Termination of employment and restricted shares
This video shows our insights about the dispute between taxpayers and the IRD on the taxation of termination payments.
Our views on a dispute between taxpayers and IRD on the taxation of termination payments
CFI handed down its decision on the case of Mr Zarin that restricted shares released pursuant to a Termination Agreement should not be subject to Salaries Tax. The fact that the CFI had previously ruled in favour of the IRD illustrates that whilst the applicable legal principles are clear, their application can still be challenging. We expect the taxation of termination payments will continue to be a contentious matter in Hong Kong. That said, the case will be useful precedence as terminated employees retaining their restricted shares is not unusual.