HKICPA QP Module 9 Principles of Taxation common mistakes
HKICPA QP Module 9 Principles of Taxation · Understand the traps and how to avoid them.
Mixing the salaries-tax bases
Personal allowances affect net chargeable income but are not subtracted in the same way in the standard-rate comparison.
What to do instead
Identify assessable income, deductions and allowances before calculating and comparing the two amounts.
Applying the highest tier to everything
A higher rate on an excess does not replace the lower rate on the first portion of the base.
What to do instead
Split the base at the applicable boundary and add the tax on each defined portion.
Treating accounting profit as final taxable profit
Recorded expenses and depreciation do not by themselves establish the applicable tax deductions or allowances.
What to do instead
Prepare a supported reconciliation showing each required add-back and allowable tax adjustment.
Assuming a foreign-source label settles every rule
The income category and statutory deeming or special regimes can affect the result under their conditions.
What to do instead
Analyze the actual operations and relevant regime before announcing an exemption or charge.
Deducting property expenses twice
The statutory allowance and specifically permitted base adjustments do not authorize every additional actual expense.
What to do instead
Follow the defined property-tax sequence and identify a legal basis for each separate deduction.
Treating provisional payment as a universal exemption
The payment is applied to a relevant final assessment, which may differ from the advance amount.
What to do instead
Reconcile the actual credit with the final charge and keep other years or liabilities distinct.
Confusing return, assessment and payment
Communicating information, receiving a charge and paying or crediting tax are different actions and records.
What to do instead
Identify which step occurred and what process or deadline actually follows from it.
Inventing facts to finish a tax case
Missing source, period, capacity or eligibility facts can change the result and cannot be supplied merely for convenience.
What to do instead
State supported assumptions and request the material missing information before asserting an exact legal liability.