New Tenancy Agreement Capital In Nature

Individuals, including capital corporations, partnerships, trustees and entities engaged in commercial, professional or commercial activities in Hong Kong, are required to tax all profits (excluding profits from the sale of assets) in Hong Kong or from this downturn. Therefore, there is no distinction between residents and non-residents. A resident can therefore deduct profits from abroad without incurring taxes; Conversely, a non-resident may be taxed on profits in Hong Kong. Whether a business is managed in Hong Kong and whether profits are made in Hong Kong is largely a fact, but some indications of the principles applied can be found in cases reviewed by the Hong Kong courts and the Privy Council. Profits generated abroad are not subject to tax, even if they are transferred to Hong Kong. However, if the property in question is used for substantial use other than leasing, for example.B. the owner`s occupancy between contracts. B lease or if a long lease replaces a short lease, legal and other costs are investments. In these circumstances, the expenses correspond to a physical change or an improvement in the lessor`s assets. Expenses related to revenue fees are deductible when they are made for rental purposes. Fees are not allowed if it is a capital or if it is not entirely and exclusively for rent. In general, commissions are capital when they relate to a capital business, such as the acquisition of real estate, for example.B.

If a business source changes the tax treatment of the rental of a property [paragraph 4 point a) to a non-commercial source [paragraph 4 d)] during the reference period for an YA, the company is not entitled to charge capital allowances for machinery and investments, as they are not used for business purposes at the end of the reference period. In cases where capital bonuses cannot be claimed, the residual costs of the facility and machinery are reduced by fictitious premiums for this YA and subsequent valuation years. However, if several properties are leased and any changes to the tax treatment of one of the properties are made from the commercial source to the non-commercial source or vice versa, capital premiums are claimed for investments and machinery for the property that remains a commercial source, since the facility and machinery are used for a transaction at the end of the reference period for that YA. In cases where the tax treatment is changed from the non-commercial source to the source of activity, the qualifying burden of the installation and, by machine, the market value is the first time they are used in the business. If the lease ceases temporarily due to the following circumstances, the costs are deductible for the period during which the property is not rented, provided that the property remains in good condition and can be rented: the expenses related to the first rental or subletting of a property for more than a year are capital expenses and therefore not rented. Fees include. B legal fees (for example. B rental contracting fees), brokerage and survey fees, and commissions. Expenses of one year or less can be deducted. Capital charges may be included in the calculation of capital gains or losses from the sale of the property.