What is the Incentive for JTC land Intensification Allowance (LIA)?

Answer: The LIA Incentive

• An initial allowance at 25% of the qualifying capital expenditure incurred on the construction or renovation/extension of the approved LIA building will be granted in the year of assessment relating to the basis period during which the capital expenditure is incurred. Upon issuance of the TOP for the completed LIA building and where it meets all qualifying criteria, annual allowance at 5% of the qualifying capital expenditure incurred will be granted until total allowance amounts to 100% of qualifying capital expenditure. Please refer to Annex B on the example of how the initial and annual allowances will be computed.

• LIA Applicant is only eligible if conditions can be met at the point of TOP. LIA applicants must comply with all approved conditions (i.e. GPR condition and 80% GFA requirement) upon the completion of their building works and throughout the duration of the LIA incentive. EDB reserves the right to revoke the incentive by recovering initial and/or annual allowances if conditions are not met.

• In cases where the completed building or structure fails to meet the relevant GPR benchmark, the initial and/or annual allowances will be recovered through reassessment of preceding tax years.

• For any basis period where there are any changes to qualifying user(s) and/or use(s) that count towards the minimum 80% GFA requirement, the applicant shall inform EDB of the change, and the change shall be assessed by EDB according to prevailing criteria and benchmarks at the time of application. If approval is granted by EDB, the taxpayer shall be allowed to continue to claim the LIA under the new qualifying use(s). Otherwise, the annual allowance will not be granted for the year of assessment relating to that basis period. If change is permanent, no further annual allowances will be granted to the taxpayer from the year of assessment relating to the basis period during which the permanent change occurs and the LIA incentive shall be terminated with effect from that year of assessment.

• When the approved LIA building is sold at any time when there is still a balance of qualifying capital expenditure remaining to be claimed or after the qualifying capital expenditure has been fully claimed, any balance of the qualifying capital expenditure still remaining will be disregarded and there will not be any balancing adjustment on the seller of the building.

• Where the LIA building is transferred to an amalgamated company under a qualifying amalgamation under section 34C of the Income Tax Act (ITA), the annual allowances will be given to the amalgamated company until the remaining qualifying capital expenditure is fully claimed, subject to the amalgamated company meeting the same conditions for the LIA incentive. The taxpayer is required to notify the EDB of the amalgamation.

• When there is insufficient income in any year of assessment to absorb the initial or annual allowances, any unutilised LIA can be carried forward to offset against the taxpayer’s income in future years of assessment, subject to the taxpayer meeting the prevailing conditions for carry forward of unutilised allowances. Any unutilised allowances can also qualify for carry back under the Carry-Back Relief System or for transfer under the Group Relief System, subject to the taxpayer meeting the prevailing conditions under those systems.