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6 common tax deduction items that help your tax allowance!

Taxpayers will want to know more about the tax allowances when calculating the salary tax and personal assessment during the tax filing period. 

What items and payments can be tax deducted? This article integrates common deductible tax payments for taxpayers.

Self-Education Expenses: Tax Deduction up to $10,000

Salaries tax can apply for tax deduction for various self-education expenses, including prescribed education courses, further training seminars, and examination fees, such as training or development provided by universities, university colleges, post-secondary colleges, approved educational institutions, and industry associations Courses, etc., can be used as the tax deduction for the tax year.

Starting from the 2018 tax year, the tax deduction ceiling for self-education expenses has been increased from $80,000 to $100,000. The expenses of self-education used for tax deduction must be studied in order to obtain or maintain the qualifications used in employment, and the same expenses cannot be deducted twice.

Approved Charitable Donations: Tax deduction up to 35% of assessable income

According to the “Tax Regulations”, donations to tax-exempt charities or government donations for charitable purposes can be tax deducted, as well as donations for spouses and tax deductions.

The total amount of approved charitable donations should not be less than $100, and the tax deduction limit is 35% of the assessable income for the year. When submitting tax returns, taxpayers should also retain the receipt of approved donations for a period of 6 years. 

Although there is no need to submit documentary proof, they should still pay attention to the opportunity of the Inland Revenue Department to conduct random inspections in the future.

For charities that are exempt from tax, you can search the “Charitable Trust List”.

Contributions to MPF or Recognized Occupational Retirement Schemes (ORSO) : Tax deduction up to $18,000

According to the Tax Ordinance, some of the contributions of employees and self-employed persons in the MPF or Recognized Occupational Retirement Scheme (ORSO) can be tax deducted, and the tax deduction limit for each tax year is $18,000.

The contributions of recognized occupational retirement schemes must not exceed the mandatory contributions calculated in accordance with the provisions of the “MPF Ordinance”; and the tax deduction ceiling of $18,000.

Voluntary Health Insurance Scheme (VHIS): tax deduction up to  $8,000

Since November 2018, the Tax Regulations were gazetted into law, officially incorporating the taxpayer’s Voluntary Health Insurance Scheme into the tax deduction scope, and it will take effect in subsequent tax years.

The regulations stipulate that if you purchase products under the eligible Voluntary Health Insurance Scheme for yourself or specified relatives (your parents, siblings, spouse, spouse’s parents, etc.) (for details, please visit the website of the voluntary health insurance plan). All insurance premiums can be used for salaries tax deduction.

Each taxpayer, or VHIS insured person, has an annual allowable tax deduction cap of $8,000, and taxpayers can apply for multiple policies of the same insured at the same time and use the eligible premiums paid as tax deductions. Remember that the insurance premium of the approved product will be deductible.

Eligible annuities, Tax Deductible Voluntary Contributions (TVC) : Tax deduction up to $60,000

In 2019, the “Taxation and Mandatory Provident Fund Schemes Legislation (Amendment) Ordinance” was gazetted into law to implement qualifying annuities (deferred annuities) premiums and Tax Deductible Voluntary Contributions (TVC) as salaries Tax deduction items will be effective in subsequent tax years.

The two preferential tax deductions are calculated in total, and the tax deduction limit for the relevant payments per taxpayer is 60,000 yuan per year. The relevant voluntary contributions must be deposited into the relevant TVC account, and the account holder must be the taxpayer himself; and the eligible annuity can apply for more than one deduction, and there is no upper limit on the number of insurance policies.

Home Loan Interest: Tax deductions up to $10,000

If the taxpayer is a residence in Hong Kong and a parking space in the same development property, the home loan interest paid will have the opportunity to apply for tax deduction from the salaries tax income.

Starting from the year of assessment in 2013, taxpayers can apply for extension of the period of deduction of home loan interest to 20 tax years (not necessarily consecutive years), with a maximum tax deduction of 100,000 yuan per year. In theory, the monthly interest payment decreases over time, and the earlier you apply, the greater the tax deduction.

The above information is for reference only. If you have any questions about tax declaration and tax deduction, we welcome your enquiries.

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