Hong Kong Ordinances

INLAND REVENUE ORDINANCE - SECT 22B

Limited partner loss relief

(1) In this section-

"limited partner" (有限責任合夥人) means a person who is a partner in a
partnership which is carrying on a trade, profession or business and that
person is-

   (a)  a limited partner in a limited partnership registered under the
        Limited Partnerships Ordinance ( Cap 37);

   (b)  a general partner in a partnership in which he is not entitled to or
        does not take part in the management of the partnership but is
        entitled to have his liabilities, or his liabilities beyond a certain
        limit, for debts or obligations incurred by the partnership for the
        purposes of the trade, profession or business discharged or reimbursed
        by some other person; or

   (c)  under the law of any place outside Hong Kong, not entitled to or does
        not take part in the management of the partnership and is not liable
        beyond a certain limit for debts or obligations incurred by the
        partnership for the purposes of the trade, profession or business;

"relevant sum" (有關款項) means the amount of the person's contribution to
the partnership as at the end of the relevant year of assessment in which the
loss is sustained, except that where the person ceased to be a partner in the
partnership during that year of assessment it is the time when he so ceased.

(2) For the purposes of this section, a person's contribution to the
partnership at any time is the aggregate of-

   (a)  the amount which he has contributed to it as capital less the sum of-

        (i)    the amounts of capital that he has directly or indirectly drawn
               out or received back; and

        (ii)   anything that he is or may be entitled at any time while the
               partnership carries on the trade, profession or business to
               draw out, receive back or be reimbursed from another person,
               whether or not the entitlement is enforceable or is pursuant to
               an unenforceable undertaking or practice; and

   (b)  the amount of any profits or gains of the partnership to which he is
        entitled but which he has not received in money or money's worth.

(3) Notwithstanding section 19C, where in any year of assessment a person who
is a limited partner in a partnership has incurred a share of a loss of that
partnership the amount of the loss which may be set off against the
assessable profits of the person is limited to the lesser of-

   (a)  the amount of the loss; or

   (b)  the relevant sum.

(4) This section applies to years of assessment that commence on or after 1
April 1991 and to that part of any basis period for a year of  assessment that
occurs on or after 15 November 1990 but before 1 April 1991 but does not apply
in respect of a share of a loss incurred under a transaction which was the
subject of an application for advance clearance made to the Commissioner
before 15 November 1990 and the Commissioner before or after that date
expressed the opinion that the transaction would not fall within the terms of
section 61A or, where no such application was made in respect of a loss
incurred under a transaction entered into before that date, the transaction
is, in the Commissioner's opinion, of the same type as any for which, in the
circumstances prevailing as at 14 November 1990, he would have expressed the
opinion that the transaction would not fall within the terms of section 61A.
(Added 15 of 1992 s. 3)

"limited partner" (有限責任合夥人)

"relevant sum" (有關款項)