for the year of assessment. If the employee does not receive a return, he is required to send the department a notification of chargeability by 31 July following the year of assessment. The tax is payable directly by the taxpayer, who is also obliged to remit provisional salaries tax by instalments based on the previous year's liability. Income subject to tax Liability for salaries tax arises from two separate sources: employment income and pensions arising or derived from Hong Kong, and income derived from services rendered in Hong Kong (other than from visits totalling 60 days or less in any given year), except for: income earned from services rendered wholly outside Hong Kong in connection with employment (except for those who work for the Government, or on board ships or aircraft), or income earned in any territory on which tax similar to salaries tax has been paid. Under Commissioner of Inland Revenue v George Andrew Goepfert'', the following factors must be taken into account to determine where the source of income arises for an employment (whether inside or outside the territory): where the contract of employment was negotiated, entered into and is enforceable; where the employer is resident; and where the employee's remuneration is paid to him. Employment income is deemed to include the following: wages, salaries and other compensation (other than severance payment or long service payment on termination of employment) whether from the employer or another person, amounts received from a pension or provident fund connected with the employment, amounts received from a recognized occupational retirement scheme, the rental value of any place of residence provided rent-free (or any discount from the rental value from any rent paid) by the employer or an associated corporation, and any gain realized by the exercise of, or by the assignment or release of, a stock option. Calculation of liability Salaries tax is chargeable on the lower of: net chargeable income (total income less deductions and allowances) net total income (total income less deductions) Deductions include expenses necessary for earning such income (such as professional membership dues for one association), expenses for self-education (subject to a ceiling of $80,000), charitable donations (subject to minimum and maximum limits), contributions to the Mandatory Provident Fund or other occupational retirement schemes, home loan interest (subject to a lifetime limit of 15 years) and elderly residential care expenses (subject to a ceiling of $76,000). Allowances are