XN000022-1983-03-09 — Page 21

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WEDNESDAY, MARCH 9, 1983

INLAND REVENUE (AMENDMENT)(NO. 2) BILL INTRODUCED

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THE PURPOSE OF THE INLAND REVENUE (AMENDMENT)(NO. 2) BILL 1983, INTRODUCED INTO THE LEGISLATIVE COUNCIL TODAY, IS TO REMOVE FROM PROFITS TAX LIABILITY GAINS ACCRUING TO UNIT TRUSTS FROM THE DISPOSAL OF SECURITIES, THE FINANCIAL SECRETARY, THE HON JOHN BREMRIDGE, SAID.

IT IS THE VIEW OF THE COMMISSIONER OF INLAND REVENUE THAT UNIT TRUSTS DO NOT ENGAGE IN TRADING IN SECURITIES TO ANY SIGNIFICANT EXTENT, MR BREMRIDGE SAID, IN MOVING THE SECOND READING OF THE BILL.

FOR THE MOST PART, TRANSACTIONS IN SECURITIES UNDERTAKEN BY UNIT TRUSTS ARE IN THE NATURE OF CAPITAL INVESTMENT TRANSACTIONS.

THE THREAT OF LIABILITY TO PROFITS TAX IS, HOWEVER, SEEN BY THE INDUSTRY AS A REAL DISINCENTIVE TO THE FURTHER EXPANSION OF UNIT TRUSTS IN HONG KONG, HE SAID.

+ACCORDINGLY, IN THE INTERESTS OF FOSTERING THE HEALTHY GROWTH OF THE UNIT TRUST MANAGEMENT INDUSTRY AS A USEFUL AND WORTHWHILE ANCILLARY TO THE FINANCIAL SECTOR, THE BILL PROVIDES FOR EXEMPTION FROM TAX OF PROFITS ARISING ON THE DISPOSAL OF SECURITIES BY TRUSTEES OF AN AUTHORISED UNIT TRUST, MR BREMRIDGE SAID.

THE PROPOSED EXEMPTION IS TO BE RETROSPECTIVE, AS IT WOULD BE ALMOST IMPOSSIBLE FOR FUND MANAGERS TO RECOVER TAX FROM THOSE UNIT HOLDERS WHO WERE PROPRIETORS OF A TRUST AT THE TIME OF THE RELEVANT TRANSACTIONS, BUT WHO HAVE SINCE CEASED TO BE MEMBERS OF THE UNIT TRUST SCHEME, HE EXPLAINED.

DEBATE ON THE BILL WAS ADJOURNED UNTIL APRIL 13 OR 14.

NO ALTERNATIVE TO SMOKE LOBBY DOORS

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IT IS IMPRACTICAL TO MAKE IT AN OFFENCE IN LAW TO JAM SMOKE LOBBY DOORS OPEN, NOT LEAST BECAUSE OF THE DIFFICULTY IN POLICING IT AND FINDING THE CULPRITS, THE SECRETARY FOR SECURITY, THE HON D.G. JEAFFRESON, SAID IN THE LEGISLATIVE COUNCIL TODAY.

THE PROPER USE OF THE DOORS MUST DEPEND ON THE VOLUNTARY CO-OPERATION OF THE USERS, MR JEAFFRESON SAID IN REPLY TO THE HON ANDREW SO WHO ASKED WHAT ACTION THE GOVERNMENT WAS TAKING TO ENHANCE FIRE SAFETY ARRANGEMENTS, CONSIDERING THAT TAMPERING WITH SMOKE LOBBY DOORS WAS COMMON.

/+TO INCOURAGE