Jan 2010, Issue 3
Court of Final Appeal ruled against the taxpayer in Shui On Credit Co Ltd v CIR
The Court of Final Appeal ("CFA") handed down its judgment in Shui On Credit Co Ltd v CIR on 30 November 2009, in which the taxpayer's appeal was unanimously dismissed. While the case has been widely known as a general anti-avoidance case, a closer look of the CFA's judgment shows that the taxpayer lost the case mainly because the deferred expenditure in question failed the deductibility test under sections 16 and 17 of the Inland Revenue Ordinance ("IRO") rather than as a result of the application of section 61A of the IRO (i.e. the general anti-avoidance provision). Although it was held that it was not necessary to consider the applicability of section 61A in this case, the CFA did express a few general observations regarding the application of section 61A in the obiter dictum of its judgment.
This news flash summarises the relevant facts of the case, highlights the key findings of the authority at various levels, and discusses a number of noteworthy observations from the CFA's judgment on the application of section 61A.
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