(3) Any sum recoverable under insurance or contract of indemnity. (4) Rent of or expenses relating to premises not occupied or used
for the purpose of producing the profits.
(5) The Hong Kong taxes or income, except Salaries Tax paid in
respect of employees' remuneration [see also Property Tax]. (6) Any remuneration or interest on capital or loans payable to
members of a partnership.
Operating losses may be carried forward and successively deducted from assessable profits for subsequent years.
A transfer of certain allocable head office administrative expenses by means of a charge to a local branch in Hong Kong [either subsidiary or branch] would be allowed as a deduction for Hong Kong tax purposes, to the extent to which they were incurred during the basis period for the year of assessment in the production of profits chargeable to tax.
4. DEPRECIATION ALLOWANCES.
Deductions are allowable in respect of capital expenditures incurred in the construction of industrial buildings and structures [for use in certain trades, including transport, dock, water, electricity undertakings, manufacture, processing or storage of goods, farming and trades carried on in mills, factories, etc.] and in the provision of machinery and plant for trade or business purposes.
An initial allowance has been restored from the year 1965/66 at the increased rate of twenty per cent of capital expenditure on indus- trial buildings and structures and an annual allowance of four per cent of the original capital expenditure is given, until it is written off. The original initial allowance of ten per cent was abolished in 1955 and for all years up to 1964/65 the annual allowance was calculated at two per cent.
Provision is made for balancing allowances and charges, in case the disposal price of the asset differs from the written down expenditure.
An annual "rebuilding allowance" amounting to 0.75 per cent of construction expenditure is given in the case of a non-industrial building or structure which the owner uses for trade, professional or business. purposes.
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