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1. I resigned (without advance notice) and left the company on 1 March 2015. As I was required to pay one month's salary in lieu of notice to my employer, my employer did not pay me the salary for February 2015. For the year of assessment 2014/15, should I pay tax on my salary for 10 months or 11 months?

Your assessable income is salary for 11 months (i.e. 1 April 2014 to 28 February 2015). Although you had not received the salary for February 2015, it was actually used to offset the money in lieu of notice that you ought to pay.


Section 12(1)(a) of the Inland Revenue Ordinance stipulates that “in ascertaining the net assessable income of a person for any year of assessment, there shall be deducted from the assessable income of that person all outgoings and expenses……. wholly, exclusively and necessarily incurred in the production of the assessable income .” There was also an Inland Revenue Appeal Case heard at the High Court (Commissioner of Inland Revenue v Sin Chun Wah) in which the Court held that the salary paid by the employee in lieu of notice of termination was not expenditure incurred in the production of emoluments, and hence it was not deductible from the employee's assessable income.


Therefore, you cannot claim a deduction of the salary in lieu of notice paid by you as an expense for producing income.