Correction of error or omission
The purpose of section 70A
is to redress unreasonable hardship, if any, arising from mistakes made by
either the taxpayer or the Assessor. This purpose was confirmed in the Board
of Review case D6/91 in which the Board rejected the CIR's argument that
if a taxpayer took a different view of law on some known facts, section 70A
could not be invoked. In its judgment, the Board said:
there must be finality in taxation matters. That is the clear
intention of section 70... Section 70 of the
Inland Revenue Ordinance states that assessments are to be final and
conclusive for all purposes of the Ordinance. That is a
sweeping and draconian section. It is clear that section 70A was introduced
to overcome the possible hardship of section 70. ”
Hence, the first question
for reopening of an assessment by section 70A is whether there is hardship
on the part of the taxpayer. If yes, then it is very probable that section
70A could be invoked to redress the hardship.
no definition of 'error or omission' in the Ordinance. So, we may apply
the Literal Rule --- that is to look to their ordinary and literal meaning. The
meaning of 'error' given in the Oxford English Dictionary is 'something
incorrectly done through ignorance or inadvertence; a mistake'. The meaning
of 'omission' in Webster's New International Dictionary is: an act or
instance of omitting, whether by leaving out, or by abstention from
inserting, or by neglect or failure to do something.
Although there are no
definition of 'error or omission' in the Ordinance, there are a number of
cases on the issue. In the case Extramoney Ltd v CIR, the court made comments on
the subject. Click here for details. In the
Board of Review Case No. D52/99, the Board also made comments.
Click here for details. Besides, in his
book Inland Revenue Legislation Annotated, Professor Willoughby also talked
about the subject.
Click here for details.
70A is applicable when the following conditions are satisfied.
application to re-open the assessment is made within 6 years after
the end of the year of assessment or within 6 months from the date of
assessment, whichever is the later, and
The tax charged is
excessive because of :
error or omission in any return or statement submitted in respect thereof,
any arithmetical error or omission in the calculation of the amount of the
net assessable value, assessable income or profits assessed or in the
amount of the tax charged.
Typical examples of 'error or
A salaried taxpayer reported
compensation for loss of an employment as taxable income in his tax
A salaried taxpayer has not
claimed married person allowances, child allowances or dependent parent
allowance (this claim is still valid even for an estimated assessment in
the absence of a tax return).
A salaried taxpayer has not
claimed home loan interest, charitable donation, contribution to
recognized retirement scheme, traveling expenses from one workplace to
another workplace, self-education expenses... etc. in his tax return.
A business taxpayer has
submitted an incorrect tax computation.
A business taxpayer reported
offshore profit in his tax return.
A business taxpayer has not
claimed depreciation allowances in his tax return.
A business taxpayer added back
an item which should be deductible.
A business taxpayer made a
An assessor made an salaries tax
assessment based on an incorrect employer return.
An assessor made an arithmetical
mistake in computing the assessable profit.
An assessor fails to deal with a
deduction claimed by a taxpayer.
“error or omission” include :(a) an arithmetical error, (b) an omission to claim an expense or deduction or allowance, (c) an error or
omission of fact, or (d) an error of law.