The Financial Secretary proposed a one-off reduction of 75% of the 2009/10 final tax in respect of salaries tax and tax under personal assessment, subject to a ceiling of $6,000 per case. See Implementation Details of the One-off reduction for details.

Individuals having business profits or rental income, if eligible, can enjoy the reduction by electing personal assessment. Under personal assessment, they will enjoy a reduction of 75% of the 2009/10 final tax, subject to a ceiling of $6,000 per case.

Estimated tax savings of taxpayers by income group are shown in Annex 1. Please refer to the examples in Annex 2 for typical cases showing tax savings of taxpayers liable to salaries tax when the one-off reduction in 2009/10 final tax is implemented. You can also use our tax computation program to calculate your tax liability under salaries tax or personal assessment under the 2010-11 Budget proposals.

The tax reduction will be reflected in the tax bill for the coming year. Taxpayers will, as usual, file their tax returns - individuals for 2009/10 which will be issued starting from May 2010. They need not make any application on the reduction.

Legislative amendments are required for implementing the measures proposed in the Budget. Upon enactment of the relevant legislation, the Inland Revenue Department will effect the reduction in the final assessment for 2009/10. Most taxpayers will receive their tax bills, with the reduction duly reflected, starting from the third quarter in 2010. As in previous years, salaries tax will generally fall due in January 2011.

The proposed one-off reduction will only apply to the 2009/10 final tax, but not to the provisional tax of the same year. For most taxpayers, the second instalment of their 2009/10 provisional tax will fall due in April 2010, which should be paid on time despite the proposed reduction. The provisional tax paid will, in accordance with the Inland Revenue Ordinance, be applied in payment of the final tax for 2009/10 and provisional tax for 2010/11. Excess balance, if any, will be refunded.

Individuals having business profits or rental income, if eligible, can enjoy the reduction by electing personal assessment. They can make the election when completing their 2009/10 tax returns. The Department will check in each case if the personal assessment election, with the tax reduction, will reduce the amount of tax payable, and assess each taxpayer in the way most advantageous to him.

Individuals having salaries income only, but no business profits and rental income, are not required to elect personal assessment.

2009/10 tax bills issued before enactment of the relevant legislation will not reflect the tax reduction. The Inland Revenue Department will revise them after the enactment. Excess tax paid will be refunded from late July 2010 onwards. Taxpayers are not required to apply for such refund or make phone enquiry in this regard.