What tax relief measures have been proposed by the Financial Secretary in his 2011–12 Budget?
The Financial Secretary proposed to increase the following allowances and deduction ceiling from the year of assessment 2011/12 onwards:
The Dependent Parent/Grandparent Allowance for a dependant aged 60 or above will be increased from $30,000 to $36,000 and the additional allowance in respect of a dependant residing with the taxpayer continuously throughout the whole year will also be increased from $30,000 to $36,000.
The Dependent Parent/Grandparent Allowance for a dependant aged 55 to 59 will be increased from $15,000 to $18,000, and the additional allowance in respect of a dependant residing with the taxpayer continuously throughout the whole year will also be increased from $15,000 to $18,000.
The deduction ceiling for Elderly Residential Care Expenses will be increased from $60,000 to $72,000.
The Child Allowance for each child will be increased from $50,000 to $60,000. The one-off additional allowance for each child born in the year of assessment will also be increased from $50,000 to $60,000.
The Financial Secretary further proposed:
A one-off reduction of 75% of the 2010/11 final tax in respect of salaries tax and tax under personal assessment, subject to a ceiling of $6,000.
Can I withhold payment of the 2nd instalment of 2010/11 provisional tax falling due from April 2011 onwards because of the proposed tax reduction?
You are advised to pay on time the 2nd instalment of the 2010/11 provisional tax falling due from April 2011. Otherwise, recovery actions will be taken by the Inland Revenue Department.
Similar to last year, the tax reduction is to reduce the 2010/11 final tax that will be charged and not the 2010/11 provisional tax that has been charged. Therefore, you are still required to pay the 2010/11 provisional tax as charged.
Will the Inland Revenue Department refund the 2010/11 provisional tax already paid by me?
The tax reduction is to reduce the 2010/11 final tax that will be charged, so the reduction will only be reflected in the notices of assessment for salaries tax and personal assessment to be issued starting from the third quarter of 2011. The tax reduction is not applicable to the 2010/11 provisional tax. The provisional tax already paid will be applied for payment of the 2010/11 final tax and the 2011/12 provisional tax. Excess balance, if any, will be refunded.
What amount of Child Allowance can I claim in respect of a child born in 2011/12 and thereafter?
You can claim Child Allowance of $60,000 and a one-off allowance of $60,000 in the year in which your child was born (i.e. in 2011/12). In the years thereafter, you can claim for each year a Child Allowance of $60,000 in respect of the child as long as other prescribed conditions are satisfied.
Would the Assessor take into account the increase in allowances and deduction ceiling when computing the 2011/12 provisional salaries tax?
After the enactment of the relevant legislation, the Assessor will apply the increased allowances and deduction ceiling to compute the 2011/12 provisional salaries tax. 2010/11 salaries tax assessments and 2011/12 notices for payment of provisional salaries tax will be issued from the third quarter of 2011.
I paid elderly residential care expenses of $65,000 in 2010/11, which exceeded the specified maximum of $60,000 for 2010/11. What amount should I write down in the 2010/11 Tax Return – Individuals for claiming the residential care expenses deduction?
You should state the actual amount of $65,000 paid in Part 8.4 of your 2010/11 Tax Return – Individuals (Form BIR 60). The Assessor will allow a deduction of $60,000 when computing your 2010/11 final tax, and a deduction of $65,000 when computing your 2011/12 provisional salaries tax.
My father, who is above 60 years of age in 2011/12 and maintained by me, is eligible to claim an allowance under the Government’s Disability Allowance Scheme. What allowances can I claim in 2011/12?
You are entitled to claim the Dependent Parent Allowance of $36,000. If your father resides continuously with you throughout 2011/12, you can also claim an additional allowance of $36,000. You are also eligible to claim the Disabled Dependant Allowance of $60,000 which remains unchanged for 2011/12.
After I had filed my 2010/11 Tax Return – Individuals, the residential care home, in which my 65 years old father stays, informed me that the residential care expenses payable in 2011/12 will be increased from $55,000 to $70,000. What should I do if I want to claim $70,000 as deduction?
If the amount of Elderly Residential Care Expenses paid or payable for 2011/12 exceeds $60,000, you may apply in writing for holding over of the 2011/12 provisional salaries tax upon receiving the assessment and notice for payment of provisional salaries tax. The application must be lodged not later than:
28 days before the due date for payment of the provisional tax, or
14 days after the date of issue of the notice for payment of the provisional tax,