Is alimony taxable?

[doreen]

Hi, I am about to get divorced, however, there are a few things I need to know. I know i should seek a lawyer for legal advise, but before I do so, (because I m sure they would suck me dry) I would like to get your opinion on things.

1. is alimony taxable?
2. wife is unemployed (husband imposed on this); husband runs a company, wife is a minority share holder of this company. Now, with this divorce, husband plans on filing for company bankruptcy. How will alimony be settled?
3. Should I get a lawyer of my own? Even if the divorce is uncontested?
4. What about child custody? Can mother apply for sole custody of the pre-schooler kid despite the fact that she is unemployed?

If there are any lawyers out there who are members of geoexpat, would appreciate it if you could shed light in this situation. through this thread, that is. (Can't afford solicitor services for now, i am hurting and poor...

Thanks y'all

[MovingIn07]

From your questions I assume you are the wife? It sounds to me like you REALLY need a lawyer. My very quick view is that your husband is about to make himself bankrupt to avoid paying you anything and I think that's probably illegal - so you will gain by getting someone to injunct him. Talk to some lawyers, I'm sure they must be used to dealing with wifes who have no assets (yet) and have some sort of payment structures sorted out.

[Claire ex-ax]

Depending on your assets, you may be eligible for legal aid, which will give you access to a solicitor. Even though the divorce may be "uncontested", if you cannot agree on maintenance for you, maintenance for your child, welfare of the child, etc., then a solicitor will be needed. Does your husband intend to leave Hong Kong? Do you intend to leave Hong Kong? Court orders are country specific.

[hullexile]

yes definitely get a lawyer especially if there are kids involved. You may want to just get out of it as quickly as possible but you have to think about the rest of your and your child's life (putting aside my personal views on how husbands can get stitched up )

[doreen]

Thanks for the advise everyone! I have searched the internet to gain more knowledge on how the system in HK works and have found good insights regarding the matter. Like Legal Aid and stuff.

Still, does anyone know if Alimony is taxable? Please ask your company accountant or anybody who has encountered this situation before. I cannot ask our accountant. If i do, soon-to-be-ex would definitely find out.

Thanks again!!!

[Crocodile]

I don't believe it is, but that is not the point ..... at the moment it looks like you will be getting ZERO from your ex unless you lawyer-up immediately. I am not talking about sucking him dry, but you need to ensure that you get what you are legally entitled to.

It sounds like your ex is wanting an uncontested divorce and is keeping you in the dark with the express purpose of giving you no money. It is not an uncommon practice is Hong Kong for a company to become bankrupt and to change a business into a different legal name to continue trading.

Frankly, I think you are naive and need a reality check - if you don't get a lawyer today, you may well end up no money, no children and no hope.

[Claire ex-ax]

It might be best to check with the IRD but Hong Kong has salaries tax, not income tax; therefore, it could be that maintenance is not taxed. If your husband pays maintenance for your child, he is entitled to claim child allowance in his tax return.

The hotline for tax enquiries for individuals is 187 8022. Put your mind at rest regarding the tax.

[shri]

LCQ6: Tax relief on maintenance payments

In response to Hon Margaret Ng's question, I wish to raise the following points for discussion -

(a) It has been our taxation policy to provide tax relief for Salaries Taxpayers on payments made contributing to the maintenance or support of a relative. Relative means a person who has a relationship with the taxpayer established either by blood or by law. Examples include spouse, child, parent, grandparent, brother and sister etc.

"Spouse" is defined as a husband or wife. Where the husband and wife are living apart and the divorce has not yet become absolute, a taxpayer may still claim Married Person's Allowance for contributions to the maintenance or support of his or her estranged spouse.

Although a taxpayer may not claim Married Person's Allowance when a divorce has become absolute, the alimony payments received by a former spouse are exempt from tax. Also, the taxpayer may continue to claim the Child Allowance for payments made contributing to the maintenance or support of his or her children after divorce.

(b) Referring to the United Kingdom's tax legislation, the Court of Appeal in a recent case pointed out that some overseas tax jurisdictions do provide tax relief on maintenance payments and remarked that it seemed to be unfair and inequitable not to allow divorcees in Hong Kong to claim tax allowance for maintenance payments made to former spouses. I wish to inform this Council that in April 2000, the UK Government has changed this system. It abolished the tax relief for divorcees, except for a small number of old-aged taxpayers, while retaining the tax exemption for maintenance payments received by former spouses. This is exactly the system in practice in Hong Kong and indeed in other overseas jurisdictions such as Australia and New Zealand.

(c) I understand that there are some problems relating to the making of maintenance payments in Hong Kong. I wish however to point out that a tax allowance is unlikely to be an effective solution to such problems. Divorcees may fail to make maintenance payments as required by court order for various reasons, such as being out of employment, financial problem or a bitter relationship with their former spouse. Introducing a tax allowance will hardly help in such situations.

Those who are not required by the court to make maintenance payments would probably still not pay even if there is a tax allowance for these, as the benefits from a tax allowance must by definition be less than the payment itself. Also, people who pay no tax and taxpayers who are already paying at the standard tax rate will derive no benefit from such a tax allowance.

(d) Also, such a tax allowance will be difficult to implement and prone to abuse. It is administratively cumbersome and difficult to prevent double benefits and to verify that a person has actually made certain payments to another person for alimony.

(e) As a responsible Government, we encourage people to fulfill their obligations to their ex-spouses and we have policies in place to achieve that goal. However, we do not consider it appropriate or effective to do it through tax incentives.

But, I do think you should call the IRD.

By the way, contact this member ( http://www.geoexpat.com/forum/thread41359.html ). Not sure what her gig is ....

[doreen]

To everybody who took the time to reply to my post, THANK YOU SO MUCH!!!

Croc, yes I admit, when it comes to legal matters like these I am naive. I have never been in this situation before, that is why I need all the advise I can get. I am a first wife, I believe most first wives feel lost during the demise of their marriage and they feel confused as to where to draw the line to what they are entitled to.

Shri, thank you so much for quoting that article. I would try to print it for reference.

I received a phone call today from my future ex's attorney. I wondered why he is calling me and asking me if I am amenable to the settlement terms which he said over the phone. I asked him to have it in black and white and mail me the copy. (I really find that strange...)

Anyway, I will apply for Legal Aid next week and hope that they can provide me a killer divorce lawyer.

Any further advise would be very much appreciated. I am blessed to know that I can be helped by complete strangers. There is still goodness and kindness existing in the world.

Thank you again so much.

[doreen]

[QUOTE=doreen;357187]To everybody who took the time to reply to my post, THANK YOU SO MUCH!!!

Croc, yes I admit, when it comes to legal matters like these I am naive. I have never been in this situation before, that is why I need all the advise I can get. I am a first wife, I believe most first wives feel lost during the demise of their marriage and they feel confused as to where to draw the line to what they are entitled to.


I just want to correct something on my previous post.

I used the wrong term being being the "first wife". (Actually I am already my ex's second wife. Yes, he has been in this road before) What I meant to say, was I am a first time divorcee. (or is there a better term for this?)