The 2009-10 Budget Proposal

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On 25 February 2009, the Financial Secretary proposed to reduce 50% of the 2008-09 final tax in respect of salaries tax and tax charged under personal assessment, subject to a ceiling of $6,000. On 26 May 2009, the Financial Secretary proposed to increase the one-off reduction for the 2008-09 salaries tax and tax under personal assessment to 100%, subject to a revised ceiling of $8,000.

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Taxpayers who are chargeable to salaries tax and tax under personal assessment will have a reduction of 100% of their 2008-09 final tax, subject to a ceiling of $8,000.

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As a taxpayer, you need not make any application. You only need to file, as usual, your 2008-09 tax return - individuals which will be issued starting from the coming May. After the enactment of tax reduction legislation, the Inland Revenue Department will effect the tax reduction in the final assessment for 2008-09. Notices of assessment for salaries tax and tax under personal assessment with the tax reduction will be issued in the third quarter of 2009. For assessments issued before the legislative amendment, the Department will revise them after the enactment of the legislation. The excess tax paid, if any, will be refunded to you from late July onwards. There is no need for you to make enquiry.

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You are required to pay on time the 2nd instalment of the 2008-09 provisional tax falling due from April 2009. Otherwise, recovery action will be taken by the Inland Revenue Department.

Similar to last year, the tax reduction is to reduce the 2008-09 final tax that will be charged and not relating to the 2008-09 provisional tax that has already been charged. Therefore, you are still required to pay the 2008-09 provisional tax as charged.

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As the tax reduction is to reduce the 2008-09 final tax that will be charged, the reduction will only be reflected in the notices of assessment which will be issued starting from the third quarter of 2009 and you will then find reduction in the amount of tax payable for salaries tax and tax under personal assessment. The tax reduction is not applicable to the 2008-09 provisional tax. The provisional tax already paid will be applied for payment of the 2008-09 final tax and the 2009-10 provisional tax. Excess balance, if any, will be refunded.

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You can make use of the tax computation program to compute the tax reduction. For salaries taxpayers, please note the tax payable after reduction has not taken into account your 2008-09 provisional tax paid.

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Under personal assessment, all income of an individual taxpayer chargeable to tax, including the salaries income will be aggregated together to compute the tax payable. Hence, the amount of tax reduction for the year 2008-09 is 100% of the tax assessed under personal assessment and not the tax payable under salaries tax. If the tax payable under personal assessment is $8,000 or less, the tax reduction is 100%; if the tax payable is more than $8,000, then the amount reduced is restricted to $8,000.

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On 25 February 2009, the Financial Secretary proposed to reduce 50% of the 2008-09 final tax in respect of salaries tax and tax charged under personal assessment, subject to a ceiling of $6,000.  On 26 May 2009, the Financial Secretary proposed to increase the one-off reduction for the 2008-09 salaries tax and tax under personal assessment to 100%, subject to a revised ceiling of $8,000. Under salaries tax, a husband and a wife are allowed separate assessment; each of them gets a tax reduction subject to a ceiling of $8,000. However, under personal assessment, there is no separate taxation and only one assessment will be issued; therefore, the ceiling for the couple is $8,000.  Whether a taxpayer should apply for personal assessment will depend on his situation. In the year of assessment 2008-09, taxpayers should also take into account the factor that the tax reduction for each couple will be capped at $8,000 when considering their personal assessment election. IRD will check in each case if the personal assessment election will reduce the amount of tax payable, and assess each taxpayer in the way most advantageous to him.

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Businesses holding one-year certificate commencing during the period from 1 April 2009 and 31 July 2009 can enjoy the one-year BR fees waiver when they renew their certificates during the waiver period, i.e. from 1 August 2009 to 31 July 2010.

Concessionary refund of registration fees will be considered for businesses that are not required to renew their certificates during the waiver period. They include businesses that cease to operate during the waiver period and businesses holding 3-year certificates. These businesses can apply for refund of the registration fees paid that are attributable to the waiver period. As the waiver does not cover the 4 months from 1 April 2009 to 31 July 2009, business or branch registration fees paid for these 4 months will not be refunded.

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No. The waiver only applies to fees payable in respect of business registration certificates and branch registration certificates with commencement date falling within the period from 1 August 2009 to 31 July 2010. The basis for the waiver is the commencement date of the registration certificate, not the date of application for business or branch registration.

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The amount to be refunded will be calculated by reference to the validity period of the certificate held by the business, the number of days attributable to the waiver period (i.e. 1 August 2009 to 31 July 2010) and the actual amount of fees paid.

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Yes, the levy for the Protection of Wages on Insolvency Fund will continue to be payable.