Desktop VersionSite MapContact UsShare RSS

*

1.

Q:

What tax measures in the 2014-15 Budget will benefit individual taxpayers?

 
 

A:

Individual taxpayers will get a one-off reduction of 75% of the final tax for the year of assessment 2013/14 in respect of profits tax, salaries tax and tax under personal assessment, subject to a ceiling of $10,000 per case. Furthermore, the following tax measures will be introduced from the year of assessment 2014/15 onwards to alleviate taxpayers’ burden :

 (a) Increase in the following allowances:

Year of Assessment 2013/14
 $
From 2014/15 onwards
$
Dependent Parent / Grandparent Allowance (For each dependant)    
  Parent / Grandparent aged 60 or above, or is eligible to claim an allowance under the Government’s Disability Allowance Scheme 38,000 40,000
  Parent / Grandparent aged between 55 and 59 19,000 20,000
       
Additional Dependent Parent / Grandparent Allowance (For each dependant who is living with the taxpayer continuously throughout the year)    
  Parent / Grandparent aged 60 or above, or is eligible to claim an allowance under the Government’s Disability Allowance Scheme 38,000 40,000
  Parent / Grandparent aged between 55 and 59 19,000 20,000

 

 (b) Increase in the maximum allowable deduction for elderly residential care expenses as follows:

Year of Assessment 2013/14
$
From 2014/15 onwards
$
Elderly Residential Care Expenses 76,000 80,000

 

 

  back to top


*

2.

Q:

Do I need to apply for the tax reduction and the new allowances?

 
 

A:

You only need to file, as usual, your 2013/14 tax return for individuals (BIR60). IRD will effect the tax reduction in the final assessment for 2013/14 and apply the new allowances in calculating the 2014/15 provisional tax. For 2013/14 assessments issued before the legislative amendment, IRD 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 mid August 2014. There is no need for you to make a separate application.

 

  back to top


*

3.

Q:

Can I withhold payment of the 2nd instalment of 2013/14 provisional tax falling due from April 2014 onwards because of the proposed tax reduction?

 
 

A:

You are required to pay on time the 2nd instalment of the 2013/14 provisional tax falling due from April 2014. Otherwise, recovery action will be taken by IRD . Similar to previous occasions, the tax reduction is to reduce the 2013/14 final tax that will be charged and not relating to the 2013/14 provisional tax that has already been charged. Therefore, you are still required to pay the 2013/14 provisional tax as charged.

 

  back to top


*

4.

Q:

Will the Inland Revenue Department refund the 2013/14 provisional tax already paid by me?

 
 

A:

As the tax reduction is to reduce the 2013/14 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 2013/14 that will be issued starting from the third quarter of 2014. The tax reduction is not applicable to the 2013/14 provisional tax. The provisional tax paid will be applied to pay the 2013/14 final tax and 2014/15 provisional tax. Excess balance, if any, will be refunded.

 

  back to top


*

5.

Q:

How to compute the tax reduction?

 
 

A:

You can use the tax computation program (www.gov.hk/etax) to calculate your 2013/14 and 2014/15 salaries tax and tax under personal assessment.

 

  back to top


*

6.

Q:

I have to pay salaries tax for the year 2013/14 and I have elected for personal assessment for the year. How the tax reduction should be computed?

 
 

A:

Under personal assessment, all income of an individual taxpayer, including salaries, will be aggregated to compute the tax payable. Hence, the amount of tax reduction for the year 2013/14 is 75% of the tax assessed under personal assessment and not the tax payable under salaries tax.

 

  back to top


*

7.

Q:

A husband and a wife, each with employment income and liable to salaries tax, are separately assessed to tax and they can enjoy a maximum tax reduction of $20,000 in total. However, when the husband and the wife are assessed under personal assessment, they can only get a reduction of $10,000. Is it unfair to a couple electing for personal assessment?

 
 

A:

Profits tax, salaries tax and tax under personal assessment for the year of assessment 2013/14 are reduced by 75%, subject to a ceiling of $10,000 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 $10,000. 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 $10,000. 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 2013/14, taxpayers should take into account the factor that the tax reduction for each couple will be capped at $10,000. 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.

 

  back to top


*

8.

Q:

I have two businesses in the year of assessment 2013/14, can I get a tax reduction in respect of each business?

 
 

A:

For each business, you can get the tax reduction of 75% of the profits tax payable for 2013/14, subject to a ceiling of $10,000.

 

  back to top


*

9.

Q:

I paid elderly residential care expenses of $82,000 in 2013/14, which exceeded the specified maximum of $76,000 for 2013/14. What amount should I write down in the 2013/14 tax return for individuals (BIR60) for claiming the residential care expenses deduction?

 
 

A:

You should state the actual amount of $82,000 paid in Part 8.4 of your 2013/14 tax return for individuals (BIR 60). The Assessor will allow the respective maximum deductions at $76,000 and $80,000 when computing your 2013/14 final salaries tax and 2014/15 provisional salaries tax liabilities.

 

  back to top


*

10.

Q:

I had filed my 2013/14 tax return for individuals (BIR 60), the residential care home, in which my 65 years old father stays, informed me that the residential care expenses payable in 2014/15 will be increased from $65,000 to $85,000. What should I do if I want to claim the increased deduction?

 
 

A:

If the amount of Elderly Residential Care Expenses paid or payable for 2014/15 exceeds $76,000, you may apply in writing for holding over the 2014/15 provisional salaries tax upon receiving the assessment and notice for payment of provisional salaries tax. The application must be lodged not later than: 

(a) 28 days before the due date for payment of the provisional tax, or
(b) 14 days after the date of issue of the notice for payment of the provisional tax,
whichever is the later.

 

In computing the provisional salaries tax payable for 2014/15, the Assessor will not deduct $85,000 as the amount of Elderly Residential Care Expenses but will restrict the deduction to $80,000.

 

  back to top


*

11.

Q:

What is an Exchange-Traded Fund (ETF)?

 
 

A:

An ETF is an investment fund or unit trust that is designed to track the performance of its underlying benchmark (e.g. a stock index or a commodity such as gold bullion etc.) In Hong Kong, an ETF is an open-ended fund authorised by the Securities and Futures Commission as a collective investment scheme and traded on the Stock Exchange of Hong Kong Limited (“SEHK”).

 

  back to top


*

12.

Q:

Is the transfer of ETF subject to stamp duty?

 
 

A:

In general, all securities listed on the SEHK are subject to a stamp duty at a rate of 0.1% on the value of the transaction, on both the buyer and the seller. Under the Stamp Duty Ordinance, the transfer of ETF is subject to stamp duty.

 

  back to top


*

13.

Q:

Is there any proposal to exempt the stamp duty on the trading of ETFs in the 2014-15 budget?

 
 

A:

The Financial Secretary has proposed in the 2014-15 budget to waive the stamp duty for the trading of all ETFs.

 

  back to top


*

14.

Q:

When would the proposed relief be effected?

 
 

A:

Law amendments are required to provide for the proposed stamp duty relief. The Administration is taking preparatory steps to implement the proposal, with a view to introducing the legislative amendments to the Legislative Council for scrutiny in the 2014-2015 session.