e_dipn13a_Interest Expense_s16(2ABC)

Support for this proposition can be found in the

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Unformatted text preview: n of the general anti-avoidance provision under section 61A in cases that satisfy the conditions specified in section 61A. Support for this proposition can be found in the Privy Council decision of CIR v. Challenge Corporation Limited, [1986] STC 548, and the Court of Appeal decision of Yick Fung Estates Ltd. v. CIR, 5 HKTC 52. 21 GRANDFATHERING PROVISIONS 41. The application of the new interest deduction provisions of the 2004 Amendment Ordinance is set out in section 16(5A). As a general rule, the new scheme will apply to interests incurred after the commencement of the 2004 Amendment Ordinance, that is, on or after 25 June 2004. 42. Nevertheless, interest incurred under a transaction which was the subject of an advance clearance, or under an arrangement which was the subject of an advance ruling given under section 88A, can be grandfathered from the application of the new scheme. To qualify for grandfathering, the advance clearance or the advance ruling must have been given by the Commissioner, before 25 June 2004, on the issue that the transaction or the arrangement, as the case may be, would not fall within the terms of section 61A. Deductions of interest expenses arising from these transactions or arrangements (incurred after 25 June 2004) are governed by the provisions that were in force before the amendments made by the 2004 Amendment Ordinance are effected [see paragraphs 2 – 9 above], as if the amendments of the 2004 Amendment Ordinance to section 16 had not taken effect. DUTY OF THE TAXPAYER TO DISCLOSE DETAILS OF INTEREST DEDUCTION CLAIMS 43. It is the duty of the taxpayer who makes a claim for interest deduction to disclose the full details of the facts that may affect the deductibility of the interest concerned. It is therefore necessary for him to ascertain and to disclose in the tax return whether there is any arrangement in place that may trigger the interest deduction restriction provisions under section 16(2A), (2B) or (2C). 22...
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This note was uploaded on 03/11/2010 for the course BBA B415 taught by Professor Mrli during the Spring '10 term at Academy of Art University.

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