|
Correction of error or omission
An “error
of law” occurs in the following situations:
-
Because
of ignorance of law, a taxpayer might in his tax return report some
non-taxable items. For example, a taxpayer may invoke Section 70A to claim time-apportionment on
the grounds that he omitted to do so in his tax
return.
-
Because of ignorance of law, a
taxpayer might report his business income as employment income his tax
return For example, an insurance
agent, who has no master and servant relationship with the insurance
company, reported his income under Salaries Tax. On the grounds of “error
of law”, he can invoke Section 70A to have his income re-assessed under
Profits Tax so as to get more expenses deduction.
|
An error or omission can be made by (a)
the taxpayer, (b) the Revenue, or (c) a third party.
|
The error
or omission made by or on behalf of a taxpayer must be one in a tax return
or a related statement. 'Statement' includes accounts submitted in
support of the return as well as any related correspondence.
An act
deliberately done by an Assessor in arriving at the assessment is not an
error. For example, the Assessor's disallowance of, say 50%, of entertainment
expenses in computing Assessable Profits is a judgment, not an error.
Section
70A does not apply where the return or statement was made in accordance with
the then prevailing practice. In other words, it is inapplicable where there is a change of the Revenue's practice or
where there is a new court judgment.
|
The
Revenue should issue a formal notice of rejection if it does not accept the
taxpayer's claim under Section 70A. When the taxpayer receives the notice,
he can lodge a formal objection under Section 64 of Inland Revenue Ordinance
against the notice
as if it were a notice of assessment.
If the
Revenue refuses a Section 70 A claim but does not issue a formal notice of rejection,
then the taxpayer will forfeit his right of objection ---
that means he cannot pursue his claim under Section 64 --- in that case,
the taxpayer
should phone the complaints officer via 2594 5000.
|
In
the case Sun Yau Investment Co. Ltd. v. CIR 2 HKTC 17, it was held that Section 70A
did not apply
to an estimated assessment in the absence of a tax return.
Press here for detail |
