The Insurance Companies Ordinance (Cap 41) ("ICO") was amended in 1993 to include retirement scheme management categories I and II as Classes G and H respectively under Long-term Business in Part 2, Schedule 1 of the ICO. It has been the Department's practice to assess income arising from such a business under section 23A of the Inland Revenue Ordinance ("IRO").
Following a recent review of this matter, it has been concluded that income arising from a business falling within Classes G and H is not assessable under section 23A of the IRO.
Instead, any business transacted under these two Classes is assessable under section 14 of the IRO. This reflects the position that a contract for a retirement scheme under Class G or Class H is not a contract of insurance because it does not have as its principal object the provision of insurance.
With effect from the year of assessment 2005/06, income arising from a business under Classes G and H will be assessable under section 14 of the IRO.
It is not proposed to disturb assessments made under section 23A of the IRO in respect of Classes G and H for years of assessment prior to 2005/06.