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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.