During the relevant years, the first defendant and his wife, the second defendant, were the joint owners of two properties (Property A and Property B) in Hong Kong. The defendants received rental income from letting of Property A for the years of assessment 1997/98 and 1998/99 and from Property B for the years of assessment 1999/2000 and 2000/2001. The rental income assessable to Property Tax amounted to HK$2,973,868.

The defendants were chargeable to Property Tax for the years of assessment 1997/98 to 2000/2001 in respect of the rental income. However, they did not inform the Commissioner of Inland Revenue in writing of their chargeability to tax until the Inland Revenue Department issued to them enquiry letters and subsequently the tax returns. The court was told that the couple's failure to notify chargeability had resulted in tax undercharged of HK$343,798.

The Inland Revenue Department reminded the public that every person chargeable to tax for any year of assessment must inform the Commissioner in writing that he is so chargeable not later than four months after the end of the basis period for that year of assessment unless he has already been required to furnish a tax return. A person who fails to notify chargeability without reasonable excuse shall be guilty of an offence and is liable to a maximum fine of $10,000 for each charge and a further fine of three times the amount of tax undercharged.

Ends/Thursday, April 8, 2004

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