Hong Kong Case Law: Decisions & Judgments

Topic

Termination payments

Legal area

Court

15 Jul 2021

MARK ANDREW WILSON v. COMMISSIONER OF INLAND REVENUE

Citation

[2021] HKCFI 1950
Court

Court of First Instance
Case number

HCIA5/2020

Leave to appeal was refused because no question of law with reasonable prospect of success was shown: the Board did not err in law in holding the three sums were income from employment—Sum A was an earned performance bonus/inducement tied to services in 2010, Sum B was payable under clause 12 of the Employment Letter as assessed while in employment, and Sum C was an employment-related stock valuation adjustment; the Release Agreement’s characterization did not alter the substance.
11 Mar 2020

HEATH BRIAN ZARIN v. THE COMMISSIONER OF INLAND REVENUE

Citation

[2020] HKCFI 330
Court

Court of First Instance
Case number

HCIA4/2019

The court concluded Sum D was not income from employment under section 8(1)(a) IRO because the payment arose from a separate Termination Agreement for post‑termination assistance and, on the substance of the bargain and the terms (including express provision for assistance after termination and potential conflicts), the payment was not made 'from' the prior employment; the Board's conclusion was contrary to the true and only reasonable conclusion and was disturbed on appeal.
14 Nov 2019

COMMISSIONER OF INLAND REVENUE v. POON CHO-MING, JOHN

Citation

[2019] HKCFA 38
Court

Court of Final Appeal
Case number

FACV1/2019

Applying the Fuchs analysis and the statutory language of the Inland Revenue Ordinance, both Sum D and the Share Option Gain were not chargeable to salaries tax because they were given as part of a settlement to induce the taxpayer to desist from litigation and to leave (i.e. to make him 'go away quietly'), not as rewards for past, present or future employment services; acceleration of vesting was part of that settlement and did not convert the benefits into taxable remuneration.
11 Mar 2019

POON CHO-MING, JOHN v. COMMISSIONER OF INLAND REVENUE

Citation

[2019] HKCA 303
Court

Court of Appeal
Case number

CACV94/2016

Leave to appeal to the Court of Final Appeal was granted because the question whether termination payments or benefits not paid pursuant to contractual entitlement are chargeable to salaries tax is of great general and public importance, distinct from Fuchs where payments were made under contract, and accordingly the issue should be resolved by the Court of Final Appeal; costs of the application ordered as costs in the cause.
1 Jun 2018

POON CHO-MING, JOHN v. COMMISSIONER OF INLAND REVENUE

Citation

[2018] HKCA 297
Court

Court of Appeal
Case number

CACV94/2016

Applying the Fuchs purpose test to the facts found by the Board of Review, the Court held that Sum D and the accelerated vesting that produced the Share Option Gain were not payments made as a reward for employment or pursuant to an accrued entitlement under the Service Agreement or option grants but were consideration to secure the taxpayer's agreement to resign, give covenants and avoid litigation; accordingly they were not income 'from' employment and not chargeable to salaries tax.
24 Mar 2016

POON CHO-MING, JOHN v. COMMISSIONER OF INLAND REVENUE

Citation

POON CHO-MING, JOHN v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA2/2015

Applying the Fuchs test the court concluded Sum D and the accelerated share option gains were, in substance, income from the appellant's employment. The employer lawfully terminated under contractual rights; payments were effectively replacements for bonuses and incentives earned or provided for services, not compensation for abrogation of contractual rights, and therefore chargeable to salaries tax.
10 Nov 2015

THIAW DOUDOU BADIANE v. WILLIAM E. CONNOR & ASSOCIATES LTD

Citation

THIAW DOUDOU BADIANE v. WILLIAM E. CONNOR & ASSOCIATES LTD
Court

Court of First Instance
Case number

HCLA37/2015

The Tribunal's factual finding that the Hong Kong Agreement was a sham (or was never performed) was supported by evidence and cannot be impugned; accordingly the claimant was in truth employed by the Mainland company which discharged the relevant termination obligations, and the claimant is not entitled to the termination payments claimed from the defendant.
11 May 2011

LEE NGAI MING JACKSON v. QUEST TELECOM LTD AND ANOTHER

Citation

LEE NGAI MING JACKSON v. QUEST TELECOM LTD AND ANOTHER
Court

District Court
Case number

DCCJ2586/2008

On the balance of probabilities the relationship between Mr Lee and QTL after 1 March 2007 was one of employment; the payments labelled as 'loans' were in substance salary/consideration for services and not repayable as personal loans; therefore Mr Lee was entitled to salary arrears, termination pay and reimbursement, QTL was entitled to limited telephone charge recovery, and LST owns the Source Code and is entitled to possession.
1 Feb 2011

FUCHS, WALTER ALFRED HEINZ v. COMMISSIONER OF INLAND REVENUE

Citation

FUCHS, WALTER ALFRED HEINZ v. COMMISSIONER OF INLAND REVENUE
Court

Court of Final Appeal
Case number

FACV22/2009

Sums B and C were paid to satisfy accrued contractual entitlements under clause 9(c) of the Hong Kong employment contract and thus were payments 'from' employment within the meaning of s8(1) of the Inland Revenue Ordinance; the apportionment argument failed because the employment contract was effective from 1 January 2004 and governed by Hong Kong law and there was no admissible evidence of any German severance entitlement accruing over 29 years.
19 Nov 2009

MRS. MURAD AND OTHERS v. COMMISSIONER OF INLAND REVENUE

Citation

MRS. MURAD AND OTHERS v. COMMISSIONER OF INLAND REVENUE
Court

Court of First Instance
Case number

HCIA1/2009

The taxed sums were paid pursuant to assured entitlements in the service agreement (and acknowledged in the separation agreement), not as consideration for surrender or damages; therefore they were emoluments arising from employment and assessable under s.8/ s.9 Cap.112.