Deduction for Elderly Residential Care Expenses

Eligibility for deduction

You may claim a deduction for elderly residential care expenses paid by you or your spouse to a residential care home in respect of your parent or grandparent or your spouse's parent or grandparent. The deduction may be allowed under salaries tax and personal assessment. A person chargeable to tax at standard rate is also entitled to the deduction.

The parent/grandparent is a parent/grandparent of you or your spouse.
The parent/grandparent is aged 60 or above at any time in the year of assessment, or under 60 but entitled to claim an allowance under the Government's Disability Allowance Scheme.
The parent/grandparent was receiving residential care in a residential care home in the year of assessment.
The expenses were paid to a residential care home or any person acting on its behalf.
The expenses were paid by you or your spouse in the year of assessment (net of any reimbursement by any person or organization). A husband may claim deduction for payments made by his wife, and vice versa.
The residential care home is situated in Hong Kong and is licensed or exempted from licensing under the Residential Care Homes (Elderly Persons) Ordinance, or is a nursing home registered under the Hospitals, Nursing Homes and Maternity Homes Registration Ordinance.
Only one person may be granted the deduction in respect of the same parent or grandparent for a year of assessment. Where more than one person, who is entitled to claim the deduction, contributes to the payment of the residential care expenses of a parent or grandparent, it is necessary for them to agree amongst themselves as to which of them will claim the deduction for the year of assessment. In the event that they are unable to agree, no deduction may be allowed.

Amount of allowable deduction

The deduction is allowed for expenses actually paid in the year of assessment to a residential care home in respect of the residential care received, subject to a maximum of $60,000 for a year of assessment for each parent or grandparent.

In the year that a parent or grandparent attains the age of 60 years, the maximum allowable deduction is still $60,000. No apportionment on a time basis by reference to the periods prior to, and after, the parent/grandparent's 60th birthday will be made. Provided that the parent or grandparent was aged 60 or more at any time within the year of assessment, then subject to the amount of the maximum deduction not being exceeded, the full amount of the residential care expenses paid in that year is allowable as a deduction.

The deduction covers only the cost of care provided to the parent or grandparent who is resident in a residential care home (e.g. accommodation, food, nursing care and sundry expenses). Medical expenses paid to doctor and hospital, private expenses paid by the residential care home on their resident's behalf and then recovered from any person (such as personal expenditure needs) are not deductible.

An alternative to the granting of dependent parent/grandparent allowance

The deduction for elderly residential care expenses is allowed as an alternative to the granting of dependent parent/grandparent allowance. When a deduction for residential care expenses has been allowed in respect of a parent or grandparent, no person can be granted a dependent parent allowance or dependent grandparent allowance for the same parent or grandparent for the same year of assessment.

The deduction for elderly residential care expenses takes precedence over the granting of allowances. If you have claimed deduction for both the elderly residential care expenses and dependent parent/grandparent allowance for the same parent/grandparent for the same year of assessment, only the deduction for elderly residential care expenses will be allowed.

Example :

You are not paying tax at standard rate and pay $15,000 to a residential care home in respect of your father who is over the age of 60. You may choose to claim Dependent Parent Allowance ($30,000) instead of the deduction for elderly residential care expenses ($15,000).

A claim for the deduction may be made in Part 8.4 of your Tax Return - Individuals (B.I.R. 60) for the relevant year of assessment. You are not required to submit documentary evidence in support of the amount claimed together with the tax return. You should, however, retain such documentary evidence (e.g. receipts issued by the residential care home) for production to the Inland Revenue Department for verification when required.

If no claim for the deduction is made in the tax return, and you wish to lodge a claim after submission of the tax return, you may do so by completing a form I.R. 6071 and return it to the Inland Revenue Department. Such claim, however, should be lodged not later than 6 years after the end of the year of assessment to which the claim relates. If you wish to download I.R. 6071 for lodging a claim for the deduction, please click here.

A Departmental Interpretation and Practice Note No. 36 on deduction for elderly residential care expenses was issued in January 2000. For the English version, please click here.

For common questions and answers on deduction for elderly residential care expenses, please click here.