Industrial and commercial building allowances

Sales amount - land price = sales proceed.

Land price = portion of land cost at acquisition x sales amount.

But sales proceed subject to ceiling of building cost at acquisition.

Example:
Cost of acquisition = $1,000,000 in which $400,000 is land cost.
Sales amount is $2,000,000.

Land price = $2,000,000 x 400,000/1,000,000 = $800,000
Sales proceed = $2,000,000 - $800,000 = $1,200,000

However, Sales proceed is subject to ceiling of $600,000 (cost of building at acquisition). Therefore, $600,000 is used to calculate balancing charge/allowance.

Remark: no capital gain tax in HK.

sale amount 減左land price再減iba/cba 個 residue就係Balancing charge/balancing allowance.
如果公司嗰年買入價一半係嗰年land price,o甘 disposal 時你將sale amount 一半當land price減左先。