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Tax Smart Tips

2022-23 Budget Tax Measures

  • In his 2022-23 Budget, the Financial Secretary proposed the following tax measures:
  1. For the year of assessment 2021/22
    Reducing profits tax, salaries tax and tax under personal assessment for the year of assessment 2021/22 by 100%, subject to a ceiling of $10,000 per case. The relevant legislation for the tax reduction was passed by the Legislative Council on 6 April 2022 and gazetted on 14 April 2022. 
  2. From the year of assessment 2022/23 onwards
    Introducing a tax deduction for domestic rental expenses. (This measure can only be implemented after completion of the relevant legislative process.)

The one-off tax reduction

  • The tax reduction for the year of assessment 2021/22 is not applicable to property tax. Individuals earning rental income, if eligible, may elect for personal assessment in Part 7 of the tax return for the year of assessment 2021/22 to enjoy the tax reduction.
  • For profits tax, the tax reduction ceiling is applied to each business. For salaries tax, the ceiling is applied to each individual taxpayer, but for couples jointly assessed, the ceiling is applied to each couple. For personal assessment, the ceiling is applied to each single taxpayer or married person who elects for personal assessment separately from his / her spouse. If married couples make their personal assessment election jointly, the ceiling will apply to each couple.
  • A taxpayer who is separately chargeable to salaries tax and profits tax can enjoy the tax reduction under each of the tax types. If he / she elects personal assessment, the reduction will have to be based on the tax payable under personal assessment.
  • Taxpayers should complete the 2021/22 tax returns as usual. IRD will effect the tax reduction in the final assessment for the year of assessment 2021/22.

Tax deduction for domestic rental expenses

  • The Financial Secretary proposed to introduce a tax deduction for eligible domestic rental expenses from the year of assessment 2022/23. Taxpayers liable to salaries tax or tax charged under personal assessment who do not own any domestic property can claim deduction for the rent paid by him / her or his / her spouse as the tenant. The annual ceiling of the deduction is $100,000. This measure will be implemented after completion of the relevant legislative processes.

 

Other Useful Tips

  • Inform IRD promptly if your correspondence address has been changed.
  • Check your copy of “Employer’s Return of Remuneration and Pension” (IR56B/F/G) carefully. In case of doubt, clarify with your employer immediately and inform IRD, if necessary.
  • Claim for deductions under salaries tax (i.e. outgoing and expenses, self-education expenses, approved charitable donations and contributions to the MPF or ORSO Scheme) can be made in Part 4.3 of the tax return.
  • Deduction claims for qualifying premiums paid under Voluntary Health Insurance Scheme Policy, and qualifying annuity premiums and tax deductible MPF voluntary contributions can be made in Parts 9 and 10 of the tax return for the year of assessment 2021/22 respectively.
  • The registered owner of a self-occupied property can claim for the deduction of home loan interest. If the relevant property is solely owned by you, the maximum amount of home loan interest deductible is $100,000 for each year of assessment. Where a property is owned by joint tenants or tenants in common, the maximum deduction allowable is apportioned between / among all the owners on the basis of their respective ownership ratios.
  • When filing your tax return, do not attach supporting documents for deductions claimed. However, such documents should be retained for 7 years for examination when called for.
  • When sending your completed tax return to IRD by post, affix sufficient stamp according to the appropriate category of postage so as to ensure delivery in order.
  • To rectify any error or omission in your tax return discovered after submission, inform IRD in the soonest. State your name, phone number, file number, the relevant year of assessment and details of your amendments, and sign your rectification notice. eTAX users can also file their rectification notices through "Contact Us" in their eTAX Accounts.