(D)	How to Complete the Return

Part 5	Profits Tax
	Report sole proprietorship businesses [whether the business(es) had any activities or not] in
	this Part. If you complete paper return and you had more than two sole proprietorship
	businesses, supply details in the same format on a separate sheet. For Internet Filing, supply
	details of remaining sole proprietorship businesses in the 'Supplementary Information on Tax
	Return' text box. See Section B.
	Complete 'Business Registration Number' and 'Name of business' and enter '0' in the items
	from 'Gross income' to 'Mandatory contributions to Mandatory Provident Fund Scheme in the
	capacity of a self-employed person' for sole proprietorship businesses which were dormant or
	had already ceased business for the whole year.
	Do not report partnerships of which you were a partner or sole proprietorship businesses
	which had changed to partnerships and vice versa during the year. Separate Profits Tax
	returns will be issued to the partnerships.
	Do not report corporations of which you were a shareholder. Separate Profits Tax returns will
	be issued to the corporations.
	Declare the profits / (losses) from the businesses, trades or professions for the basis period.
	'Basis period' means either the year ended 31 March during the relevant year of assessment
	or the accounting period ending on a day within the relevant year of assessment.
Completion of items in 'Profits Tax' ( Part 5 of paper return)
	Gross income means all types of income, including ordinary business income, proceeds from
	sale of capital assets and other non-taxable receipts, whether or not derived from the principal
	activities. (boxes & of paper return)
	Turnover includes amounts received / receivable from goods sold or services rendered.
	(boxes & of paper return)
	Gross profit / (loss) is the amount of turnover after deducting cost of goods sold. For a
	business not involving sale of goods, enter '0' for this item. (boxes & of paper return)
	Assessable profits / (Adjusted losses) must be computed in accordance with the Inland
	Revenue Ordinance. Add non-deductible expenses charged in the accounts to the net profit
	per account or deduct from the net loss to arrive at the assessable profits / (adjusted losses).
	Salaries paid to, benefits received by the proprietor or his / her spouse, proprietor's domestic
	or private expenditure, capital expenditure and non-business expenses are not deductible.
	For more details, refer to 'Related Tax Rules'. (boxes & of paper return)
	State whether the business is chargeable at two-tiered profits tax rates (applicable to the
	year of assessment 2018/19 and subsequent years). If the business had no connected entity
	for the subject year or no other connected entity elects to be so chargeable, the business
	is chargeable at two-tiered rates. For connected entities, the two-tiered rates will only
	be applicable to one of them. If your business had connected entities for the subject year
	and elects to be chargeable at two-tiered rates, you are required to complete Section 6 of
	the Appendix. (boxes & of paper return)
	You may use the PROFORMA PROFITS TAX COMPUTATION FORM [IR957A(e)] and
	attach it to your paper return. Each business should have a separate computation. Only
	business with gross income not exceeding $2,000,000 is suitable for Internet filing. If you
	choose Internet filing, the computation form need not be submitted. (Please see more
	information on documents and information to be submitted).
Attention: Election for Personal Assessment may reduce your tax liability.
Documents and Information to be Submitted in 'Profits Tax'
(a)	For each business with gross income not exceeding $2,000,000 for the basis period:
	Supporting documents listed in (b) below need not be submitted with the return. However,
	you must complete the return in accordance with the supporting documents. Retain these
	documents as you may be required to submit them later.
(b)	For each business with gross income over $2,000,000 for the basis period, complete paper
	return and provide:
	(i) A certified copy of the Statement of Financial Position / Balance Sheet and   Statement of Comprehensive Income / Profit and Loss Account for the basis period; (ii) A tax computation with supporting schedules showing how the amount of     assessable profits / (adjusted losses) has been arrived at; (iii) A Realization Statement if the business ceased during the year. If the business   was transferred to and carried on by another person, provide the name under   which the business is carried on by the transferee; (iv) In respect of interest paid, the names and addresses of the recipients   together with the purpose for which the money was borrowed and any security   provided to the lenders; (v) A list of all new capital items (e.g. plant and machinery, vehicles, furniture and   buildings) purchased during the basis period, the date of purchase and purchase   price of each item. For items acquired under hire purchase agreements, state the   purchase price and the number and amount of instalments paid, excluding interest; (vi) Changes in the method of valuation of opening or closing inventories or work in   progress if applicable; (vii) A list of properties rented. For each property rented, state full name and address   of the landlord or recipient of rent paid, the exact location of the property,   the total rent paid and the period covered; (viii) Payments made to contractors and / or subcontractors and commission paid   showing the amount, full name and address of the recipients and HKID Card   numbers or business registration numbers if available. [The information can   be supplied in Form IR56M which is available from this Department on written   request by quoting the business registration number of your business(es).]
(c)	Sufficient records must be kept for each business and retained for at least 7
	years after the date of the transaction to which they relate.
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