2012-13 Financial Budget

A:

Individual taxpayers will get a one-off reduction of 75% of the final tax for the year of assessment 2011/12 in respect of profits tax, salaries tax and tax under personal assessment, subject to a ceiling of $12,000 per case. Furthermore, the following tax measures will be introduced from year of assessment 2012/13 onwards:

(a) Increase in the following allowances:

(b)Increase in the maximum allowable deductions for the following items:

(c) Extension of the number of years of deduction for home loan interest to 15 years of assessment.

A:

You only need to file, as usual, your 2011/12 individuals tax return (BIR60) which will be issued in May this year. After enactment of the relevant legislation, IRD will effect the tax reduction in the final assessment for 2011/12 and apply the new allowances in calculating the 2012/13 provisional tax. For 2011/12 assessments issued before the legislative amendment, the Department will revise them after enactment of the legislation. It is expected that the excess tax paid, if any, will be refunded to taxpayers starting from late July 2012. There is no need for you to make a separate application.

A:

You are required to pay on time the 2nd instalment of the 2011/12 provisional tax falling due from April 2012. Otherwise, recovery action will be taken by IRD . Similar to previous occasions, the tax reduction is to reduce the 2011/12 final tax that will be charged and not relating to the 2011/12 provisional tax that has already been charged. Therefore, you are still required to pay the 2011/12 provisional tax as charged.

A:

As the tax reduction is to reduce the 2011/12 final tax that will be charged, the reduction will only be reflected in the notices of salaries tax assessment, profits tax assessment and personal assessment for 2011/12 that will be issued starting from the third quarter of 2012. The tax reduction is not applicable to the 2011/12 provisional tax. The provisional tax paid will be applied to pay the 2011/12 final tax and 2012/13 provisional tax. Excess balance, if any, will be refunded.

A:

You can use the tax computation program to calculate your 2011/12 and 2012/13 salaries tax and tax under personal assessment.

A:

Under personal assessment, all income of an individual taxpayer, including salaries income, will be aggregated to compute the tax payable. Hence, the amount of tax reduction for the year 2011/12 is 75% of the tax assessed under personal assessment and not the tax payable under salaries tax.

A:

The Financial Secretary has proposed to reduce 75% of the 2011/12 final tax in respect of profits tax, salaries tax and tax charged under personal assessment, subject to a ceiling of $12,000 per case. Under salaries tax, a husband and a wife are separately assessed. Each of them will get a tax reduction of 75%, subject to a ceiling of $12,000. However, under personal assessment, there is no separate taxation and only one assessment will be issued. Therefore, the tax reduction for the couple is 75%, capped at $12,000. Whether a taxpayer should apply for personal assessment will depend on his situation. When considering an election for personal assessment for the year of assessment 2011/12, taxpayers should take into account the factor that the tax reduction for each couple will be capped at $12,000. IRD will check each personal assessment election to see if it will reduce the amount of tax payable, and assess each taxpayer in the way most advantageous to him.

A:

You should state the actual amount of $80,000 paid in Part 8.4 of your 2011/12 individuals tax return (BIR 60). After enactment of the relevant legislation, the Assessor will allow the respective maximum deductions at $72,000 and $76,000 when computing your 2011/12 final salaries tax and 2012/13 provisional salaries tax liabilities.

A:

If the amount of Elderly Residential Care Expenses paid or payable for 2012/13 exceeds $72,000, you may apply in writing for holding over the 2012/13 provisional salaries tax upon receiving the assessment and notice for payment of provisional salaries tax. The application must be lodged not later than:

whichever is the later.

In computing the provisional salaries tax payable for 2012/13, the Assessor will not deduct $85,000 as the amount of Elderly Residential Care Expenses but will restrict the deduction to $76,000.

A:

You cannot claim deduction for the interest paid during the period from 1 April 2009 to 31 August 2010 in your 2012/13 Tax Return since the interest is not paid during the period 1.4.2012 to 31.3.2012. As the extension of the deduction period to 15 years of assessment has no retrospective effect, your 2009/10 and 2010/11 assessments cannot be revised to give effect to the deduction.

A:

You need not claim the deductions consecutively. After granting each deduction of home loan interest to you, the Commissioner will notify you of the number of years for which the deductions have been allowed.

A:

Since you did not claim any home loan interest deduction in your 2011/12 individuals tax return (BIR60), no deduction will be allowed when computing the 2012/13 provisional tax. However, if your net chargeable income for 2012/13 for which provisional tax was charged is, or is likely to be, less than 90% of the net chargeable income for 2011/12 or of the estimated sum in respect of which you are liable to pay provisional tax, you may apply in writing for holding over of the 2012/13 provisional tax upon receiving the assessment and notice for payment of provisional salaries tax. The application must be lodged not later than:

whichever is the later.