Fact of the Case - Offence & Penalty Amy Fok is a qualified professional accountant in...

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Fact of the Case - Offence & Penalty Amy Fok is a qualified professional accountant in Hong Kong. She has a master's degree in finance and currently works as a finance manager of a real estate company that is listed on Hong Kong Stock Exchange. She had an annual income of over $400,000. In her composite individual tax return (BIR 60) for the 2018/19, she applied for dependent parent allowance ("DPA") in respect of her mother, namely Susan Cheung. In the year of assessment 2019/20, Amy hired Chan, Bin and Cheung Partners as her tax representative ("the Tax Rep.") to take care of her salaries tax matters. In the same year, Amy continued to claim Susan as her dependent parent under DPA through the Tax Rep., despite Susan had already passed away in October 2018. In December 2020, the Inland Revenue Department ("the IRD") issued a Notice of Assessment ("the NoA") to Amy regarding her 2019/20 tax assessment. In the NoA, it disallowed Amy's claim for DPA because the assessor stated that Amy did not financially support Susan in the said fiscal year. Amy did not object against the NoA and she settled the tax liabilities in January and April 2021 accordingly. In May 2021, the Commissioner of Inland Revenue ("the CIR") informed Amy that additional tax under s.82A would be made against her in respect of the wrongful statement in the 2019/20 tax return, i.e., her claim for DPA in respect of Susan Cheung. Later, the IRD received submissions from the Tax Rep., who stated that Amy's 2019/20 tax return was handled by a new staff, who filled in the tax return of Amy with Susan's particulars without carefully going through Amy's information. Amy, who was in a hurry to sign the return, was also unable to discover the mistake. The Tax Rep. asked for leniency from the IRD by not raising any additional tax under s.82A against Amy. The CIR rejected the request and made an additional tax of $3,200 (equivalent to 49.54% of the amount of tax not assessed as a result of the mistake) based on the 2019/20 NoA. Amy appealed and asked for repealing the additional tax of $3,200. She further stated that she had no intention to deceive the IRD. In that appeal, Amy also disputed that the amount of additional tax was excessive. Required: Discuss critically: a) whether Amy was liable to the additional tax of $3,200; and b) whether additional tax made by the IRD was excessive. (8 marks) (12 marks) Fact of the Case - Offence & Penalty Amy Fok is a qualified professional accountant in Hong Kong. She has a master's degree in finance and currently works as a finance manager of a real estate company that is listed on Hong Kong Stock Exchange. She had an annual income of over $400,000. In her composite individual tax return (BIR 60) for the 2018/19, she applied for dependent parent allowance ("DPA") in respect of her mother, namely Susan Cheung. In the year of assessment 2019/20, Amy hired Chan, Bin and Cheung Partners as her tax representative ("the Tax Rep.") to take care of her salaries tax matters. In the same year, Amy continued to claim Susan as her dependent parent under DPA through the Tax Rep., despite Susan had already passed away in October 2018. In December 2020, the Inland Revenue Department ("the IRD") issued a Notice of Assessment ("the NoA") to Amy regarding her 2019/20 tax assessment. In the NoA, it disallowed Amy's claim for DPA because the assessor stated that Amy did not financially support Susan in the said fiscal year. Amy did not object against the NoA and she settled the tax liabilities in January and April 2021 accordingly. In May 2021, the Commissioner of Inland Revenue ("the CIR") informed Amy that additional tax under s.82A would be made against her in respect of the wrongful statement in the 2019/20 tax return, i.e., her claim for DPA in respect of Susan Cheung. Later, the IRD received submissions from the Tax Rep., who stated that Amy's 2019/20 tax return was handled by a new staff, who filled in the tax return of Amy with Susan's particulars without carefully going through Amy's information. Amy, who was in a hurry to sign the return, was also unable to discover the mistake. The Tax Rep. asked for leniency from the IRD by not raising any additional tax under s.82A against Amy. The CIR rejected the request and made an additional tax of $3,200 (equivalent to 49.54% of the amount of tax not assessed as a result of the mistake) based on the 2019/20 NoA. Amy appealed and asked for repealing the additional tax of $3,200. She further stated that she had no intention to deceive the IRD. In that appeal, Amy also disputed that the amount of additional tax was excessive. Required: Discuss critically: a) whether Amy was liable to the additional tax of $3,200; and b) whether additional tax made by the IRD was excessive. (8 marks) (12 marks)

Answer rating: 100% (QA)

a Amys Liability to the Additional Tax Amys liability to the additional tax of 3200 hinges on whethe... View the full answer