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(Source : Government Information Centre)

LCQ17: Tax allowances for dependent family members


Following is a question by the Hon Ho Chun-yan and a written reply by the Secretary for the Treasury, Miss Denise Yue, in the Legislative Council today (November 21):


Will the Government inform this Council:

(a) whether it will consider introducing a tax allowance for maintenance payments, so as to alleviate the burden of divorcees and encourage them to make maintenance payments to their ex-spouses; if not, of the reasons for that; and

(b) of the amount of tax forgone per year if maintenance payments are fully tax exempted?



(a) Under the Inland Revenue Ordinance (IRO), Salaries Tax payers may claim various tax allowances for dependent family members, including the married person's allowance, child allowance, dependent parent allowance, dependent grandparent allowance, dependent brother allowance and dependent sister allowance, to alleviate the burden of supporting their dependent family members. A taxpayer may claim the married person's allowance for his/her separated spouse provided that the marriage relationship has not been dissolved. A taxpayer may also claim the child allowance for his/her children after a divorce provided that the taxpayer contributes to the maintenance of his/her children. We consider that introducing a tax allowance specifically for maintenance payments on top of the various existing tax allowances will amount to double benefit for a concerned taxpayer. We do not support such a proposal.

Moreover, it is doubtful whether the introduction of a maintenance allowance would be effective in encouraging the making of maintenance payments. People fail to make maintenance payments for various reasons, such as out of employment or bitter relationship with ex-spouse, etc, which would affect the ability or willingness of divorcees to make maintenance payments. A tax allowance is unlikely to serve a useful purpose.

Separately, we note that the Home Affairs Bureau are making efforts to improve the legislative and administrative arrangements in order to address the difficulties encountered by maintenance payees in collecting maintenance payments.

(b) We do not have any estimate on the amount of tax forgone if maintenance payments were to be tax-exempted.

End/Wednesday, November 21, 2001