Hong Kong Case Law: Decisions & Judgments

Topic

Deductibility of expenses

Legal area

Court

29 Nov 2024

FOXCONN (FAR EAST) LTD v. COMMISSIONER OF INLAND REVENUE

Citation

[2024] HKCA 1111
Court

Court of Appeal
Case number

CAMP16/2024

Leave to appeal refused because the Board applied the correct legal tests and its adverse factual findings as to the Applicant's lack of substantive offshore manufacturing role and the Applicant's onshore middleman activities were open on the evidence; the Applicant failed to show its profits were derived offshore or that the challenged expenses were deductible; there was no established inordinate delay that would annul the assessments and the Board correctly declined to decide pure public law abuse claims (remedies for delay are judicial, e.g. mandamus).
5 Jan 2024

FOXCONN (FAR EAST) LTD v. COMMISSIONER OF INLAND REVENUE

Citation

[2024] HKCFI 97
Court

Court of First Instance
Case number

HCIA3/2023

The application for leave was refused because the contested questions were predominantly challenges to the Board's factual findings rather than questions of law, Foxconn failed to show a reasonable prospect of success under section 69(3)(e), the Board's findings were not arguably perverse or unsupported by evidence, the deductions were matters of fact and evidential sufficiency, and the public law complaints lacked prospects given the failure on the substantive points.
3 Nov 2021

KWP QUARRY CO LTD v. INLAND REVENUE BOARD OF REVIEW

Citation

[2021] HKCA 1627
Court

Court of Appeal
Case number

CACV256/2017

The proposed question was not a proper question of law because it was insufficiently specific and amounted to a disguised challenge to factual findings; the applicant failed to show a reasonable prospect of success that the Board's conclusion was the only reasonable conclusion on the facts; therefore the Board was entitled to refuse to state a case and the Court of Appeal dismissed the appeal.
7 Mar 2008

CANTON INDUSTRIES LTD v. COMMISSIONER OF INLAND REVENUE

Citation

CANTON INDUSTRIES LTD v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA6/2007

Permanent quota acquisition was a once‑and‑for‑all expenditure that conferred an enduring benefit and became part of the appellant's profit‑yielding structure (fixed capital); therefore the expenditure was capital in nature and not deductible from assessable profits under the IRO
17 Jul 2007

SAME FAST LTD v. INLAND REVENUE BOARD OF REVIEW

Citation

SAME FAST LTD v. INLAND REVENUE BOARD OF REVIEW
Court

Court of First Instance
Case number

HCAL122/2006

The Board acted reasonably in refusing to state a case because the majority of the questions either sought to re-open findings of primary fact, were premised on factual findings the Board did not make, or were unclear; accordingly judicial review failed and the refusal to state a case was upheld.
7 Jun 2007

KAO, LEE & YIP (a firm) v. DONALD KOO HOI YAN AND OTHERS

Citation

KAO, LEE & YIP (a firm) v. DONALD KOO HOI YAN AND OTHERS
Court

Court of First Instance
Case number

HCA8847/1993

The defendant (Mr Koo) must account for KP's profits from BOC work during the Accounting Period; where records are missing the court may favour the beneficiary but must act reasonably; donations and profits tax paid by KP are not deductible from accountable profits; only apportioned amounts of set‑up costs and loan interest linked to the Accounting Period are deductible (set‑up $46,000; loan interest approx $42,000); partners' time attributable to the period is quantified at $3,924,000; interest is to be compounded annually at 1% above HKD prime but with no interest for 1 April 1997–31 March…
20 Dec 2006

THE COMMISSIONER OF INLAND REVENUE v. FRANCO TONG SUI LUN

Citation

THE COMMISSIONER OF INLAND REVENUE v. FRANCO TONG SUI LUN
Court

Court of First Instance
Case number

HCIA2/2006

The Court held that indemnity repayments were contingent personal contractual obligations not incurred 'in the performance' of the taxpayer's duties within the narrow meaning of s.12(1)(a); therefore they were not 'wholly, exclusively and necessarily incurred' for salaries tax purposes and the Board of Review's allowance of the deductions was set aside.
20 May 2006

COMMISSIONER OF INLAND REVENUE v. CHU FUNG CHEE

Citation

COMMISSIONER OF INLAND REVENUE v. CHU FUNG CHEE
Court

Court of First Instance
Case number

HCIA10/2005

The court held the Tribunal costs were not deductible: they were not incurred for the production of profits but related to disciplinary matters remote from the profit‑earning process, they were akin to fines/penalties recoverable under s.37 Cap.159 (with public revenue as secondary under s.39) and, on the facts, were capital in nature as payments to preserve the taxpayer's professional practice; the Board erred in law and its decision is annulled.
2 Dec 2005

NAM TAI TRADING CO LTD v. COMMISSIONER OF INLAND REVENUE

Citation

NAM TAI TRADING CO LTD v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCAL80/2004

The application was dismissed because the Commissioner lawfully applied the IRD holdover policy (DIPN 6) and reached different, reasonable conclusions for the two years based on materially different evidence of recoupment; the partial unconditional holdover and conditional holdover with TRC requirement for HK$4,420,000 were lawful under s71(2); there was no irrationality, failure to give adequate reasons, error of law or legitimate expectation warranting relief.
21 Nov 1995

THE COMMISSIONER OF INLAND REVENUE v. COSMOTRON MANUFACTURING CO. Ltd.

Citation

THE COMMISSIONER OF INLAND REVENUE v. COSMOTRON MANUFACTURING CO. Ltd.
Court

Court of First Instance
Case number

HCIA1/1995

Severance payments ordered by statute are deductible under s16(1) IRO because the employer incurred the liability as an unavoidable cost of conducting the business for the purpose of producing profits; the liability is an accrued obligation incurred in the production of profits and not incurred for the purpose of closing the business.