Landlord gets HK$1m fine for tax evasion

PUBLISHED : Tuesday, 04 September, 2007, 12:00am
UPDATED : Tuesday, 04 September, 2007, 12:00am

A Mong Kok landlord was yesterday given a four-month suspended sentence and fined more than HK$1 million for evading property tax over a five-year period.

The fine of HK$1,051,062 imposed on Lam Fuk-wa represented nearly three times the tax he had evaded between 2000 and 2005, according to the Inland Revenue Department.

The court was told that Lam was the sole owner of a shop in Argyle Street. He subdivided the property into two shops, which were referred to as Shop A and Shop B in tenancy agreements. The defendant let the two shops to two different tenants and received monthly rental through his bank accounts.

An investigation by the Inland Revenue Department revealed that Lam declared only the rental income derived from Shop A in his tax returns, and omitted the rental income received from Shop B for the years of assessment 2000-01 to 2004-05. The total amount of rental income understated was HK$2,852,500 and the resultant tax evaded was HK$390,425.

Lam pleaded guilty to five counts of omitting rental income from tax returns for the years of assessment, contrary to a section of the Inland Revenue Ordinance. He also pleaded guilty to five counts of signing tax returns without reasonable grounds for believing the same to be true, also contrary to the ordinance.

District Court Deputy Judge David Thomas suspended the jail term for two years.

A spokesman for the department yesterday reminded taxpayers that tax evasion was a criminal offence under the ordinance.

The maximum penalty for each charge is three years' imprisonment and a fine of HK$50,000 plus a further fine of three times the amount of tax evaded.

Convicted tax evasion cases have been rare in recent years. Statistics from the department showed that there was only one conviction in 2004-2005, three cases in 2005-2006, one case in 2006-2007, and three cases in the current financial year.

The department also recorded two convicted cases of profit tax evasion last year.