Amendment of First Schedule.
8.
Amendment of
9.
Second
Schedule.
5
(b) in paragraph (d) —
(i) by inserting after "1984 and all subsequent years of assessment" the following-
"up to and including the year of assessment commencing on 1 April 1986";
(ii) by deleting the full stop and substituting the following-- "; and"; and
(c) by inserting after paragraph (d) the following-
"(e) for the year of assessment commencing on 1 April 1987 and all subsequent years of assessment, at the rate of 18 per cent.".
The First Schedule to the principal Ordinance is amended (a) in the fourth paragraph by deleting "year of assessment 1984–85
and until superseded" and substituting the following--
"years of assessment 1984-85 to 1986-87 inclusive";
(b) inserting after the fourth paragraph the following—–
"For the year of assessment 1987/88 and until superseded
-161 per cent.".
The Second Schedule to the principal Ordinance is amended— (a) by deleting "For the year of assessment 1985/86 and each year
thereafter" and substituting the following
"For the years of assessment 1985/86 to 1986/87 inclusive”; and
(b) by inserting at the end thereof the following-
"For the year of assessment 1987/88 and each year thereafter-
SECOND COLUMN
THIRD COLUMN
(a) Upon the first $10,000
5 per cent
(b) Upon the next $10,000
10 per cent
(c) Upon the next $20,000
15 per cent
(d) Upon the next $20,000
20 per cent
(e) Upon the remainder
25 per cent,,
The Fourth Schedule to the principal Ordinance is amended-
in Part 1 by—-
(i) deleting “year of assessment 1979/80 and subsequent years
of assessment" and substituting the following
"years of assessment 1979/80 to 1986/87 inclusive"; and
(ii) inserting at the end the following—
"For the year of assessment 1987/88 and subsequent years of assessment and
-10 per cent";
(b) in Part 2 by—
(i) deleting "year of assessment 1979/80 and subsequent years of assessment" and substituting the following-
"years of assessment 1979/80 to 1986/87 inclusive”; and
(ii) inserting at the end the following-
"For the year of assessment 1987/88
and subsequent years of assessment
-10 per cent".
11. For the purpose of calculating net chargeable income under Transitional. section 63C(1) of the principal Ordinance in order to ascertain provisional salaries tax for the year of assessment commencing on April 1987 the references in sections 12B(1)(b) and 2(b) of the principal Ordinance to section 42B(1) shall be read as if they referred to section 42B(1) as amended by this Ordinance.
Explanatory Memorandum
The purpose of this Bill is to amend the Inland Revenue Ordinance to give effect to the proposals in the 1987 Budget to—
(a) reduce the standard rate of tax from 17% to 16% (clause 8); (b) combine the existing basic and additional personal allowances to form a new basic allowance and set the additional personal allowance at $5,000 for single persons and $10,000 for married persons. The new additional allowances will be progressively reduced where an individual's income exceeds in the case of a single person, $34,000 and $70,000 in the case of a married person. The amount of the reduction will be 10% of the difference between the income and $34,000 or $70,000 as the case may be (clauses 5 and 10);
(c) increase the allowance for a first child from $9,000 to $11,000 and
for a second child from $6,000 to $8,000 (clause 5);
(d) widen the band to which the 15% marginal rate of personal tax
applies from $10,000 to $20,000 (clause 9);
(e) reduce the rate of tax on corporate profits from 18% to 18%
(clauses 2 and 7); and
(f) as an anti-avoidance measure, make it clear that where a right to receive income from property is transferred by a person to another person without transferring the ownership of the property and consideration has been received or is receivable in respect of the transfer, the amount of consideration is deemed to be a receipt chargeable to profits tax (clauses 3 and 4).
2. The concessions under paragraphs 1(a) to (e) will apply for the first time to provisional and final assessments for the year of assessment commencing on 1 April 1987. The anti-avoidance measures are deemed to have come into operation on 26 February 1987.
3. The total cost to the revenue of the various concessions is estimated at $665 million in 1987/88 and $1,070 million in subsequent years. The provisions to counter tax avoidance will eliminate a tax drain which, although difficult to measure, could otherwise have reached upwards of $100 million per annum. So far as staffing implications are concerned, the enactment of this Bill will obviate the need for some additional staff to deal with returns that would otherwise have been received.
A
Amendment of
10.
Fourth
Schedule.
(a)
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