WEDNESDAY, AUGUST 2, 1978
TAX EXEMPTION FOR RETIREMENT BENEFITS SUGGESTED
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THE SENIOR UNOFFICIAL MEMBER OF THE LEGISLATIVE COUNCIL, THE HON. SIR SZE-YUEN CHUNG, ASKED THE GOVERNMENT TO EXEMPT FROM TAX THE RETIREMENT BENEFITS RECEIVED BY WORKERS, WHETHER OR NOT THE RETIREMENT SCHEMES COVERING THEM ARE APPROVED BY THE COMMISSIONER OF INLAND REVENUE.
AT PRESENT ONLY THOSE BENEFITS GIVEN OUT UNDER APPROVED SCHEMES ARE TAX FREE.
SIR SZE-YUEN RAISED THIS SUBJECT AT AN ADJOURNMENT DEBATE TODAY AND WAS SUPPORTED IN HIS REQUEST BY FOUR OTHER UNOFFICIALS.
APPROVAL GIVEN TO RETIREMENT SCHEMES HAS CONSEQUENCES FOR EMPLOYERS. THEY ARE GIVEN BASIC TAX RELIEF ON ANNUAL CONTRIBUTIONS MADE TO THE SCHEMES, SUBJECT TO A MAXIMUM OF 15 PER CENT OF THE TOTAL EMOLUMENTS OF THE INDIVIDUAL EMPLOYEES CONCERNED.
SIR SZE-YUEN SAID THAT WHILE THE INLAND REVENUE (RETIREMENT SCHEME) RULES GOVERNING THE APPROVAL OF RETIREMENT SCHEMES WERE VERY FAIR, THE COMMISSIONER OF INLAND REVENUE HAS IMPOSED, ON TOP OF THESE RULES, CERTAIN ADMINISTRATIVE CONDITIONS, ONE OF WHICH HAS CAUSED TREMENDOUSLY UNFAIR SUFFERING TO EMPLOYEES.+
+THE RULES, AS APPROVED BY THIS COUNCIL, DO NOT STIPULATE THAT AN APPROVED RETIREMENT SCHEME MUST BE FUNDED AND ADMINISTERED BY TRUSTEES OR A TRUSTEE CORPORATION. NEVERTHELESS, WHERE THE FUNDS OF A SELF-ADMINISTERED SCHEME ARE INVESTED BY THE MANAGEMENT IN THE COMPANY'S OWN BUSINESS, APPROVAL OF THE SCHEME WILL, AS THE DEPARTMENT'S OWN INFORMATION PAMPHLET PUTS IT, ALMOST INVARIABLY BE WITHHELD'.+
HE SAID IT WAS THIS ADMINISTRATIVE AND DISCRIMINATORY DECISION OF THE COMMISSIONER THAT HE WISHES TO SEE ABOLISHED AS SOON AS POSSIBLE. +WHETHER OR NOT AN EMPLOYER OR MANAGEMENT IS RELIABLE OR TRUSTWORTHY AND WHETHER OR NOT A COMPANY HAS ADEQUATE FINANCIAL MEANS TO MEET THE LIABILITY OF ITS EMPLOYEES' RETIREMENT BENEFITS HAS NO RELEVANCE WHATSOEVER TO GRANTING EMPLOYEES EXEMPTION FROM SALARIES TAX ON SUMS PAID TO THEM UNDER A RETIREMENT SCHEME.+
HE THEREFORE SUGGESTED THAT THE GOVERNMENT ALLOWS TWO TYPES OF APPROVED RETIREMENT SCHEMES, BOTH OF WHICH MUST, FIRST OF ALL, CONFORM WITH THE INLAND REVENUE (RETIREMENT SCHEME) RULES.
THE FIRST TYPE WOULD BE FOR THOSE THAT ARE SEPARATELY FUNDED AND ADMINISTERED BY TRUSTEES OR TRUSTEE CORPORATIONS.
UNDER THIS TYPE, EMPLOYERS WOULD BE GIVEN RELIEF ON ANNUAL AND SPECIAL CONTRIBUTIONS MADE TO THE SCHEME AS PERMITTED AT PRESENT, AND EMPLOYEES WOULD NOT BE LIABLE FOR SALARIES TAX ON SUMS PAID TO THEM.
/THE SECOND