Hong Kong Ordinances

INLAND REVENUE ORDINANCE - SECT 9

Definition of income from employment

Caution: This is a past version. See the current version here.

(1) Income from any office or employment includes-

   (a)  any wages, salary, leave pay, fee, commission, bonus, gratuity,
        perquisite, or allowance, whether derived from the employer or others,
        except-

        (i)    the value of any holiday warrant or passage granted by an
               employer to an employee in so far as it is used for travel;

        (ii)   any allowance for the purchase of any such holiday warrant or
               passage in so far as it is expended for that purpose; (Amended
               1 of 1991 s. 3)

        (iii)  any allowance paid by an employer to an employee for the
               transportation of the personal effects of the employee in
               connection with any journey on which a holiday warrant or
               passage referred to in subparagraph (i) or (ii) is used in so
               far as the allowance is expended for the transportation of the
               personal effects of the employee; and (Amended 3 of 1949 s. 4;
               9 of 1950 Schedule; 2 of 1971 s. 6; 40 of 1972 s. 2; 1 of 1991
               s. 3)

        (iv)   subject to subsection (2A), any amount paid by the employer to
               or for the credit of a person other than the employee in
               discharge of a sole and primary liability of the employer to
               that other person, not being a liability for which any person
               was surety; (Added 1 of 1991 s. 3)

   (aa) so much of any amount (other than a pension falling under
        section 8(1)(b)) received by an employee before or after his
        employment ceases, whether by way of commutation or otherwise, from a
        pension or provident fund, scheme or society, other than a
        recognized occupational  retirement scheme, as represents the
        employer's contributions to that fund, scheme or society; (Added 2 of
        1971 s. 6. Amended 76 of 1993 s. 4)

   (ab) so much of any amount (other than a pension falling under
        section 8(1)(b)) received by an employee, whether by way of
        commutation or otherwise, under a
        recognized occupational retirement scheme-

        (i)    by reason other than termination of service, death, incapacity
               or retirement of the employee as represents the employer's
               contributions under the scheme in respect of the employee;

        (ii)   by reason of termination of service as represents such part of
               the employer's contributions under the scheme in respect of the
               employee that exceeds the proportionate benefit calculated in
               accordance with section 8(4)(b); (Added 76 of 1993 s. 4)

   (ac) any payment received by an employee pursuant to a judgment given under
        section 57(3)(b) of the Occupational Retirement Schemes  Ordinance (
        Cap. 426) that is attributable to his employer's contributions to the
        occupational retirement scheme in respect of which the judgment was
        given; (Added 76 of 1993 s. 4)

   (b)  the rental value of any place of residence provided rent-free by the
        employer or an associated corporation; (Amended 38 of 1975 s. 2)

   (c)  where a place of residence is provided by an employer or an
        associated corporation at a rent less than the rental value, the
        excess of the rental value over such rent; (Amended 2 of 1971 s. 6; 38
        of 1975 s. 2)

   (d)  any gain realized by the exercise of, or by the assignment or release
        of, a right to acquire shares or stock in a corporation obtained by a
        person as the holder of an office in or an employee of that or any
        other corporation. (Added 2 of 1971 s. 6)

(1A) (a) Notwithstanding subsection (1)(a), where an employer or an
associated corporation

        (i)    pays all or part of the rent payable by the employee; or

        (ii)   refunds all or part of the rent paid by the employee, such
               payment or refund shall be deemed not to be income; (Replaced 1
               of 1991 s. 3)

   (b)  a place of residence in respect of which an employer or
        associated corporation has paid or refunded all the rent therefor
        shall be deemed for the purposes of subsection (1) to be provided rent
        free by the employer or associated corporation;

   (c)  a place of residence in respect of which an employer or
        associated corporation has paid or refunded part of the rent therefor
        shall be deemed for the purposes of subsection (1) to be provided by
        the employer or associated corporation for a rent equal to the
        difference between the rent payable or paid by the employee and the
        part thereof paid or refunded by the employer or
        associated corporation. (Added 36 of 1954 s. 2. Amended 38 of 1975 s.
        2; 1 of 1991 s. 3)

(2) The rental value of any place of residence provided by the employer or an
associated corporation shall be deemed to be 10% of the income as described in
subsection (1)(a) derived from the employer for the period during which a
place of residence is provided after deducting the outgoings, expenses and
allowances provided for in section 12(1)(a) and

