Voluntary Health Insurance Scheme Tax Deduction

Starting from the year of assessment 2019/2020, taxpayers are eligible for a tax deduction for the premiums they purchase for themselves or their relatives under the VHIS scheme to reduce their taxable income. However, it should be noted that the insurance plan must be certified by the Food and Health Bureau as a plan that complies with the government’s Voluntary Health Insurance. Taxpayers can visit the Voluntary Health Insurance website to check whether their plan is included in the list of approved products.

A taxpayer can claim a maximum premium deduction of $8,000 for each insured person, and there is no upper limit on the number of taxpayers who can claim a premium deduction for relatives.

According to the Inland Revenue Ordinance, only the premiums of eligible dependents are eligible for deduction. The definition of adopter includes:

• Taxpayer’s spouse

• The taxpayer’s or spouse’s parent, grandparent, or maternal grandparent who is at least 55 years old. If they are under the age of 55 but have a claim for the Government Disability Allowance.

• The taxpayer’s or spouse’s children or siblings under the age of 18, if over 18 but under 25 and in full-time education. If they are over 18 but are physically or mentally incapable to work.

Married taxpayers can claim deductions for premiums paid by their spouse in addition to claiming deductions for their adopters, but married couples cannot double claim deductions for the same premium. They must agree on how to share the deduction for the premiums Otherwise, the Inland Revenue Department will not consider giving both parties a deduction.

For an adoptee with more than one person purchasing a VHIS scheme, each of them can claim a deduction for their respective premiums, but not more than $8,000. In addition, taxpayers can only claim deductions for premiums paid during the year of assessment. The premium for that month is not paid until the end of the year so the deduction for that month’s premium will not be available until the next year of assessment.

The above information is for reference only. If in doubt, we welcome your tax inquiry