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Hong Kong Individual - Deductions

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Outgoings and expenses other than those of a domestic, private or capital nature are allowable under salaries tax insofar as they are incurred wholly, exclusively, and necessarily in the production of income subject to salaries tax. In practice, very few expenses can meet the above restrictive requirements.

Employment expenses

Some business travel expenses (excluding private travel expenses such as home to place of work) and entertainment expenses may qualify for deduction under salaries tax subject to the restrictive requirements above. Depreciation allowances may be allowed on capital expenditure incurred on plant and machinery where the use of which is essential in the production of assessable income.

Concessionary deductions

A few concessionary deductions are specifically provided for under the Inland Revenue Ordinance.

Charitable donations

Charitable donations made in cash to approved charitable institutions are allowable if the aggregated amount for a year of assessment is not less than HKD 100. For year of assessment 2018/19, the deduction for charitable donations is restricted to 35% of the assessable income after allowable deductions of the year of assessment.

Elderly residential care expenses

Elderly residential care expenses paid to a residential care home in respect of a parent or grandparent of a taxpayer or spouse are deductible up to a maximum of HKD 100,000 for each tax year for each parent or grandparent for year of assessment 2018/19.

Self-education expenses

A deduction is allowed for self-education expenses paid for employment-related courses. The maximum amount of deduction allowed for each tax year is HKD 100,000 for year of assessment 2018/19.

Contributions to retirement scheme

Contributions to a recognised occupational retirement scheme or an MPF scheme are deductible up to a maximum of HKD 18,000 for year of assessment 2018/19.

Home loan interest expenses

Home loan interest paid can be deducted by a person if the property is owned by that person and is occupied by that person as their place of residence during the year of assessment. The place or residence must be situated in Hong Kong in order to qualify for the deduction. The maximum deduction for each tax year is HKD 100,000 for 20 years of assessment.

Standard deductions

There is no blanket or standard deduction although a few concessionary deductions are available (see Concessionary deductions above for more information).

Personal allowances

Under salaries tax and personal assessment (if elected), allowances are granted for each taxpayer provided that the applicable conditions for the allowances are satisfied. The amounts allowed for year of assessment 2018/19 are shown below.

Personal allowances 2018/19 (HKD)
Basic allowance (for single persons) (1) 132,000
   
Married person’s allowance (for married couples) (1) 264,000
   
Child allowances (2)  
1st to 9th child (each)  
Year of birth 240,000
Other years 120,000
   
Dependent parent or grandparent allowance (each)  
Aged 60 or above  
Not residing with taxpayer 50,000
Residing with taxpayer throughout the tax year 100,000
Aged 55 to 59  
Not residing with taxpayer 25,000
Residing with taxpayer throughout the tax year 50,000
   
Dependent brother or sister allowance (for whom no child allowance is claimed) 37,500
   
Single parent allowance (for single parent with sole or predominant care of a child) 132,000
   
Disabled dependant allowance (in addition to any allowances already granted for the disabled person) 75,000
Personal disability allowance (in addition to any allowances already granted for the disabled person) 75,000

Notes

  1. If a married couple both have income chargeable to salaries tax and no joint assessment or personal assessment is elected, they are taxed as two single persons and each will be entitled to the basic allowance. The married allowance is given only if one spouse has no income liable to salaries tax, or where joint assessment or personal assessment is elected by the couple.
  2. Child allowances are only available to one of the spouses of a married couple. The couple must state which spouse will claim the child allowance.

Business deductions

Business expenses incurred for producing assessable profits are allowable under profits tax (see Profits tax in the Other taxes section for more information).

Losses

Business losses may be used to offset against assessable business profits from the same trade under profits tax. If an individual elects personal assessment (see the Tax administration section for more information), business losses can be used to offset employment income or business profits from other trades. Capital losses are not allowable under either salaries tax or profits tax.

Fine and penalties

Fine and penalties are not deductible as they do not meet the conditions of being incurred wholly, exclusively and necessarily in the production of income subject to salaries tax.


Last Reviewed - 27 June 2018

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