(Source : news.gov.hk)
Revenue Bill 2006 to be gazetted tomorrow
The Revenue Bill 2006, which seeks to implement tax relief measures announced in the 2006-07 Budget, will be gazetted tomorrow (April 13).
Under the Bill, the Inland Revenue Ordinance (Cap. 112) will be amended to effect two proposals relating to salaries tax and personal assessment.
The first proposal is to lower the marginal rates of the second, third and top tax bands by one percentage point from the existing levels of 8, 14 and 20% to 7, 13 and 19% respectively. The standard rate will remain unchanged. The proposed reduction will benefit salaries taxpayers and those under personal assessment. It will reduce the tax payable by nearly a million people, i.e. three-quarters of taxpayers.
The second proposal is to extend the limit for deduction for home loan interest from seven years to 10 years, subject to the maximum annual deduction of $100,000.
"To many people, particularly the middle class, mortgage payments are major items of family expenditure. In 1998-99, a salaries tax deduction for home loan interest of up to $100,000 a year for five years was introduced as a temporary measure to provide relief to taxpaying households heavily burdened with home mortgage payments. The entitlement period was extended to seven years in the 2004-05 Budget as a relief to all home owners and to ease the heavy financial load still borne by many families. (To ease the burden of home owners, the 2001 Policy Address announced the raising of the maximum deduction to $150,000 for the two years of assessment 2001-02 and 2002-03.)
The recent increases in mortgage rates have added to the burden of home owners. For taxpayers who acquired their homes in the 1998-99 financial year or before and have, since 1998-99, claimed the deduction continuously, the seven-year entitlement period will have expired after the year of assessment 2004-05. The proposal is to extend the limit for deduction for a further three years to a total of 10 years, subject to the maximum annual deduction of $100,000. "We propose the extension be implemented from the year of assessment 2005-06, so that those who have claimed the deduction continuously since 1998-99 can continue claiming the deduction without a break", a Government spokesman said.
Around 400,000 taxpayers will benefit from the home loan interest deduction in 2006-07, and some 80,000 taxpaying home owners whose seven-year entitlement period for the deduction has expired or is due to expire would benefit immediately.
It is estimated that the proposal to reduce the marginal tax rates will cost the Government $1.5 billion in a full year. The proposal to extend the entitlement period for home loan interest deduction is estimated to cost the Government $1.2 billion in 2006-07.
The Bill will be introduced into the Legislative Council on April 26, 2006.
Ends/Wednesday, April 12, 2006
Issued at HKT 14:48