|
Publications and Press Releases :
Press Release
: News Archives
LCQ20: Dependent parent/grandparent allowance
***********************************************************
Following is a question by the
Hon Lau Kong-wah and a written reply by the Secretary for Financial
Services and the Treasury, Mr Frederick Ma, in the Legislative Council
today (June 7):
Question:
Under the Inland Revenue Ordinance
(Cap. 112), a person chargeable to Salaries Tax may claim dependent
parent/grandparent allowance in respect of his or her parent/grandparent,
or his or her co-residing spouse's parent/grandparent, who is maintained
by that person and is ordinarily resident in Hong Kong. In this
connection, will the Government inform this Council:
(a) of the definition of being "ordinarily
resident in Hong Kong";
(b) given that an increasing number
of retired elderly dependants have moved to live in the Mainland,
whether the authorities will consider relaxing the relevant residence
requirement; if not, of the justifications for that;
(c) whether the authorities will consider
permitting such allowance in respect of the same dependant to be
equally apportioned among two or more eligible claimants; if not,
of the reasons for that; and
(d) of the evidence that the authorities
may, during their spot checks of claims for such allowance, require
the claimants to show that the dependants concerned were maintained
by them during the relevant year of assessment, and whether the
authorities have reviewed if this requirement is reasonable?
Reply:
Madam President:
(a) "Ordinarily resident in Hong
Kong" is not defined in the Inland Revenue Ordinance (IRO).
The Inland Revenue Department (IRD) handles the relevant cases according
to general legal principles.
In deciding whether dependent parents/grandparents
are ordinarily resident in Hong Kong, the IRD will consider their
social and economic ties with Hong Kong. Objective factors for consideration
include:
(1) the number of days they stay in
Hong Kong;
(2) whether they have a fixed abode
in Hong Kong;
(3) whether they own properties overseas
for residential purpose;
(4) whether they have a job or carry
on business in Hong Kong or overseas; and
(5) whether their principal family
members reside in Hong Kong or overseas.
Generally speaking, dependent parents/grandparents
who reside overseas on a long-term basis and stay in Hong Kong for
a limited number of days for visiting relatives only will not be
regarded by the IRD as ordinarily resident in Hong Kong even if
they are holders of Hong Kong Permanent ID Cards.
(b) According to the existing IRO,
the definitions of parents and grandparents are rather broad. Apart
from the natural father/mother of a taxpayer or his/her spouse (including
deceased spouse), the step parents and adopted parents are also
included in the definition of parents. As for the definition of
grandparents, it includes natural grandparents, adoptive grandparents
and step grandparents. In other words, a taxpayer can claim dependent
parent/grandparent allowance in respect of a number of dependants.
If the requirement of "ordinarily resident in Hong Kong "
is waived, that means a taxpayer can claim allowance in respect
of any dependent parent/grandparent living overseas. It would be
very difficult to verify the relationship between the taxpayer and
the dependant, whether the dependant has been maintained by the
taxpayer, whether there are more than one taxpayer claiming the
allowance in respect of the same dependant, and whether the dependant
is still alive. As it would be difficult for the IRD to verify the
authenticity of the information, the allowance might be subject
to abuse, which would lead to a loss in tax revenue.
For the above reasons, we have no
plan to waive the requirement that the dependants must be ordinarily
residents in Hong Kong.
(c) If we allow the dependent parent/grandparent
allowance in respect of the same dependant to be shared by two or
more eligible claimants, verification of such claims will become
more complicated and difficult. Therefore, we do not intend to change
the requirement at present.
(d) In checking claims for such allowance,
the IRD will require taxpayers who claim to be residing with their
dependants to provide documents (such as monthly bank statements)
in proof of the dependants' residential addresses. Taxpayers who
claim to have contributed towards the maintenance of the dependants
must set out details of their contributions to the maintenance.
If necessary, the IRD may check the records of their bank accounts
or verify from the circumstantial evidence the maintenance information
provided by the taxpayers. Generally speaking, the IRD will not
require taxpayers to submit the bills and receipts in respect of
the daily expenses of their dependants.
The IRD will check the information
provided by taxpayer against its computer records. In addition,
the IRD will request other government departments such as the Immigration
Department, Social Welfare Department and Housing Department to
provide the relevant information so as to verify whether the information
provided by taxpayer is correct.
To prevent abuse of the dependent
parent and grandparent allowances, the IRD will review this checking
method from time to time so that the checks will be conducted without
being abused and causing any inconvenience to the public. We consider
the existing practice reasonable.
Ends/Wednesday, June 7, 2006
Issued at HKT 11:55
NNNN
|
|