Hong Kong Ordinances

INLAND REVENUE ORDINANCE - SECT 19C

Treatment of losses after 1 April 1975

(Past version on 17/04/1998).
(Past version on 30/06/1997).

(1) Subject to section 19CB, where in any year of assessment-

   (a)  an individual sustains a loss in any trade, profession or business
        carried on by him; and

   (b)  the individual or, in the case of a husband and wife, not being a wife
        living apart from her husband, the husband or wife does not elect for
        personal assessment under section 41 for that year of assessment, the
        amount of that loss shall be carried forward and set off against the
        amount of his assessable profits from that trade, profession or
        business for subsequent years of assessment. (Amended 71 of 1983 s.
        17; 43 of 1989 s. 9)

(2) Subject to section 19CB, where in any year of assessment-

   (a)  an individual incurs a share of a loss of a partnership in any trade,
        profession or business carried on by that partnership; and

   (b)  the individual or, in the case of a husband and wife, not being a wife
        living apart from her husband, the husband or wife does not elect for
        personal assessment under section 41 for that year of assessment, the
        amount of that share of the loss shall be carried forward and set off
        against the amount of his share of assessable profits of the
        partnership from that trade, profession or business for subsequent
        years of assessment: (Amended 71 of 1983 s. 17; 43 of 1989 s. 9)
        Provided that where at the end of the year of assessment commencing on
        1 April 1983 a share of a loss to be carried forward under this
        subsection is one that was incurred by a husband and wife, not being a
        wife living apart from her husband, in partnership with each other,
        whether or not also with other persons-

        (i)    the share of the loss shall be deemed to be apportioned between
               the husband and wife in the proportions in which they were
               entitled to share profits between themselves as at the last day
               of the basis period for that year of assessment; and

        (ii)   each such portion of the share of the loss shall be carried
               forward and set off against the husband's or, as the case may
               be, the wife's respective share of assessable profits of the
               partnership from that trade, profession or business for
               subsequent years of assessment. (Added 71 of 1983 s. 17)

(3) Subject to subsection (3A), where in any year of assessment an individual
has sustained a loss or has incurred a share of a loss of a partnership and-

   (a)  is personally assessed under Part VII; or

   (b)  in the case of a husband and wife, not being a wife living apart from
        her husband, the husband or wife is personally assessed under Part
        VII, (Replaced 43 of 1989 s. 9) the amount of the loss or share of the
        loss shall be dealt with in accordance with that Part. (Replaced 71 of
        1983 s. 17)

(3A) For the purposes of Part VII, where the loss or the share of the loss
referred to in subsection (3) consists solely of the balance of an unabsorbed
loss calculated in accordance with section 19CA(2)(b), the amount of the loss
or the share of the loss shall be deemed to be the amount arrived at by
dividing such balance by the adjustment factor within the meaning of
section 19CA. (Added 32 of 1998 s. 12)

(4) Subject to section 19CB, where in any year of assessment a corporation or
a person, who is not an individual, a partnership or a corporation, carrying
on a trade, profession or business sustains a loss in that trade, profession
or business, the amount of that loss shall be set off against the
assessable profits of the corporation or person

(including its share of the assessable profits of a partnership in which it is
a partner) for that year of assessment and to the extent not so set off, shall
be carried forward and set off against the corporation's or the person's
assessable profits and its share of assessable profits of such a partnership
for subsequent years of assessment.

(5) Subject to section 19CB, where-

   (a)  a trade, profession or business is carried on in Hong Kong by persons
        in partnership and any one of those persons is a corporation or is a
        person who is not an individual, a partnership or a corporation; and
        (Amended 7 of 1986 s. 12)

   (b)  in any year of assessment a loss is incurred in that trade, profession
        or business, then the corporation's or the person's share of that loss
        shall be set off against the assessable profits of the corporation or
        the person for the year of assessment in which the loss was incurred
        and to the extent not so set off, be carried forward and, for
        subsequent years of assessment, be set off first against the
        corporation's or the person's share of the assessable profits of such
        partnership and, to the extent not so set off, then against the
        assessable profits of the corporation or the person.

(6) For the purposes of this section-

   (a)  the amount of any loss set off in computing the assessable  profits
        for any year of assessment shall not be set off in computing the
        assessable profits for any other year of assessment;

   (b)  the amount of any loss carried forward to any year of  assessment to
        be set off against the assessable profits for that year shall not be
        set off more than once in that year of assessment;

   (c)  the total amount set off against assessable profits shall not exceed
        the amount of the loss;

   (d)  the amount of any loss to be set off under this section shall be the
        loss attributable to activities in Hong Kong; (Amended 30 of 1981 s.
        4; 7 of 1986 s. 12)

   (e)  the amount of any loss sustained in any trade, profession or business
        carried on for the benefit of a trust by a person in his capacity as
        trustee shall not be available for set off except against the
        assessable profits of that trust from that trade, profession or
        business for subsequent years of assessment. (Added 30 of 1981 s. 4)

(7) (Repealed 30 of 2004 s. 3)

(8) This section shall apply to the year of assessment commencing on 1 April
1975 and to subsequent years of assessment. (Added 7 of 1975 s. 16. Amended 32
of 1998 s. 12)