10. Which expenses/outgoings are NOT deductible from the assessable profits?
Expenses not deductible include (this is not an exhaustive list):
- any loss of capital;
- withdrawals by the sole proprietor/partners;
- any withdrawal of capital;
- any expenditure of a capital nature (e.g. purchase fixed assets);
- the costs of any improvements;
- rent or expenses relating to premises not occupied for the purpose of producing assessable profits;
- any sum recoverable under insurance or contract of indemnity;
- taxes paid under the Inland Revenue Ordinance, except Salaries Tax paid in respect of employees’ remuneration;
- any remuneration or interest on capital or loans payable to:
for a sole proprietorship - the proprietor or the proprietor's spouse,
for a partnership - the partners or their spouses;
- domestic or private expenses, including:
medical expenses, insurance premiums, birthday celebration expenses for the sole proprietor/partners and their family members, etc., and
costs of travelling between residence and place of business;
- traffic penalty incurred during the delivery of goods to customers (this is a fine for breaking the law);
- any sum not expended for the purpose of producing assessable profits.
- contributions made to a mandatory provident fund scheme in respect of the proprietor (except mandatory contributions) or the proprietor's spouse or, in case of a partnership, to its partners (except mandatory contributions) or their spouses.