Wallis Wang

A former medical sector lawmaker and ex-public hospital doctor, Leung Ka-lau, does not have to pay taxes on the HK$1.7 million compensation he received from the Hospital Authority for working on rest days and holidays as the sum was not his income, the Court of Appeal ruled yesterday.

Leung sued the Hospital Authority in 2002 that doctors' rights to rest days and holidays had been deprived by the HA's on-call system and received more than HK$1.7 million in compensation in 2009. However, he was asked to pay taxes for the compensation.

Although the High Court had ruled that the compensation should not be taxed, the Inland Revenue Department filed an appeal, which was dismissed by a three-judge panel in the Court of Appeal yesterday.

The vice-president of the Court of Appeal, Susan Kwan Shuk-hing, said it was not in dispute that Leung received HK$1.7 million as compensation for his loss of rest days and statutory holidays.

The question was whether the compensation should be viewed as income from employment, she said, adding the payment was not a matter listed in Leung's employment contract.

Although Leung's claims against the HA were based on rights conferred by the Employment Ordinance on an employee and his contract of employment, the compensation payment was not a matter provided for in the contract of employment, Kwan said.

"There was breach by the HA and deprivation of his statutory and contractual rights to absence from work on rest days and public holidays, and the sum received as damages was consideration for such deprivation," Kwan said.

As two of the three judges believed Leung did not have to pay the taxes for the compensation, the court dismissed the Inland Revenue Department appeal by a majority.

Leung Ka-lau won the compensation back in 2009. SING TAO

Doctor cleared of paying taxes on $1.7m compensation