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2020-21 Budget – Concessionary Measures

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1.

Q:

What tax measures are proposed in the 2020-21 Budget for individual taxpayers?

 
 

A:

Subject to passage of the legislative amendments by the Legislative Council, individual taxpayers will get a one-off reduction of 100% of the final tax for the year of assessment 2019/20 in respect of profits tax, salaries tax and tax under personal assessment, subject to a ceiling of $20,000 per case.

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2.

Q:

Do I need to apply for the tax reduction proposed in the 2020-21 Budget?

 
 

A:

You only need to file, as usual, your Tax Return - Individuals (BIR60) for the year of assessment 2019/20.  After enactment of the relevant legislation, IRD will effect the tax reduction in the final assessment for the year of assessment 2019/20 (hereinafter called "2019/20 assessment").  For 2019/20 assessments issued before the legislative amendment, IRD will revise them after enactment of the legislation.  There is no need for you to make a separate application.

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3.

Q:

Can I withhold payment of the 2019/20 provisional tax because of the proposed tax reduction measure?

 
 

A:

You are required to pay on time the 2019/20 provisional tax.  Otherwise, recovery action will be taken by IRD.  Similar to previous occasions, the tax reduction is to reduce the 2019/20 final tax that will be charged and not relating to the 2019/20 provisional tax that has already been charged.  Therefore, you are still required to pay the 2019/20 provisional tax as charged.

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4.

Q:

Will the Inland Revenue Department refund the 2019/20 provisional tax already paid by me?

 
 

A:

As the tax reduction is to reduce the 2019/20 final tax that will be charged, the reduction will only be reflected in the notices of salaries tax assessment, profits tax assessment and personal assessment for the year of assessment 2019/20 to be issued. The tax reduction is not applicable to the 2019/20 provisional tax. The provisional tax paid will be applied to settle the 2019/20 final tax and 2020/21 provisional tax. Excess balance, if any, will be refunded.

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5.

Q:

How to compute the tax reduction?

 
 

A:

You may use the Tax Calculator provided in GovHK to calculate your 2019/20 salaries tax and tax under personal assessment.

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6.

Q:

I have to pay salaries tax and profits tax for the year of assessment 2019/20 and I have elected for personal assessment for the year.  How the tax reduction should be computed?

 
 

A:

Under personal assessment, all income of an individual taxpayer, including salaries income and business profits, will be aggregated to compute the tax payable.  Hence, the amount of tax reduction for the year of assessment 2019/20 is 100% of the tax assessed under personal assessment (subject to a ceiling of $20,000) and not the tax payable under salaries tax and profits tax.

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7.

Q:

A married couple, each with employment income and liable to salaries tax, are separately assessed to tax and they can enjoy a maximum tax reduction of $40,000 in total.  If they also have rental income and business loss from sole proprietorship business and are eligible to elect for personal assessment, what is / are their tax reduction ceiling(s) under personal assessment?

 
 

A:

Profits tax, salaries tax and tax under personal assessment for the year of assessment 2019/20 are reduced by 100%, subject to a ceiling of $20,000 per case.  Under salaries tax, a married couple are separately assessed.  Each of them will get a tax reduction of 100%, subject to a ceiling of $20,000.  From the year of assessment 2018/19, the requirement for the election of personal assessment is relaxed by allowing married persons the option to elect for personal assessment separately (hereinafter called "Separate PA").  Under Separate PA, a married couple are separately assessed. Each of them will get a reduction of 100% of the tax assessed under their own personal assessment, subject to a ceiling of $20,000.  If the taxpayer elects for personal assessment jointly with his / her spouse, the tax reduction for the couple is 100% of their total tax assessed under personal assessment, capped at $20,000.  Whether a taxpayer should apply for personal assessment jointly with his / her spouse will depend on his / her own situation.  When considering an election for personal assessment for the year of assessment 2019/20, taxpayers should take into account the factor that the tax reduction for personal assessment jointly elected by a couple will be capped at $20,000.  You may use the Tax Calculator provided in GovHK to calculate the tax payable under different scenarios for the year of assessment 2019/20.

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8.

Q:

I have two businesses in the year of assessment 2019/20, can I get a tax reduction in respect of each business?

 
 

A:

For each business, you can get the tax reduction of 100% of the profits tax payable for the year of assessment 2019/20, subject to a ceiling of $20,000.