Taxation 問題一問

Section 8(1) and Section 8(1A) are two different charging provisions under
the Inland Revenue Ordinance (Cap.112) ("IRO") in respect of employment
income.

In the event that the employment in question is a Hong Kong employment, the
entire amount of income derived from such employment will be chargeable to
Hong Kong salaries under Section 8(1), notwithstanding that the taxpayer
may render his services partly in and partly outside Hong Kong during the
subject year of assessment (unless he renders all his services outside Hong
Kong in which case the entire amount of income will be eligible for
exemption under Section 8(1)(b)(ii) of the IRO).

In the event that the employment in question is an overseas employment,
only that part of employment income that is attributable to the taxpayer's
services in Hong Kong will be chargeable to Hong Kong salaries tax under
Section 8(1A). In calculating the amount of taxable / non-taxable income
that is attributable to a taxpayer's onshore / offshore services, it is
generally accepted by the Inland Revenue Department that the time
apportionment approach can be adopted.

With the above in mind, one should note forthwith that it is the source of
employment that determines which charging provisions will apply in a
particular case. Under the precedent doctrine of Goepfert , the three main
factors that one should look at in determining the source of employment are
set out infra:-

(i) the locality of the employer,
(ii) the location where the employment contract is negotiated, concluded
and effected, and
(iii) the location where the remuneration is paid.

In the case that the aforesaid factors are in any wise pointing to the
contrary, factor (i) will be weighed for foremost salience. Save for the
foregoing, one should note that in recent cases, the relevant authority is
putting more emphasis on the totality of fact approach apart from looking
solely at the abovementioned factors.