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WEDNESDAY, FEBRUARY 27, 1980
TAX REFORM TO PLUG LOOPHOLE
******
THE FINANCIAL SECRETARY, THE HON SIR PHILIP HADDON-CAVE PROPOSED ONLY ONE TAX REFORM THIS YEAR.
DESCRIBING IT AS A MILDLY COMPLICATED ONE,+ SIR PHILIP SAID THE COMMISSIONER OF INLAND REVENUE HAD DRAWN HIS ATTENTION TO A LOOPHOLE IN THE TRANSITIONAL PROVISIONS ENACTED WHEN THE METHOD OF ASSESSMENT OF PROFITS TAX WAS CHANGED IN 1975-76 FROM A PRECEDING YEAR BASIS TO AN ACTUAL YEAR BASIS.
+ THE LOOPHOLE APPEARS TO HAVE BEEN THE CONSEQUENCE OF AN ANXIETY ON OUR PART NOT TO DEPRIVE PERSONS GENUINELY GOING OUT OF BUSINESS OF THEIR RIGHTS TO A FORM OF TERMINAL RELIEF,+ HE SAID.
SIR PHILIP SAID IT WAS NOW CLEAR THE GENEROUS APPROACH ADOPTED IN 1975 WAS NOW BEING EXPLOITED BY SOME PROPERTY DEVELOPERS AND SPECULATORS WHO, THROUGH THE USE OF CONTRIVED CESSATIONS OF BUSINESS, WERE SUCCEEDING IN DROPPING OUT OF CHARGE TO TAX ENORMOUS PROFITS ON SALES OF PROPERTIES AT A CONSIDERABLE COST TO THE REVENUE.
+CLEARLY, THIS STATE OF AFFAIRS CANNOT BE ALLOWED TO CONTINUE AND, ACCORDINGLY, AN AMENDING BILL WHICH WILL CLOSE THIS LOOPHOLE IS ABOUT TO BE PUBLISHED. AS I AM BOUND TO BE ACCUSED OF CLOSING THE STABLE DOOR AFTER THE HORSE HAS BOLTED, I SHOULD MAKE IT CLEAR THAT THERE IS NO TIME LIMIT ON THOSE CONTRIVED CESSATIONS SO THAT, WITHOUT CORRECTIVE LEGISLATION NOW, CONSIDERABLE SUMS OF FUTURE REVENUE WILL REMAIN AT RISK,+ HE SAID.
ON TAX REFORMS IN HAND, SIR PHILIP SAID HE UNDERTOOK TO HAVE AMENDMENTS TO THE INLAND REVENUE ORDINANCE IN RESPECT OF
* A SYSTEM OF POOL ING+ OF CAPITAL EXPENDITURE AS
A MEANS OF SIMPLIFYING THE CALCULATION OF DEPRECIATION ALLOWANCES FOR THE PURPOSES OF PROFITS TAX- AND
* GRANTING RELIEF TO TRUSTEES WHO BECOME SUBJECT TO
WITHHOLDING TAX ON INTEREST RECEIVED AND THEREAFTER ARE OBLIGED TO DEDUCT INTEREST TAX A SECOND TIME FROM INTEREST PAID TO BENEFICIARIES OF THE TRUST FUND.
HE SAID DESPITE THE RELATIVELY SIMPLE CONCEPTS INVOLVED, THE DRAFTING OF THE NECESSARY LEGISLATION HAD PROVED UNUSUALLY DIFFICULT, BUT IT WAS NOW NEARING COMPLETION.
AS REGARDS THE TAXATION TREATMENT OF CERTIFICATES OF DEPOSITS AND MONETARY INSTRUMENTS, SIR PHILIP CONCLUDED THAT ON THE GROUNDS OF EQUITY AND TO PROTECT THE REVENUE, THE ORDINANCE SHOULD BE AMENDED TO PLACE THE INTEREST TAX OR PROFITS TAX LIABILITY, AS THE CASE MAY BE, OF THE SURPLUSES REALISED ON THESE INSTRUMENTS BEYOND DOUBT, AND A BILL IS NOW IN DRAFT FORM.
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