TNAG-1451-FCO40-1955-Hong-Kong-Regional-Council-Ordinance-and-elections-1986 — Page 23

A30

Ord. No. 7/86

Amendment of section 40.

8.

INLAND REVENUE (AMENDMENT)

(iv) any conjunction of such rights as are referred to in sub-paragraphs (i), (ii) and (iii);

(v) rights in respect of a mortgage or other security over the machinery or plant; or

(vi) rights arising out of any arrangement relating to the financial obligations of the end-user of the machinery or plant towards the taxpayer, being financial obligations in relation to the machinery or plant;

(b) are in the opinion of the Commissioner capable of being limited as described in paragraph (a), having regard to either or both of the following-

(i) the assets of the taxpayer;

(ii) any arrangement to which the taxpayer is a party; or (c) where paragraphs (a) and (b) do not apply, are limited by reason that not all of the assets of the taxpayer (not being assets that are security for a debt of the taxpayer other than a debt arising in relation to the financing of the whole or part of the cost of the acquisition of the machinery or plant) would be available for the purpose of the discharge of the whole of the debt so arising (including the payment of interest) in the event of any action or actions by the creditor or creditors against the taxpayer arising out of the debt;

"principal officer" means—

(a) a person employed by a corporation who, either alone or jointly with one or more other persons, is responsible under the immediate authority of the directors for the conduct of the business of the corporation; or

(b) a person so employed who, under the immediate authority of a director of the body corporate or a person to whom paragraph (a) applies, exercises managerial functions in respect of the body corporate;

"relative" means the spouse, parent, child, brother or sister of the relevant person, and, in deducing such a relationship, an adopted child shall be deemed to be a child both of the natural parents and the adopting parent and a step child to be the child of both the natural parents and of any step parent; "used" includes held for use.".

Section 40(1) of the principal Ordinance is amended by inserting after the definition of "commercial building or structure" the following---

""hire-purchase agreement” means an agreement for the bailment of goods under which the bailee may buy the goods, or under which the property in the goods will or may pass to the bailee;".

Amendment of section $2.

9.

Section 52 of the principal Ordinance is amended—

(a) in subsection (3) by deleting “Any” and substituting the following-

"For the purposes of this section, any”;

(b) in subsection (4) by inserting after "Part III," the following-

"or any married woman,”;

(c) in subsection (5) by inserting after "Part III" the following-

", or any married woman,”;

INLAND REVENUE (AMENDMENT)

(d) by inserting after subsection (7) the following-

Ord. No. 7/86

A31

"(8) Notwithstanding anything to the contrary in subsections (4) and (5) an employer shall not be required to give notice under those subsections in respect of a married woman if he has reasonable grounds for believing that neither she nor her husband are, or are likely to be, chargeable to tax under Part III.”.

10. The principal Ordinance is amended by adding after section 61 the Addition of new following-

"Transactions designed to avoid liability for tax. (7 of 1986.)

61A. (1) This section shall apply where any transaction has been entered into or effected after the commencement of the Inland Revenue (Amendment) Ordinance 1986 (other than a transaction in pursuance of a legally enforceable obligation incurred prior to such commencement) and that transaction has, or would have had but for this section, the effect of conferring a tax benefit on a person (in this section referred to as "the relevant person"), and, having regard to— (a) the manner in which the transaction was entered into or

carried out;

(b) the form and substance of the transaction;

(c) the result in relation to the operation of this Ordinance that, but for this section, would have been achieved by the transaction;

(d) any change in the financial position of the relevant person that has resulted, will result, or may reasonably be expected to result, from the transaction;

(e) any change in the financial position of any person who has, or has had, any connexion (whether of a business, family or other nature) with the relevant person, being a change that has resulted or may reasonably be expected to result from the transaction;

(f) whether the transaction has created rights or obligations which would not normally be created between persons dealing with each other at arm's length under a transaction of the kind in question; and

(g) the participation in the transaction of a corporation resi-

dent or carrying on business outside Hong Kong,

it would be concluded that the person, or one of the persons, who entered into or carried out the transaction, did so for the sole or dominant purpose of enabling the relevant person, either alone or in conjunction with other persons, to obtain a tax benefit.

(2) Where subsection (1) applies, the powers conferred upon an assessor under Part X shall be exercised by an assistant commis- sioner, and such assistant commissioner shall, without derogation from the powers which he may exercise under that Part, assess the liability to tax of the relevant person—

(a) as if the transaction or any part thereof had not been

entered into or carried out; or

(b) in such other manner as the assistant commissioner con- siders appropriate to counteract the tax benefit which would otherwise be obtained.

(3) In this section-

"tax benefit" means the avoidance or postponement of the liability to

pay tax or the reduction in the amount thereof;

sections 61A and 61B.