Budget 2017-18 FAQ

A:

Individual taxpayers get a one-off reduction of 75% of the final tax for the year of assessment 2016/17 in respect of profits tax, salaries tax and tax under personal assessment, subject to a ceiling of $20,000 per case. Furthermore, the following tax measures, are introduced from the year of assessment 2017/18 onwards:

(a)  Increasing the width of marginal tax bands as follows:

(b)  Increasing the following allowance as follows:

(c)  Raising the maximum allowable deduction for Self-education Expenses as follows:

(d)  Extending the entitlement period for Home Loan Interest deduction as follows:

 #Until superseded

A:

You only need to file, as usual, your 2016/17 tax return for individuals (BIR60). IRD will effect the tax reduction in the final assessment for 2016/17 and apply the new level of allowances and the new marginal tax bands in calculating the 2017/18 provisional tax. For 2016/17 assessments issued before the legislative amendment, IRD will revise them. It is expected that the excess tax paid, if any, will be refunded to taxpayers starting from late July 2017. There is no need for you to make a separate application.

A:

You are required to pay on time the 2016/17 provisional tax. Otherwise, recovery action will be taken by IRD. Similar to previous occasions, the tax reduction is to reduce the 2016/17 final tax that will be charged and not relating to the 2016/17 provisional tax that has already been charged. Therefore, you are still required to pay the 2016/17 provisional tax as charged.

A:

As the tax reduction is to reduce the 2016/17 final tax that will be charged, the reduction will only be reflected in the notices of salaries tax assessment, profits tax assessment and personal assessment for 2016/17. The tax reduction is not applicable to the 2016/17 provisional tax. The provisional tax paid will be applied to pay the 2016/17 final tax and 2017/18 provisional tax. Excess balance, if any, will be refunded.

A:

You may use the tax computation program provided by GovHK to calculate your 2016/17 and 2017/18 salaries tax and tax under personal assessment.

A:

Under personal assessment, all income of an individual taxpayer, including salaries income and business profits, will be aggregated to compute the tax payable. Hence, the amount of tax reduction for the year of assessment 2016/17 is 75% of the tax assessed under personal assessment (subject to a ceiling of $20,000) and not the tax payable under salaries tax and profits tax.

A:

Profits tax, salaries tax and tax under personal assessment for the year of assessment 2016/17 are reduced by 75%, subject to a ceiling of $20,000 per case. Under salaries tax, a husband and a wife are separately assessed. Each of them will get a tax reduction of 75%, subject to a ceiling of $20,000. However, under personal assessment, there is no separate taxation and only one assessment will be issued. Therefore, the tax reduction for the couple is 75%, capped at $20,000. Whether a taxpayer should apply for personal assessment will depend on his situation. When considering an election for personal assessment for the year of assessment 2016/17, taxpayers should take into account the factor that the tax reduction for each couple will be capped at $20,000. IRD will check each personal assessment election to see if it will reduce the amount of tax payable, and assess each taxpayer in the way most advantageous to him.

A:

For each business, you can get the tax reduction of 75% of the profits tax payable for 2016/17, subject to a ceiling of $20,000.

A:

You should state the actual amount of $110,000 paid in Part 4.3 of your 2016/17 tax return for individuals (BIR 60). The Assessor will allow the respective maximum deductions at $80,000 and $100,000 when computing your 2016/17 final salaries tax and 2017/18 provisional salaries tax liabilities.

A:

If the amount of Self-education Expenses paid or payable for 2017/18 exceeds $80,000, you may apply in writing for holding over the 2017/18 provisional salaries tax upon receiving the assessment and notice for payment of provisional salaries tax. The application must be lodged not later than:  

In computing the provisional salaries tax payable for 2017/18, the Assessor will not deduct $100,500 as the amount of Self-education Expenses but will restrict the deduction to $100,000.

A:

You cannot claim deduction for the interest paid in 2011/12 in the year of assessment 2017/18 since the extension of the deduction period from 15 to 20 years of assessment has no retrospective effect and deduction has been claimed for a total of 10 years of assessment prior to 2012/13. Similarly, your 2011/12 assessment cannot be revised to give effect to interest deduction.

A:

You need not claim the deduction consecutively. After granting each deduction of Home Loan Interest to you, the Commissioner will notify you of the number of years for which the deductions have been allowed and the remaining number of years for claiming deductions.