Press Conference 5 May 2008 - The Gist of CIR's Speech
I shall speak mainly on 4 topics: this year's individual tax returns, the Budget measures in particular the charitable donations, the new eTAX service portal, and, lastly, the revenue collections of financial year 2007-08.
I shall start with the tax returns. Last Friday, i.e. the 2nd of May, IRD has issued 1.97 million individual tax returns to members of the public.
This is the first time we issued tax returns by two different modes, namely the traditional postal mode, and the electronic mode for eTAX users.
You may find tax filing a more pleasant job this year, having in mind that in this year's Budget, the Financial Secretary has proposed a tax reduction of 75% for 2007/08, subject to a ceiling of $25,000 per case. This proposal will benefit all taxpayers in 2007/08.
Salary earners should complete this year's tax return as usual. No application is needed for the tax reduction.
Individuals with rental and/or business income will enjoy such reduction whether they elect personal assessment or not. However, the amount of reduction they would get might be different when assessed under each type of tax or personal assessment. The exact position would need to be evaluated case by case. Therefore, individuals having business and rental income and eligible for personal assessment may make such election in their tax returns. IRD will check, in each case, whether the personal assessment election will reduce the amount of tax payable, and assess each taxpayer in the way to his advantage.
Along with the above one-off concession, the Financial Secretary has also proposed some tax relief measures for 2008/09, including raising the personal allowances, widening the tax bands, lowering the standard rate and corporate profits tax rate, raising the deduction ceiling for charitable donations and accelerating tax deductions for capital expenditure on environment-friendly facilities.
The Government has started the law amendment process. After enactment of the relevant legislation, IRD will effect the 2007/08 tax reduction in this year's tax bills, and will automatically apply the new allowances, tax rates and bands in calculating the 2008/09 provisional tax.
From 2008/09, the deduction ceiling for approved charitable donations will be raised to 35% of the taxpayer's income. That is, if a taxpayer makes a generous donation of one third of his income, the amount will still be fully deductible for tax purpose. Those who have donated more than the 2007/08 ceiling can apply to have their provisional tax for 2008/09 held over after the law amendment. If a taxpayer has also donated more than 25% of his income in 2007/08, he is advised to put down the actual amount donated in this year's return. IRD will assess his 2008/09 provisional tax by reference to such amount.
To guard against abuse, IRD will step up audit on donation claims. I would ask for taxpayers' attention that only donations made to tax-exempt charities are tax deductible. A list of these tax-exempt charities can be found on the IRD website. Donation receipts should be kept for 7 years and submitted for IRD's examination when called for.
A one-month period is allowed for filing individual tax returns. The deadline falls on 2 June 2008. For sole proprietor of un-incorporated businesses, a three-month period is allowed and therefore the filing deadline will be 2 August 2008.
If taxpayers have a problem when completing their tax returns, they may visit the IRD website for the e-Seminars. They may also seek help in the Q&A corner or call the enquiry hotline 187 8022. The service hours of the operators of this hotline will be extended, from 2 May to 2 June 2008, from 8:15 in the morning to 7:00 in the evening on weekdays, and from 9:00 in the morning to 1:00 in the afternoon on Saturdays. There is no operator service on public holidays.
Now I will go into the new eTAX service portal.
What is eTAX? It is a one-stop access portal providing a full range of online tax services under the GovHK. With an eTAX account, a taxpayer can go fully electronic with his tax transactions. That is, he can opt to receive and file e-tax returns, receive e-tax bills and e-receipts for tax payments. eTAX will provide each user with a personal message box for receiving IRD email messages. e-Alerts will be sent when a user's filing or payment deadline approaches. Besides, users can review their tax position, update their personal particulars, make e-objections or e-holdover applications online at any time.
eTAX is everyone's tax secretary. It is a convenient, safe and environment-friendly service. Hong Kong people are leading hectic lives. Some are also travelling a lot. Therefore I would recommend eTAX to them, which enable them to attend to their tax business anywhere around the clock. When opening your eTAX account, you can choose your own account name. The earlier you open your account, the higher the chance you can have your preferred account name before someone gets it.
Since its introduction in 2001, e-filing is getting increasingly popular. Last year, more than 140,000 tax returns were received through e-filing. This year, we have a new function enabling the users to have their e-return data saved in their personal computers. Our system has also been updated with the tax concessions proposed in the 2008-09 Budget. When filing their returns online, taxpayers will instantly know the amount of tax payable in the coming bill after the tax concessions.
To encourage online filing of this year's individual tax returns, we are granting an automatic extension of 1 month to all e-filers, that is, up to 2nd of July.
Finally, let me round up this session with a bit of IRD's history.
IRD was established on 1st of April 1947. In the first year, i.e. 1947-48, the total revenue collection was $14 million. Sixty years have since passed. In 2007-08, when we are celebrating our 60th anniversary, how much have we collected?
IRD collections broke our record once again in 2007-08. Our total collections reached $200.6 billion, fourteen thousand times of our result 60 years back. This also represents an increase of $45.5billion, or 29%, over the previous year's collection of $155.1 billion. The increase was largely brought by our prospering economy, with a significant growth in business profits and a general increase in salary income. The very active stock market and gradually blooming property market are also contributing factors.
Further details can be found in the papers distributed.