Taxpayers will want to know more about the allowances when calculating salaries tax and personal assessment during the tax filing period. What items and payments are eligible for tax deduction? This article consolidates common tax-deductible payments for taxpayers.
Expenses for personal education: deductible up to $10,000
Salaries tax is tax-deductible for a wide range of personal training expenses, including prescribed educational courses, training seminars, and examination fees, such as training or development provided by universities, university colleges, post-secondary colleges, approved educational institutions, trade associations Courses, etc., can be used as a tax deduction for the year of assessment.
Starting from the year of assessment 2018, the tax deduction limit for personal education expenses has been increased from $80,000 to $100,000. The personal education expenses used for tax deduction must be taken to obtain or maintain the qualifications for application in employment, and the same expenses cannot be deducted twice.
Approved charitable donations: tax deduction capped at 35% of assessable income
According to Article 88 of the “Inland Revenue Ordinance”, donations to charitable organizations that are exempt from tax or the government for charitable purposes are tax-deductible and can be donated to spouses and apply for a tax deduction.
For approved charitable donations, the total amount 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 keep receipts 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.
Tax-exempt charities can be searched here or found on the “Charitable Trust List”.
Contributions to MPF or Recognized ORSO Schemes: Tax deduction cap of $18,000
Pursuant to the Inland Revenue Ordinance, employees, and self-employed persons’ MPF or recognized occupational retirement schemes (ORSOs) can claim a tax deduction for part of their contributions, and the tax deduction is capped at $18,000 per year of assessment.
Contributions to recognized ORSO schemes must not exceed the mandatory contributions calculated in accordance with the MPF Ordinance; and the tax deduction cap of $18,000.
Voluntary Health Insurance Scheme: Tax deduction cap of $8,000
In November 2018, the Inland Revenue Ordinance was gazetted into law, officially including the voluntary health insurance scheme of taxpayers into the tax-deductible scope, and it will take effect in subsequent tax years.
The Ordinance stipulates that if you purchase products under the Eligible Voluntary Health Insurance Scheme for yourself or specified relatives (your parents, siblings, spouse, parents-in-law, etc.) Premiums are eligible for salary tax deduction.
Each taxpayer, or VHIS insured, has a maximum allowable tax deduction limit of $8,000 per year, and a taxpayer may apply for multiple policies of the same insured at the same time, and the eligible premiums paid will be used for a tax deduction, remember that policy premiums for eligible products are only deductible.
Qualifying Annuity, Tax-deductible MPF Voluntary Contribution (TVC): Tax deduction cap of $60,000
In 2019, the Inland Revenue and Mandatory Provident Fund Schemes Legislation (Amendment) Ordinance was gazette into law to implement the implementation of the premiums of qualifying annuities (deferred annuities) and tax-deductible MPF voluntary contributions (TVC) as salaries Tax deductions are effective for subsequent tax years.
The preferential tax deductions for both are calculated in total, and the tax deduction limit for each taxpayer is capped at $60,000 per year. The relevant voluntary contributions must be deposited into the relevant TVC account, and the account holder must be the taxpayer; and the qualifying annuity can apply for deduction of more than one, and there is no upper limit on the number of policies.
Home loan interest: tax deductible up to $10,000
If the taxpayer is a residence in Hong Kong and has a parking space in the same development property, the home loan interest paid by the taxpayer can apply for tax deduction from the salaries tax income.
Starting from the year of assessment 2013, taxpayers can apply for an extension of the deduction period for home loan interest to 20 years of assessment (does not have to be consecutive years), with a maximum deduction of $100,000 per year. In theory, interest decreases over time in monthly contributions, and the earlier you claim, 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 inquiries.