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Advance Ruling Case No. 18


1. The provisions of the Ordinance

  This ruling applies in respect of section 18E of the Inland Revenue Ordinance.

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2. Background

(a) The Applicants are companies of the same group, 3 of which commenced business before 1 April 1974 ("the Old Businesses"). The remaining 12 companies commenced business after 1 April 1974 ("the New Businesses").
(b) The holding company of the Applicants is Company A, a company incorporated in Country X.
(c) In 2004, Company A merged with Company B.
(d) The Applicants make up their accounts to 30 September whereas Company B makes up its accounts to 31 December.

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3. The arrangement

(a) The Applicants will change the accounting date from 30 September to 31 December in the year of assessment 2004/2005. Both the Old Businesses and the New Businesses will adopt a basis period of 15 months from 1 October 2003 to 31 December 2004 for the year of assessment 2004/2005.
(b) The reason put forward by the Applicants for the change of accounting date is to conform to the accounting date of Company B.

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4. The ruling

(a) The Commissioner will adopt the 12-month period from 1 January 2004 to 31 December 2004 as the basis period of the Old Businesses for the year of assessment 2004/2005.
(b) The assessable profits/adjusted losses of the Old Businesses for the year of assessment 2003/2004 will be subject to a re-computation as a result of the change of their accounting date from 30 September to 31 December.
(c) The Commissioner will adopt the 15-month period from 1 October 2003 to 31 December 2004 as the basis period of the New Businesses for the year of assessment 2004/2005.
(d) The assessable profits/adjusted losses of the New Businesses for the year of assessment 2003/2004 will not be recomputed as a result of the change of their accounting date from 30 September to 31 December.

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5. The period for which the ruling applies

  This ruling applies to the Applicants for the years of assessment 2003/2004 and 2004/2005.

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6. The material assumptions in respect of a future event or any other matter made by the Commissioner

  There are no assumptions made by the Commissioner.

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7 . Date of ruling issued

  14 December 2004.