   (b)  to the extent to which they are incurred during the period for which
        the place of residence is provided and any lump sum payment or
        gratuity paid or granted upon the retirement or termination of
        employment of the employee: (Amended 35 of 1965 s. 6; 26 of 1969 s.
        10; 7 of 1975 s. 3; 38 of 1975 s. 2) Provided that-

   (a)  if such place of residence be a hotel, hostel or boarding house the
        rental value shall be deemed to be 8% of the income aforesaid where
        the accommodation consists of not more than 2 rooms and 4% where the
        accommodation consists of not more than one room; (Replaced 10 of 1950
        s. 3. Amended 38 of 1975 s. 2)

   (b)  if such place of residence be other than a hotel, hostel or boarding
        house any person may elect to have, in respect of the years of
        assessment commencing on or after 1 April 1983, the rateable value
        included in the valuation list prepared under section 12 of the
        Rating  Ordinance ( Cap. 116) or, if the place of residence is not so
        included, the rateable value ascertained in accordance with Part III
        of that Ordinance, substituted for rental value at 10% as aforesaid.
        (Replaced 19 of 1996 s. 4)

(2A) Subsection (1)(a)(iv) shall not operate to exclude-

   (a)  any benefit capable of being converted into money by the recipient; or

   (b)  any amount paid by an employer in connection with the education of a
        child of an employee, from income from any office or employment.
        (Added 1 of 1991 s. 3)

(3) A pension shall include a pension which is voluntary or is capable of
being discontinued. (Replaced 36 of 1955 s. 13)

(4) For the purposes of subsection (1)-

   (a)  the gain realized by the exercise at any time of such a right as is
        referred to in paragraph (d) of that subsection shall be taken to be
        the difference between the amount which a person might reasonably
        expect to obtain from a sale in the open market at that time of the
        shares or stock acquired and the amount or value of the consideration
        given whether for them or for the grant of the right or for both; and

   (b)  the gain realized by the assignment or release of such a right as is
        referred to in paragraph (d) of that subsection shall be taken to be
        the difference between the amount or value of the consideration for
        the assignment or release and the amount or value of the consideration
        given for the grant of the right,

(a just apportionment being made of any entire consideration given for the
grant of the right to acquire the said shares or stock and other shares or
stock or otherwise for the grant of the right to acquire those shares or stock
and for something beside): Provided that neither the consideration given for
the grant of the right nor any such entire consideration shall be taken to
include the performance of any duties in or in connection with the office or
employment by reason of which the right was granted, and no part of the amount
or value of the consideration given for the grant shall be deducted more than
once under this subsection. (Replaced 2 of 1971 s. 6)

(5) Where salaries tax may by virtue of subsection (1)(d) become chargeable in
respect of any gain which may be realized by the exercise of a right, salaries
tax shall not be chargeable under any other provision of this Ordinance in
respect of the receipt of the right. (Added 2 of 1971 s. 6. Amended L.N. 65 of
1986)

(6) For the purposes of this section- "associated corporation" (相聯法團)
means-

   (a)  a corporation over which the employer has control;

   (b)  if the employer is a corporation-

        (i)    a corporation which has control over the employer; or

        (ii)   a corporation which is under the control of the same person as
               is the employer; "child of an employee" (僱員的子女) means
               any child of an employee or of his or her spouse or former
               spouse, whether or not born in wedlock, and includes the
               adopted or step child of either or both of them; (Added 1 of
               1991 s. 3) "control" (控制), in relation to a corporation,
               means the power of a person to secure-

   (a)  by means of the holding of shares or the possession of voting power in
        or in relation to that or any other corporation; or

   (b)  by virtue of any powers conferred by the articles of association or
        other document regulating that or any other corporation, that the
        affairs of the first-mentioned corporation are conducted in accordance
        with the wishes of that person; (Added 38 of 1975 s. 2) "employee"
        (僱員) includes a holder of an office; (Added 1 of 1991 s. 3) "place
        of residence" (居住地方) includes a residence provided by an
        employer or an associated corporation notwithstanding that the
        employee is required to occupy that place of residence by or under his
        terms of employment and whether or not by doing so he can better
        perform his duties; (Added 48 of 1979 s. 2. Amended 76 of 1993 s. 4)
        "retirement" (退休) and "termination of service" (服務終止) have
        the same meaning as in section 8(3). (Added 76 of 1993 s. 4)
        "associated corporation" (相聯法團) "child of an employee"
        (僱員的子女) "control" (控制) "employee" (僱員) "place of
        residence" (居住地方) "retirement" (退休) and "termination of
        service" (服務終止)