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(Source : Government Information Centre)

LCQ8: Dependent parent allowance


Following is a question by the Hon Tam Yiu-chung and a written reply by the Secretary for the Treasury, Miss Denise Yue, in the Legislative Council today (October 18):


Will the Government inform this Council:

(a) of the number of taxpayers granted the dependent parent allowance in each of the past three years; and

(b) given that the economic restructuring and persistently high unemployment rate in the territory have rendered many people out of work before the retirement age and dependent on their children, whether it has plans to relax the requirement that dependent parents must reach 60 before claim for that allowance can be made, so as to alleviate the financial burden of the taxpayers concerned; if it has, of the details; if not, the reasons for that?



(a) The number of salaries taxpayers granted dependent parent allowance in the past three years of assessment are as follows:

The number of salaries taxpayers granted dependent parent allowance in the past three years of assessment are as follows
Year of Assessment 1996-97 1997-98 1998-99
No. of taxpayers 325,000 329,000 287,000

The decrease in 1998-99 was mainly because the various salaries tax concessions introduced since that year (including reduction in tax rates, revisions in tax bands, substantial increase in personal allowances, and introduction of new deductions) have effectively excluded more than 10% of taxpayers (over 150,000) from the salaries tax net.

(b) Under the Inland Revenue Ordinance, a dependent parent allowance of $30,000 per parent is available to any salaries taxpayer who maintains a parent or a parent of his or her spouse; and an additional allowance of $30,000 is available if the taxpayer is living with the parent throughout the year. For the purpose of this allowance, the dependent parent must be ordinarily resident in Hong Kong and aged 60 or more, or if under 60 is eligible to claim any allowance under the Government's Disability Allowance scheme. In addition, the parent can only be regarded as being maintained by the taxpayer if the parent resides with the taxpayer and his or her spouse for at least a continuous period of six months without any valuable consideration, or the taxpayer or his or her spouse contributes at least $12,000 in money towards the maintenance of the parent in a year of assessment.

The present dependent parent allowance was introduced in 1978-79 in place of a previous allowance which was means-tested, mainly for the purpose of avoiding the tremendous abuse and administrative difficulties encountered. The means test was replaced by the age limit of 60, which is in line with the general retirement age in the community today.

We do not consider it appropriate to lower or remove the age limit for dependent parent allowance in respect of those parents who are below 60 and out of work and have to depend on their children, for the purpose of alleviating the financial burden of those salaries taxpayers concerned. This is because the non-means-tested nature of the allowance and the high mobility rate of our labour market render it practically impossible for the Inland Revenue Department to trace and verify the employment status of those dependent parents aged under 60 in any particular year of assessment, for the purpose of processing the claims by the concerned taxpayers.

We also do not consider it justifiable simply to lower the age limit of dependent parents regardless of their employment status or income level, in order to avoid the practicable problems described above. This is because it would unnecessarily benefit quite a substantial number of taxpayers whose parents are aged under 60 and are active income-earners.

We see no imminent need to relax the age limit of this allowance in order to alleviate the financial burden of the eligible taxpayers, since the tax burden of around 99% of salaries taxpayers (i.e. except the standard rate taxpayers) have been substantially reduced through the various concessions introduced since the 1998-99 year of assessment.

End/Wednesday, October 18, 2000