XN000022-1989-03-16 — Page 6

THURSDAY, MARCH 16, 1989

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GOVT CLARIFIES POSITION ON TAXATION OF FRINGE BENEFITS

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THE COMMISSIONER OF INLAND REVENUE HAS DECIDED THAT HIS DEPARTMENT WILL NOT REOPEN ASSESSMENTS WHICH HAVE ALREADY BEEN RAISED NOR, FOR THE CURRENT YEAR (1988/89), SEEK TO TAX BENEFITS WHICH WOULD NOT HAVE BEEN TREATED AS CHARGEABLE UNDER THE DEPARTMENT'S EXISTING PRACTICE.

THIS WAS ANNOUNCED TODAY [THURSDAY) BY THE COMMISSIONER OF INLAND REVENUE, MR ANTHONY AU-YBUNG, AT A PRESS CONFERENCE TO CLARIFY THE GOVERNMENT'S PRESENT POSITION ON TAXATION OF FRINGE BENEFITS FOLLOWING THE DECISION ON THE DAVID HARDY GLYNN

V.

THE COMMISSIONER OF INLAND REVENUE CASE, BY THE COURT OF APPEAL LAST DECEMBER.

"THE WIDE IMPLICATIONS OF THE DECISION OBVIOUSLY REQUIRE CAREFUL CONSIDERATION BY THE ADMINISTRATION, MR AU-YEUNG SAID.

HE POINTED OUT THAT SUBJECT TO THE ADVICE OF THE EXECUTIVE COUNCIL, LEGISLATION WOULD BE INTRODUCED IN THE COMING YEAR (1989/90) TO DEFINE PRECISELY THE EXTENT TO WHICH FRINGE BENEFITS SHOULD BE CHARGEABLE TO TAX.

"IT IS LIKELY THAT THE LEGISLATION WILL ADOPT THE PRACTICE FOLLOWED BY THE DEPARTMENT PRIOR TO THE GLYNN CASE," HE SAID.

IN THESE CIRCUMSTANCES AND AS THE CURRENT FINANCIAL YEAR (1988/ 89) WAS DRAWING TO A CLOSE WITH SALARIES TAX FORMS FOR EMPLOYERS AND EMPLOYEES FOR THE YEAR ABOUT TO BE ISSUED, HE HAD THEREFORE DECIDED THAT THE DEPARTMENT WOULD NOT REOPEN ASSESSMENTS WHICH HAD BEEN RAISED NOR SEEK TO TAX BENEFITS WHICH WOULD NOT HAVE BREN TREATED AS CHARGEABLE UNDER THE PRACTICE FOLLOWED BY THE IRD BEFORE THE GLYNN CASE, MR AU-YEUNG EXPLAINED.

THE PRE-GLYNN PRACTICE WOULD ALSO APPLY IN CASES WHERE IT BE NECESSARY TO RAISE 1989/90 ASSESSMENTS PRIOR то

THE INTRODUCTION OF THE LEGISLATION.

MIGHT

HE STRESSED THAT THERE WOULD BE NO CONCESSION IN RESPECT OF BENEFITS BY WAY OF THE PROVISION OF EDUCATION, THE DISCHARGE OF PERSONAL LIABILITIES OR THE TRANSFER OF ASSETS FREE OF CHARGE OR AT AN UNDERVALUE, ALL OF WHICH WERE REGARDED BY THE INLAND REVENUE AS CHARGEABLE PRIOR TO THE GLYNN CASE IRRESPECTIVE

OF THE ARRANGEMENTS UNDER WHICH THEY WERE PROVIDED.

COURT

MR AU-YEUNG NOTED THAT THE DECISION HANDED DOWN BY THE OF APPEAL ON DECEMBER 23, 1988 IN THE GLYNN CASE HAD DRAWN A GREAT DEAL OF COMMENT FROM TAXATION PRACTITIONERS, THE MEDIA AND OTHER INTERESTED PARTIES BECAUSE OF ITS IMPLICATIONS IN RELATION TO THE TAXATION OF FRINGE BENEFITS RECEIVED BY EMPLOYEES.

IN BROAD TERMS, THE CLYNN CASE WAS CONCERNED WITH THE OF WHETHER SCHOOL FEES PAID BY MR GLYNN'S EMPLOYER IN RESPECT DAUGHTER'S EDUCATION, ESCAPED CHARGEABILITY TO SALARIES TAX BY OF THE ARRANGEMENTS USED TO MAKE THE PAYMENTS.

QUESTION OF HIS VIRTUE

MR AU-YEUNG