|
1. |
To lower the marginal rates
of the second, third and top tax bands by one percentage point
from the existing levels of 8%, 14% and 20% to 7%, 13% and
19% respectively. |
|
|
Marginal
Tax Band |
Marginal
Tax Rate |
| Present |
Proposed |
Reduction
in Tax Rate |
| First $30,000 chargeable income |
2% |
2%
|
No change |
| Next 30,000 |
8%
|
7%
|
-1% |
| Next 30,000 |
14% |
13% |
-1% |
| Remainder |
20% |
19% |
-1% |
|
| 2.
|
Currently, each taxpayer is eligible to claim deduction of
Home Loan Interest for 7 years of assessment. The Budget proposed
to extend the deduction period for a further 3 years to a total
of 10 years, subject to the maximum annual deduction of $100,000. |
The
Budget proposal has yet to be passed by the Legislative Council
and the tax relief will only take effect upon the enactment
of the proposal. |
 |
If the Budget proposal is enacted by the Legislative Council,
the new marginal tax rate will be effective from the year of
assessment 2006/07. It is anticipated that the 2006/07 provisional
tax, which is payable in January 2007, will be computed using
the new tax rate after enactment. In other words, taxpayers
will not be required to lodge any application. |
|
|
Regarding the extension of the period for which
deduction of Home Loan Interest can be claimed a total of 10
years, it will take effect retrospectively from the year of
assessment 2005/06. If applicable, taxpayers may make their
claim in Part 7 of the Tax Return ¡V Individuals (B.I.R.60) which
will be issued on 2 May 2006. The claim will be dealt with upon
enactment of this Budget proposal. |
|