2023-24 Budget – Tax Measures

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In the 2023-24 Budget, the Financial Secretary proposed a one-off reduction of 100% of the final tax for the year of assessment 2022/23 in respect of profits tax, salaries tax and tax under personal assessment, subject to a ceiling of $6,000 per case. Furthermore, the child allowance for each child and the additional child allowance in respect of each child born during the year of assessment will increase from the current $120,000 to $130,000 effective from the year of assessment 2023/24. The relevant legislation for the tax measures was passed by the Legislative Council on 19 April 2023 and gazetted on 28 April 2023.

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You only need to file your Tax Return - Individuals (BIR60) for the year of assessment 2022/23 as usual. IRD will effect the tax reduction in the final assessment for the year of assessment 2022/23 (hereinafter called "2022/23 assessment") and apply the new level of child allowance in calculating the 2023/24 provisional tax. For 2022/23 assessments issued before the legislative amendment, IRD will revise them and there is no need for you to make a separate application.

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You are required to pay on time the 2022/23 provisional tax.  Otherwise, recovery action will be taken by IRD.  Similar to previous occasions, the tax reduction is to reduce the 2022/23 final tax that will be charged and not the 2022/23 provisional tax that has already been charged.  Therefore, you are still required to pay the 2022/23 provisional tax as charged.

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As the tax reduction is to reduce the 2022/23 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 2022/23. The tax reduction is not applicable to the 2022/23 provisional tax. The provisional tax paid will be applied to settle the 2022/23 final tax and 2023/24 provisional tax. Excess balance, if any, will be refunded.

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You may use the Tax Calculator provided in GovHK to calculate your 2022/23 and 2023/24 salaries tax and tax under personal assessment.

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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 2022/23 is 100% of the tax assessed under personal assessment (subject to a ceiling of $6,000) and not the tax payable under salaries tax and profits tax.

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Profits tax, salaries tax and tax under personal assessment for the year of assessment 2022/23 are reduced by 100%, subject to a ceiling of $6,000 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 $6,000.  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 $6,000.  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 $6,000.  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 2022/23, taxpayers should take into account the factor that the tax reduction for personal assessment jointly elected by a couple will be capped at $6,000.  You may use the Tax Calculator provided in GovHK to calculate the tax payable under different scenarios for the year of assessment 2022/23.

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You can get the tax reduction of 100% of the profits tax payable for each business for the year of assessment 2022/23, subject to a ceiling of $6,000.

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The profits tax reduction proposed in the 2023-24 Budget also applies to companies (including corporations and partnership businesses). They will get a one-off reduction of 100% of the final profits tax for the year of assessment 2022/23, subject to a ceiling of $6,000 per case.

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You can claim Child Allowance of $130,000 and a one-off additional allowance of $130,000 for the year of assessment in which your child was born (i.e. the year of assessment 2023/24). In the years thereafter (until the law is amended), you can claim for each year a Child Allowance of $130,000 in respect of that child as long as other prescribed conditions are satisfied.

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You can complete Part 11.2 of the 2022/23 Tax Return - Individuals by providing details of your new born child. IRD will grant Child Allowance totaling $260,000 for that child when computing your provisional salaries tax for the year of assessment 2023/24. 

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After your child is born, you may apply in writing for holding over of the provisional salaries tax charged for the year of assessment 2023/24 and inform us the date of birth of the child. The application must be lodged not later than: 
(a) 28 days before the due date for payment of the provisional tax; or 
(b) 14 days after the date of issue of the notice for payment of the provisional tax,
whichever is later.
Besides, when you complete your 2023/24 Tax Return – Individuals next year, you have to fill in details of your child again for claiming the Child Allowance.