depreciation allowances may be granted as an alternative deduction. Industrial building and commercial building allowance As derived from its name, the industrial building allowance is only available for buildings used, generally, for the purpose of manufacturing of goods and products. Buildings which are used to carry out other businesses may be qualified for commercial building allowance. Industrial building allowance is more beneficial to the taxpayer because at the year of purchase, 20% of "initial allowance" on the capital expenditure can be deducted. Such benefit is not available for commercial buildings. For every year, 4% of the capital expenditure can be deducted as "annual allowance", until 25 years after its first use. On the contrary, the amount which the proceeds received at the time of sales over the allowance claimed will be taxable as "balancing charge". Depreciation Allowance on Plant and Machinery Types of plant and machinery that are tax-depreciable and their respective rates (for annual allowance only, see below) are set out in a prescribed schedule. The definition of plant and machinery does not include any implement, utensil and article. Instead, they can be fully deductible for profits tax purpose on replacement basis (i.e. the initial purchase of which is not deductible) For assets purchased during that year of assessment, an initial allowance of 60% will be granted. Thereafter, the assets sharing the same rates of annual allowance are transferred into a pool, classified by the prescribed schedule in the Rule 2 and annual allowance of either 10%, 20% or 30% will be granted for the entire pooled assets. For example, a motor vehicle, which is 30% pooled, can be first granted a 60% initial allowance and 30% of annual allowance on the remaining 40% asset value. Therefore, 72% (i.e. 60% + 30% x 40% = 72%) of the value of motor vehicle can be deducted from tax in the year of purchase. Tax loss Tax losses can be carried forward to set off the profits in the future years until fully absorbed but not backward. Group loss relief is not available in the taxation in Hong Kong. Taxpayer bears no rights to object a loss determined by IRD because loss is not an assessment in accordance to the definition of Ordinance. Until the time when profits are assessed which affects the tax loss (e.g. offsetting of previous tax loss), the taxpayer may apply for an objection to the CIR.