TNAG-2685-FCO40-3886-Hong-Kong-Her-Majesty-s-Overseas-Civil-Service-(HMOCS)-poli-1993 — Page 79

Annex B

be

chargeable to Hong Kong

salaries

tax.

However,

compensation for

officers superseded for promotion and who

remain in the service is prima facie chargeable to salaries

tax as it cannot be regarded as compensation for loss of

principle also applies to

office or

employment.

to

This

officers who are superseded for promotion and who make

application

retire under the scheme as the compensation

could still not be regarded as compensation for loss of

office or employment.

7.

all

In order to achieve the original intention that

compensation paid to officers under the LCS should be

tax free, there is a need to gross up the compensation for

officers who are superseded for promotion to facilitate

localisation to cover their tax liability. It is proposed

factors at Tables IA and IB of the

that the

Appendix

compensation

to Annex A be grossed up by the standard tax rate

of 15%. Revised tables are at Annex B.

FINANCIAL IMPLICATIONS

8.

promotion

Το date, there have been no supersessions for

under the LCS. It is estimated about 30 staff

may have to be compensated on supersession for promotion

between now and June 1997. The additional expenditure on

compensation for

revenue.

supersession

would be recovered as tax

CONFIDENTIAL