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The 2008-09 tax concessions
1.
Q:
What tax concessions are proposed in the 2008-09 Budget?
A:
For 2007-08, a one-off reduction of 75% of the final tax in respect of salaries tax, profits tax, property tax and tax under personal assessment, subject to a ceiling of $25,000.
From the year of assessment 2008-09 onwards, the proposed tax concessions are as follows:
| (1) | The standard rate will be lowered from 16% to 15%, and the corporation profits tax rate from 17.5% to 16.5%. |
| (2) | The basic allowance and single parent allowance will be increased from $100,000 to $108,000, and married person's allowance from $200,000 to $216,000. |
| (3) | Tax bands will be widened from $35,000 to $40,000 each. |
| (4) | The deduction ceiling for approved charitable donations will be raised from 25% to 35% of adjusted assessable income or profits. |
| (5) | Full deduction under profits tax for capital expenditure on specified machinery or plant conducive to environmental protection, or deduction over 5 years for installations of the same nature. |
2.
Q:
Do I need to apply to enjoy the tax concessions relating to allowances and tax rates?
A:
After enactment of the relevant legislation on the tax concessions, the Inland Revenue Department will automatically apply the new allowances, tax rates and tax bands in calculating the 2008-09 provisional tax. You are only required to complete your tax return for the year 2007-08 in the normal manner. There is no need to make separate application.
3.
Q:
How do I report the amount of approved charitable donations in the 2007-08 tax return if it is in excess of 25% of the adjusted assessable income or profits?
A:
In 2008-09, the deduction ceiling for approved charitable donations will be raised from 25% to 35% of the adjusted assessable income or profits. You may apply for holding over of provisional tax if the amount of charitable donations made or to be made in 2008-09 exceeds or likely to exceed 25% of the adjusted assessable income or profits. If you made donations exceeding 25% in 2007-08, you can put down the actual amount in 2007-08 tax return. The Inland Revenue Department will assess 2008-09 provisional tax by reference to such amount of donations.
4.
Q:
How do I enjoy the proposals for 2008-09 regarding approved charitable donations and deductible capital expenditure on environmental protection facilities?
A:
If after taking into account the allowable amounts incurred in the basis period for the year of assessment 2008-09, your net chargeable income or assessable profits chargeable to provisional tax are, or are likely to be, less than 90% of those of the preceding year or of the estimated sums that you are liable to provisional tax, you are entitled to apply for holding over the relevant part of the provisional tax. Application for holding over of provisional tax should be lodged in writing with the Commissioner not later than (a) 28 days before the day by which the provisional tax is to be paid, or (b) 14 days after the date of the notice for payment of provisional tax, whichever is the later. The application should also state clearly the grounds for holdover. For an application for holding over of payment of provisional profits tax, properly signed draft accounts covering a period of not less than 8 months should be submitted together with the application.