A property owner has been convicted of tax evasion at Eastern Magistracy.

Yick Ka-lei, 39, pleaded guilty to three charges of wilfully intending to evade property tax by omitting rental income that should have been included in tax returns for the three years of assessment from 1997-98 to 1999-2000.

He also pleaded guilty to one charge of wilfully with intent evading tax by making a false statement regarding the loss arising from the sale of a property in connection with a claim for deduction in 2000-2001. He was sentenced to two months jail and fined $180,000, representing 138% of the tax evaded. However, he lodged an appeal against the sentence and was granted bail.

He acquired a property at Chico Terrace, Mid-Levels in 1997 and sold it in 2000 at a loss of about $1.1 million. He lodged a claim to the Inland Revenue Department that the property was acquired for trading purposes and as such, the loss arising from the sale of the property should be brought into the computation of his personal assessment. He falsely stated the property was left vacant throughout the three years he owned it so as to let potential purchasers view it. In tax returns, he either declared that the property was for his own use or left the relevant sections blank. An investigation found that the property was let during Yick's period of ownership. The omission of rental income in the defendant's tax returns was also revealed.

If the department had accepted the property was vacant, it would have been a factor in misleading the department to conclude that the loss was a trading loss arising from the sale. Had the defendant succeeded in his claim, the total aggregate income of his and his spouse for 2000-2001 would have been completely offset by the loss incurred. The resultant total tax that would have been undercharged was $109,140. The total rental income omitted was $386,483 for the three years of assessment and the resultant total tax evaded was $20,949. The overall tax evaded was $130,089.