Tax Smart Tips

2024-25 Budget Proposals

(Note: Legislative amendments are required for implementing the proposed tax measures)

In his 2024-25 Budget, the Financial Secretary proposed the following tax measures:

For the year of assessment 2023/24
Reducing profits tax, salaries tax and tax under personal assessment for the year of assessment 2023/24 by 100%, subject to a ceiling of $3,000 per case.

From the year of assessment 2024/25 onwards
Implementing a two-tiered standard rates regime for salaries tax and tax under personal assessment. In calculating the tax amount under standard rate for a taxpayer whose net income (before deduction of the allowances) exceeds $5 million, the first $5 million of his/her net income will continue to be calculated at the rate of 15% and the portion of the net income exceeding $5 million will be calculated at the rate of 16%. Details are as follows:

Standard rate		Two-tiered standard rates
Present (Year of assessment 2023/24)		Proposed (with effect from year of assessment 2024/25)
Net income *	Rate	Net income *	Rate
Any amount	15%	On the first $5,000,000	15%
		On the remainder	16%

* Net income = Total income – Deductions

The one-off tax reduction

The proposed tax reduction for the year of assessment 2023/24 is not applicable to property tax. Individuals earning rental income, if eligible, may elect for personal assessment in Part 7 of the tax return for the year of assessment 2023/24 to enjoy the tax reduction.
For profits tax, the tax reduction ceiling is applied to each business. For salaries tax, the ceiling is applied to each individual taxpayer, but for couples jointly assessed, the ceiling is applied to each couple. For personal assessment, the ceiling is applied to each single taxpayer or married person who elects for personal assessment separately from his/her spouse. If married couples make their personal assessment election jointly, the ceiling will apply to each couple.
A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy the tax reduction under each of the tax types. If he/she elects personal assessment, the reduction will have to be based on the tax payable under personal assessment.
Taxpayers should complete the 2023/24 tax returns as usual. Upon enactment of the relevant legislation, IRD will effect the tax reduction in the final assessment for 2023/24.

Other Useful Tips

Inform IRD promptly if your correspondence address has changed.
Check your copy of “Employer’s Return of Remuneration and Pension” (IR56B/F/G) carefully. In case of doubt, clarify with your employer immediately and inform IRD, if necessary.
Claim for deductions under salaries tax (i.e. outgoing and expenses, self-education expenses, approved charitable donations and contributions to the MPF or ORSO Scheme) can be made in relevant parts of Part 4.3 of the tax return.
Deduction claims for interest payments to produce rental income from properties and home loan interest can be made in relevant parts of Part 8 of the tax return.
Deduction claims for domestic rents can also be made in relevant parts of Part 8 of the tax return.
Deduction claims for qualifying premiums paid under Voluntary Health Insurance Scheme Policy, and qualifying annuity premiums and tax deductible MPF voluntary contributions can be made in Parts 9 and 10 of the tax return respectively.
When filing your tax return, do not attach supporting documents for deductions claimed. However, such documents should be retained for 7 years for examination when called for.
When sending your completed tax return to IRD by post, affix sufficient stamp according to the appropriate category of postage so as to ensure delivery in order.
To rectify any error or omission in your tax return discovered after submission, inform IRD in the soonest. State your name, phone number, file number, the relevant year of assessment and details of your amendments, and sign your rectification notice. eTAX users can also file their rectification notices through "Contact Us" in their eTAX accounts.