| 7. Taxation |
(i) |
In March 2003, the Government announced
an increase in the Hong Kong profits tax rate
from 16% to 17.5% for the fiscal year 2003-04.
Notional profits tax is provided at 17.5%
(2003 : 16%) of the estimated assessable profits
for the year. A payment in lieu of profits
tax calculated on the basis of the provisions
of the Inland Revenue Ordinance (Cap. 112)
will be made to the Government. The amount
of taxation charged / (credited) to the profit
and loss account represents : |
|
| |
2004
HK$000 |
|
2003
HK$000 |
|
 |
Current tax
Notional profits tax
Over-provision in respect of prior years
(see (ii) below) |
53,069
(62,175
|
)
|
80,082
－
|
|
|
| |
(9,106 |
) |
80,082 |
|
|
Deferred tax
Origination and reversal of
temporary differences
Effect of increase in tax rate on deferred
tax |
(2,259
(154
|
)
) |
(3,255
－
|
)
|
|
| |
(2,413 |
) |
(3,255 |
) |
|
Total tax (income) / expense |
(11,519 |
) |
76,827 |
|
|
|
(ii) |
The provision for untaken leave liability
(i.e. the estimated liability for annual leave
earned but untaken by the employees) recognised
in the accounts in provision for employee
benefits in accordance with the Statement
of Standard Accounting Practice (SSAP) 34
"Employee Benefits" since 2002-03 had previously
been ruled by the Commissioner of Inland Revenue
(CIR) as a non-deductible expense for tax
purpose.
After seeking legal advice, CIR advised in
August 2004 that the provision for untaken
leave liability (for the current year and
for the one-off adjustment for prior years
effected in the first year when adopting SSAP
34) would be allowed as a deductible expense
for tax purpose.
As a result, adjustments have been made in
respect of profits tax previously over-provided.
|
|
| |
|
(iii) |
Reconciliation between tax expense and
accounting profit at applicable tax rates
:
|
| |
|
| |
2004
HK$000 |
|
2003
HK$000 |
|
|
| Profit before tax |
352,319 |
|
531,581 |
|
|
Notional tax on profit before tax
Over-provision in respect of prior years
Recognition of a previously unrecognised
deferred tax asset
Tax effect of non-taxable revenue
Effect on opening deferred tax balances
resulting from an increase in
tax rate |
61,656
(62,175
(1,638
(9,208
(154
|
)
)
)
)
|
85,053
－
1,638
(9,864
－
|
)
|
|
Actual tax (income)/ expense |
(11,519 |
) |
76,827 |
|
|
|
| 8. Dividend |
|
A dividend of $109.151 million being 30%
of the profit after tax is proposed for the
year ended 31 March 2004 and is payable to
the Government (2003 : $136.426 million). |
|
| 9. Rate of return on fixed
assets |
|
This is calculated as a percentage of profit
from operations and interest income after
taxation to Average Net Fixed Assets (ANFA).
The Electrical and Mechanical Services Trading
Fund is expected to meet a target return of
13.5% per annum on ANFA as determined by the
Financial Secretary. |
|
