How you file your tax return will determine how much taxes you have to pay!
The seemingly simple tax return actually includes 17 allowance/deduction items. You may end up paying more if you overlook them. To qualify for the tax savings, you have first understand your eligibility, and ensure that the required information is provided correctly.
2023-24 Allowances and Reductions
| Allowances | HK$ | |
|---|---|---|
| 1 | Basic Allowance | 132,000 |
| 2 | Married Person’s Allowance | 264,000 |
| 3 |
Child Allowance
|
130,000 (for each child) 130,000 (for each child) |
| 4 | Dependent Brother or Sister Allowance | 37,500 (for each person) |
| 5 |
Dependent Parent and Dependent Grandparent Allowance
|
25,000 (for each person) 50,000 (for each person) |
| 6 |
Additional Dependent Parent and Dependent Grandparent Allowance
|
25,000 (for each person) 50,000 (for each person) |
| 7 | Single Parent Allowance | 132,000 |
| 8 | Personal Disability Allowance | 75,000 |
| 9 | Disabled Dependant Allowance | 75,000 (for each person) |
| Deductions | Maximum limits | |
| 10 | Expenses of Self-Education | 100,000 |
| 11 | Elderly Residential Care Expenses | 100,000 |
| 12 | Home Loan Interest | 100,000 |
| 13 | Mandatory Contributions to Recognized Retirement Schemes | 18,000 |
| 14 | Premiums Paid under Voluntary Health Insurance Scheme | 8,000 (for each insured person) |
| 15 | Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contributions | 60,000 (in total) |
| 16 | Domestic Rents Deduction | 100,000 |
| 17 | Approved Charitable Donations | Up to 35% of the assessable income or profits |
Source: Inland Revenue Department
There are few items that can be easily overlooked or misunderstood. First, for the “Mandatory Contributions to Recognized Retirement Schemes”, you should not assume that the Inland Revenue Department (IRD) will automatically deduct your MPF mandatory contributions from their calculations as such contributions are compulsory in nature. You will be deemed to have given up the allowance if you leave the field blank.
Second, if you have taken out a Qualifying Deferred Annuity Policy (QDAP), made any Tax Deductible MPF Voluntary Contributions (TVC) or joined the Voluntary Health Insurance Scheme (VHIS), you have to fill in Part 9 of the tax return form for QDAP, and Part 10 for TVC or VHIS. You should bear in mind that VHIS is the only medical insurance scheme eligible for tax reduction.
Third, domestic rents are eligible for tax deductions from 2022/23 assessment year onwards. The deduction amount is up to HK$100,000 per year.
Only one individual can enjoy the dependent parent/grandparent allowance, meaning it cannot be shared among siblings. If they jointly take care of their parent(s)/grandparent(s), a consensus needs to be reached before applying for the allowance.
Start saving for the tax season
You can use the “Salaries Tax Computation” on IRD’s website to get an idea of how much taxes you will have to pay. By entering some basic information, you can get an estimate on your tax payable. Next, use the IFEC Money Tracker app to help you set and track your saving goals, prepare a budget, and manage income and various expenses, allowing you to save up for taxes or achieve other saving goals easily!
