(a) where profits
are derived partly within Hong Kong and partly outside:
Expenses directly attributable to the profits derived
outside Hong Kong are to be disallowed --- apportionment is based on turnover or sales.
(b) where profits are derived from trading
(taxable) and also
from dividends (non-taxable):
(i) interest incurred for financing the
investments producing dividends --- not allowable.
(ii) management cost of the investment ---
no apportionment needed in general.
apportionment for non-deductible expenditures has been approved by
court in the case re
Stanley So & Company. It was held that certain entertainment expenses, equipment
rental and office facilities charges are disallowed because they are regarded as
and not in the production of chargeable profits. In such cases, the
IRD can make appropriate adjustments
when computing the assessable profits.
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