Tax
Services:
Pre-filing:
● Suggesting more favourable ways of paying tax
● Checking documents of income and expenses
● Tracking due dates
● Tax liability assessment
● Making the most of tax exemptions
● Macro-analysis of the tax positions of the group’s companies
● Filing salaries tax returns
● Filing corporate tax returns and preparing profits tax computations
● Preparing profit and loss account and balance sheet
● Auditing accounts
Filing：
● Filing an extension or objection
Post-filing:
Success Case 1
Solution: Upon understanding the group’s position, we discovered that the salaries of the management of all five companies were solely paid by Company A. This led to an unreasonable distribution of expenses, where Company A suffered losses and the other four saw inflated profits. After we had assessed the actual workload of the management and redistributed their salaries expense to the other four companies accordingly, the profits of the four companies were no longer overstated. Overall, the tax of the group was reduced by over HK$500,000.
Success Case 2
Solution: When handling their tax issue, we discovered that the owner and his family were paid according to estimations based on their own living expenses. As a result, some family members were underpaid and did not make optimal use of their tax allowances and reductions. On the other hand, some family members thought salaries of the major shareholders had to be higher than that of the management, thus leading to overpayments of salary. These overpayments were subject to the 17% salaries tax rate and were excluded in the calculation of the profits tax of the company at the rate 8.25%. After we had analysed the situation and given advices, salaries of all family members, i.e. employees, were readjusted to a reasonable level. The total amount of salaries tax and corporate profits tax payable was reduced by HK$300,000.
Tax Investigation
It is common for clients to receive a letter from the IRD regarding additional tax payment or even penalty during non-tax season. The letter does not necessarily say that an investigation is underway.
Services:
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Time needed:
Success Case 1
FAQ
A: The abbreviation ‘FI’ is for the internal use of the IRD for identification purpose. If you have received a letter with the abbreviation ‘FI’, it means that you are being investigated by the IRD for an understatement or misstatement of tax for the year of assessment stated in the letter.
Q: I have received a letter from the IRD requesting for a meeting. What does it mean?
A: When the IRD asks to meet with you, it means that they believe there is an understatement or a misstatement in the tax return you have submitted, and therefore ask for an explanation.
Q: According to the IRD, if the case is settled within three months, the penalty is capped at 1.5-fold. Does the three-month period start from the day the letter is received?
A: No. If you have doubts about the letter (or wish to file an objection), you can submit a document to the IRD. The IRD will meet with you after reviewing it. The three-month period starts from the day of the meeting.
Q: Why am I being investigated by the IRD?
A: The reasons for a tax investigation include:
● Long-term losses
● Signs of omission of income
● Discrepancies between expenses and the employer’s return
● Large amounts of unpaid expenses
● Income not commensurate with assets
● Recurrent late filing and non-filing of tax returns
● Round figures on accounts
Q: I have received several letters from the IRD. What should I do?
A: First, read the letters carefully to find out the year(s) of assessment in question and whether the letters are addressed to you personally or to your company. Then, contact a professional accountant for an analysis.