XN000022-1979-07-04 — Page 16

WEDNESDAY, JULY 4, 1979

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MR. HADDON-CAVE EXPLAINED THAT SINCE THE INLAND REVENUE ORDINANCE WAS ENACTED IN 1947, THE COMMISSIONER OF INLAND

REVENUE HAD ALWAYS REGARDED A QUARTER TO BE A +PLACE OF RESIDENCE+ FOR SALARIES TAX PURPOSES, NOTWITHSTANDING THE FACT THAT THE

E PLOYEE WAS DIRECTED TO THAT PARTICULAR QUARTER AND

NOTWITHSTANDING THE FACT THAT HE WAS SO DIRECTED BECAUSE HE COULD BETTER PERFORM HIS DUTIES.

FOR EXAMPLE, WHEN A DEPARTMENTAL QUARTER HAS BEEN PROVIDED FOR A CIVIL SERVANT, IRRESPECTIVE OF DIRECTION TO THE OFFICER TO OCCUPY THAT PARTICULAR QUARTER ON OPERATIONAL GROUNDS, TAX IS CHARGED ON THE NOTIONAL VALUE OF THE QUARTER.

+THIS APPLICATION OF THE LAW BY THE COMMISSIONER HAS NOT BEEN CHALLENGED UNTIL RECENTLY WHEN THE BOARD OF REVIEW HELD THAT THE DOCTRINE OF REPRESENTATIVE OCCUPATION, WHICH HAD BEEN DEVELOPED BY UNITED KINGDOM COURTS IN THE COURSE OF APPEALS UNDER THE UNITED KINGDOM INCOME TAX ACTS, ALSO APPLIED TO OUR ORDINANCE,+ MR. HADDON-CAVE SAID.

THE CONCEPT OF REPRESENTATIVE OCCUPATION, AS DEVELOPED IN THE UK, IS THAT IF AN EMPLOYEE IS REQUIRED AS A CONDITION OF HIS EMPLOYMENT TO RESIDE IN A QUARTER PROVIDED BY HIS EMPLOYER, AND HIS RESIDENCE THERE MATERIALLY ASSISTS IN THE PERFORMANCE OF HIS

DUTIES, SUBJECT TO SATISFYING CERTAIN TESTS, NOTHING CAN BE ASSESSED ON THE EMPLOYEE FOR THIS PERQUISITE.

THE DECISION OF THE BOARD OF REVIEW WAS CONTESTED IN THE HIGH COURT WHERE IT WAS HELD THAT THE BOARD WAS CORRECT IN ITS VIEW. AN APPEAL AGAINST THIS JUDGMENT HAS BEEN FILED WITH THE COURT OF APPEAL BY THE COMMISSIONER OF INLAND REVENUE.

MR. HADDON-CAVE WARNED THAT THE ACCEPTANCE OF THIS CONCEPT OF +REPRESENTATIVE OCCUPATION+ COULD HAVE FAR REACHING IMPLICATIONS FOR CASES WIDELY DIFFERENT FROM THE PARTICULAR CASE WHICH IS THE SUBJECT OF THE APPEAL.

+ IT IS ESTIMATED THAT SEVERAL THOUSAND GOVERNMENT SERVANTS AND OTHER EMPLOYEES IN THE PRIVATE SECTOR WHO ARE ENJOYING SUBSIDISED ACCOMMODATION PROVIDED BY THE IR EMPLOYERS WOULD BENEFIT FROM THE APPLICATION OF THE 'REPRESENTATIVE OCCUPATION DOCTRINE.

+IN PARTICULAR, IN THE CIVIL SERVICE, POLICEMEN AND PRISON OFFICERS ARE REQUIRED TO RESIDE AT OR CLOSE TO THEIR PLACE OF WORK ON OPERATIONAL GROUNDS.

+FURTHERMORE, THE CONCEPT OF 'REPRESENTATIVE OCCUPATION', IF INTRODUCED IN HONG KONG LAW, WOULD POSE PRACTICAL DIFFICULTIES IN DETERMINING WHAT DOES AND DOES NOT CONSTITUTE 'REPRESENTATIVE OCCUPATION'.

+IN THE GOVERNMENT'S VIEW, THE EXISTING TREATMENT OF ACCOMMODATI IN FOR SALARIES TAX PURPOSES IS ALREADY FAVOURABLE ENOUG: ITHOUT FREEING A LARGE CLASS OF EMPLOYEES FROM TAX ON WHAT IS. IN THE CONTEXT OF CONDITIONS IN HONG KONG, AN EXTREMELY VALUABLE PERQUISITE, MR. HADDON-CAVE SAID.

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