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Many people started worrying when they received a letter from Inland Revenue Department. Before freaking out, you should first check the file number on the upper left corner of the letter. They mostly starts from 4A, 4B, 4C.  With this file number it shows IRD opened the tax audit and investigation file regarding to your company.

Inland Revenue Department Investigation focus on 3 major categories:

• Tax investigation – Inland Revenue Department is preforming a very serious case and taxpayer will be investigated on all years under concern and potentially sued for criminal prosecution
• Field audit – most cases are field audits, using projection method based on one year results
• Anti-avoidance – preventing taxpayers from using aggressive tax avoidance schemes

How to interpret the Inland Revenue Department file number?

In fact, the file number will actually show a lot of important information, such as severity, investigation nature and so on

4B8-A246810-ABC(37)

• 4B8 represents the taxpayer case as a criminal prosecution group and the general Revenue Department will require taxpayers and legal representative to attend the meetings
• 4C6 / 4C7 represents taxpayer cases as anti-tax avoidance groups, and the common case is that taxpayers use past aggressive tax avoidance practices
• Second subdivision of A123456，
  • A represents Anti-avoidance、
  • B represents Tax investigation、
  • C represents Field audit
• The last part (37) represents the Floor of Inland Revenue Tower:
  • 37/F criminal prosecution case
  • 10/F Field audit
  • 35/F Tax investigation and Field audit

Inland Revenue Department will normally take about three months to two years, depending complexity of your case . If the taxpayer can fulfill required information, then IRD will closed the case accordingly.​

For further information, please contact us

You may also read: Centre O  ANNUAL SERVICE FEE OF ACCOUNTING, AUDITING AND TAX FILING

Donations qualified for tax-exempt charities or charitable purposes can be deducted. You can have options to claim from your net assessable income under salaries tax, assessable profits under profits tax and total income under personal assessment. Here you can get some brief idea about these deductions.

Eligibility for Deduction

You may claim a deduction for a donation of money to any approved charity under section 88 of the Inland Revenue Ordinance or to the Government for charitable purposes. You can also claim a deduction for any approved charitable donation made but not claimed by your spouse.

Amount of Tax Allowance

The whole deduction of approved charitable donations cannot be less than $100. The aggregate deduction shall not exceed 35% of your income after allowable expenses and depreciation allowances or assessable profits. If you have more than one source of income and you have elected for personal assessment, the unused portion of approved charitable donations under a tax type (such as profits tax) may be deductible under personal assessment. Last but the least, it must be a voluntary donation and in monetary term.

Donations Not Accepted as Tax Deductions

Not all payments to tax-exempt charities are deductible.  The following are not the examples of payments allowable donations:

• Payments for lottery or raffle tickets;  admission to film shows or charity shows; grave spaces
• Payments made for services such as saying prayers or the reservation of a space for ancestral worship
• Purchase of goods in bazaars
• Payments made to a church, a tax-exempt charity, through dropping cash in the donation bag without donation receipt.

Lodging a Claim for a Deduction

To lodge a claim, you should enter the total amount of approved charitable donations made during the relevant year of assessment in your Tax Return – Individuals (BIR60). This donation can be claim once.

For more information, please contact us 

You may also read:http://centreo.hk/what-to-do-when-i-receive-profit-tax-return-form/