Two months' jail for tax evasion

PUBLISHED : Friday, 12 May, 2006, 12:00am
UPDATED : Friday, 12 May, 2006, 12:00am

Man made false claims for parents totalling $660,000

A man was jailed for two months yesterday after pleading guilty to six counts of evading salaries tax by making false statements.

Shum Chi-hung, 58, confessed in Kowloon City Court that, between 1998 and 2004, he made false statements on the dependent parent allowance (DPA) and additional dependent allowance (ADPA) six times, violating the Inland Revenue Ordinance. Shum is the first person jailed for falsely claiming concessions for parents.

The court heard that although Shum's parents were not living in Hong Kong and at his home, he claimed, either in his tax returns or in his letters to the Inland Revenue Department, that they were living with him between the 1998 and 2003 fiscal years.

Investigations by the Inland Revenue Department found that during the period, Shum's father stayed in Hong Kong for only four days and his mother for six days.

However, one of the requisite criteria for claiming DPA is that a parent must ordinarily live in Hong Kong.

The additional requirement for claiming ADPA is that a parent must live with the claimant continuously throughout the year of assessment and must not be paying the claimant in full for his or her care, either in money or in kind.

In those six years, Shum made false claims to the tune of $660,000. The total tax undercharged was $42,794.

A spokesman for the Inland Revenue Department warned the public that evading tax was a criminal offence.

On conviction, the maximum penalty for each charge is three years in jail and a fine of $50,000.

On top of that, there is a further fine equal to three times the amount of tax evaded.

The number of tax avoidance cases in the first 11 months of the 2005 fiscal year was 191, compared with 213 for the whole of the previous year.

In total, taxpayers understated $4.47 billion of earnings and profits to the Inland Revenue Department during the 2005 financial year.

The figure was significantly lower than that for the 2004 fiscal year, when the department uncovered $7.5 billion in understated earnings and profits.

Shum's case was the second this year in which a person found guilty of tax evasion was jailed.

In March, a 39-year-old property owner pleaded guilty in Eastern Court to three charges of wilfully intending to evade property tax by omitting to declare his rental income between 1997-98 and 1999-2000.

He was sentenced to two months' imprisonment and fined a total of $180,000, representing 138 per cent of the tax evaded.

But he lodged an appeal against the sentence immediately and was granted bail.