Annual Report 2023

258 2023 Annual Report Transport International Holdings Limited NOTES TO THE FINANCIAL STATEMENTS (Expressed in Hong Kong dollars unless otherwise indicated) 29 Income tax in the consolidated statement of financial position (continued) (c) Deferred tax assets not recognised: In accordance with the accounting policy set out in note 1(y), the Group has not recognised deferred tax assets of $22,453,000 (2022: $21,267,000) in respect of cumulative tax losses of $136,079,000 (2022: $128,891,000) as it is not probable that future taxable profits against which the losses can be utilised will be available in the relevant tax jurisdiction and entity. At 31 December 2023 and 2022, these tax losses do not expire under the current tax legislation. 30 Provision for long service payments Hong Kong employees that have been employed continuously for at least five years are entitled to LSP in accordance with the Hong Kong Employment Ordinance under certain circumstances. These circumstances include where an employee is dismissed for reasons other than serious misconduct or redundancy, that employee resigns at the age of 65 or above, or the employment contract is of fixed term and expires without renewal. The amount of LSP payable is determined with reference to the employee’s final salary (capped at $15,000) and the years of service, reduced by the amount of any accrued benefits derived from the group’s contributions to MPF scheme or ORSO plans, with an overall cap of $390,000 per employee. Currently, the group does not have any separate funding arrangement in place to meet its LSP obligation. In June 2022, the Government gazetted the Amendment Ordinance, which will eventually abolish the statutory right of an employer to reduce its LSP payable to a Hong Kong employee by drawing on its mandatory contributions to the MPF scheme. The Government has subsequently announced that the Amendment Ordinance will come into effect from the Transition Date. Separately, the Government is also expected to introduce a subsidy scheme to assist employers after the abolition. Among other things, once the abolition of the offsetting mechanism takes effect, an employer can no longer use any of the accrued benefits derived from its mandatory MPF contributions (irrespective of the contributions made before, on or after the Transition Date) to reduce the LSP in respect of an employee’s service from the Transition Date. However, where an employee’s employment commenced before the Transition Date, the employer can continue to use the above accrued benefits to reduce the LSP in respect of the employee’s service up to that date; in addition, the LSP in respect of the service before the Transition Date will be calculated based on the employee’s monthly salary immediately before the Transition Date and the years of service up to that date. The group has accounted for the offsetting mechanism and its abolition as disclosed in notes 1(c)(iii) and 1(x)(ii). The group has determined that the Amendment Ordinance primarily impacts the group’s LSP liability with respect to Hong Kong employees who do not participate in the group’s ORSO plans. The Amendment Ordinance has no material impact on the group’s LSP liability with respect to employees that participate in the group’s ORSO plans.