Hong Kong Ordinances

INLAND REVENUE ORDINANCE - SECT 12

Adjustments to assessable income

(Past version on 30/06/1997).

(1) In ascertaining the net assessable income of a person for any
year of assessment, there shall be deducted from the assessable income of that
person-

   (a)  all outgoings and expenses, other than expenses of a domestic or
        private nature and capital expenditure, wholly, exclusively and
        necessarily incurred in the production of the assessable income;

   (b)  allowances calculated in accordance with Part VI in respect of capital
        expenditure on machinery or plant the use of which is essential to the
        production of the assessable income;

   (c)  the amount of any excess carried forward to that year of  assessment
        in accordance with section 12A(3);

   (d)  the amount of any excess required by subsection (3) to be deducted;

   (e)  the amount of the expenses of self-education paid in the year 
        of assessment not exceeding the amount prescribed in subsection (6).
        (Added 24 of 1996 s. 3)

(2) Where any machinery or plant is not used wholly and exclusively in the
production of assessable income, the amount of the allowances provided for in
subsection (1)(b) shall be reduced in the proportion considered by the
assessor to be fair and reasonable.

(3) If in the case of a husband and wife who have made an election under
section 10(2), the aggregate of deductions claimed for any year of  assessment
by either spouse under subsection (1)(a), (b) and (c) exceeds the
assessable income of that spouse in that year, the excess shall be deducted
from the assessable income of the other spouse for the purpose of determining
the net assessable income of that other spouse in that year. (Amended 43 of
1989 s. 4)

(4) (Repealed 71 of 1983 s. 8)

(5) The amount of assessable income for any year of assessment of a person
shall, for the purposes of ascertaining his net assessable income, be
increased by the amount of any balancing charge directed to be made under Part
VI on that person in respect of the machinery or plant used in the production
of the assessable income.

(6) For the purposes of subsection (1)(e)-

   (a)  the total amount that may be deducted in any year of assessment shall
        not exceed the amount specified in relation to that year in Schedule
        3A; (Amended 42 of 1997 s. 3)

*(b) "expenses of self-education" (個人進修開支) means expenses paid by
the taxpayer as-

        (i)    fees, including tuition and examination fees, in connection
               with a prescribed course of education undertaken by the
               taxpayer; or

        (ii)   fees in respect of an examination set by an education provider
               or a trade, professional or business association, and
               undertaken by the taxpayer to gain or maintain qualifications
               for use in any employment, but does not include- (A) expenses
               for which a deduction is allowable or has been allowed to the
               taxpayer in any year of assessment under any other provision of
               this Ordinance; or (B) expenses to the extent to which they
               have been reimbursed or are reimbursable to the taxpayer by his
               employer or any other person unless the reimbursement has been
               or will be included in the assessable  income of the taxpayer;
               (Replaced 12 of 2004 s. 4)

*(c) "prescribed course of education" (訂明教育課程) means a course
undertaken to gain or maintain qualifications for use in any employment and
being-

        (i)    a course of education provided by an education provider;

        (ii)   a training or development course provided by a trade,
               professional or business association; or +(iii) a training or
               development course accredited or recognized by an institution
               specified in Schedule 13; (Replaced 12 of 2004 s. 4)

*(d) "education provider" (教育提供者) means-

        (i)    a university, university college or technical college;

        (ii)   a place of education to which the Education Ordinance ( Cap 
               279) does not apply by virtue of section 2 of that Ordinance;

        (iii)  a school registered under section 13(a) of the Education 
               Ordinance ( Cap 279);

        (iv)   a school exempted from registration under section 9(1) of the
               Education Ordinance ( Cap 279);

        (v)    an institution approved by the Commissioner for the purposes of
               section 16C; or

        (vi)   an institution approved by the Commissioner under paragraph

   (e)  ; (Replaced 12 of 2004 s. 4)

*(e) the Commissioner may in writing approve an institution as an
education provider and the approval may operate from a date, whether before or
after the date of approval, specified in the instrument of approval and may be
withdrawn at any time; (Added 12 of 2004 s. 4) +(f) the Secretary for
Financial Services and the Treasury may by order amend Schedule 13. (Added 12
of 2004 s. 4) (Replaced 7 of 1975 s. 4. Amended 71 of 1983 s. 8)
__________________________________________________________________________
Notes:

* Section 12(6)(b), (c)(except paragraph (c)(iii)), (d) and (e) applies in
relation to the year of assessment 2000/01 and to all subsequent years of
assessment. (Please see 12 of 2004 s. 2(1))

+ Section 12(6)(c)(iii) and (f) applies in relation to the year of  assessment
2004/05 and to all subsequent years of assessment. (Please see 12 of 2004 s.
2(4))

"expenses of self-education" (個人進修開支)

"prescribed course of education" (訂明教育課程)

"education provider" (教育提供者)