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Suspended jail sentences for property owners over tax evasion

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A couple, who owned Property A and Property B for letting purposes, were convicted at the Kowloon City Magistrates' Court today (June 22) of evading Property Tax. The first defendant was sentenced to two months' imprisonment, suspended for two years, fined $50,000 for each count of five charges making a total fine of $250,000. His wife, the second defendant, was sentenced to two months' imprisonment, suspended for two years and fined a total of $200,000, or $50,000 on each of four charges.

The first defendant pleaded guilty to five counts of charges of wilfully with intent to evade tax by making a false statement or entry in Tax Returns for the years of assessment 1997/98 to 2001/02, contrary to Section 82(1)(b) of the Inland Revenue Ordinance (IRO).

The second defendant pleaded guilty to four counts of charges of wilfully with intent to evade tax by making a false statement or entry in Tax Returns for the years of assessment 1998/99 to 2001/02.

The court heard that the defendants let their respectively owned Property A and Property B. The couple received their monthly rental through their respective personal bank accounts. Investigation by the Inland Revenue Department (IRD) revealed that the couple had understated, in their tax returns, nearly half of their rental income. The first defendant had understated the rental income from Property A by $1,234,000 in total for the five years of assessment, while the second defendant had understated the rental income from Property B by $427,200 for the four years of assessment. The resultant total tax undercharged was $146,240 for the first defendant and $46,052 for the second defendant.

An IRD spokesman reminded people that tax evasion was a criminal offence under the IRO. On conviction, the maximum sentence is three years' imprisonment and a fine of $50,000 on each charge, plus a further fine equivalent to three times the amount of tax evaded.

Ends/ Wednesday, June 22, 2005