depreciation allowance一問

The critical issue whether the plant and machinery is a part of capital injected to China factory. If it is, this is money for capital other than in cash. The value of the Plant and Machinery ( P & M ) will form part of the capital contributed. The titleship of the Plant and Machinery has passed to the Factory. 甲A has no ownership on these. Therefore,A could not claim any depreciation allowance on these P & M as A has no title of ownership. There should be no such fixed assets as appeared in the accounts of A. Instead, the value of these will represents an investment in China as an associated company or a subsidiary where appropriate.
However, if A is just lending / leasing these P & M to the factory for production. A still has the title of it. A is not using these P & M as a capital invested in the factory. The depreciation allowance of these could then be claimed by A for Hong Kong profits tax purposes. The plant and machinery is also appeared as a fixed assets in the accounts of A.
It is a common mistaken accounting treatment that plant and machinery for investment will still be regarded as fixed assets of A. This is definitely a critical error. And, IRD will be triggered for a tax investigation to clarify for the above 2 different issue. Beware... An adjustment for tax underpaid and, of course, a penalty will be levied by IRD.

www.multi-trade.diytrade.com

甲公司把機器當作是自己的資產,

是沒有問題的, 最重要是最初甲沒有說將那些機器比廠, 而只是租或借給廠, 香港有很多公司也是這樣做, 但有很多小折要少心, 例如所有機器的單要寫明是售給甲,

這樣子的話, 香港公司當然可以claim depreciation allowance !

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Best regards,

Samson So.

P.S. Samson So = so mo tuen