Change your tax bill to $0

#Tips 1: Use up your dependent tax allowance

 

If you have dependent parents or grandparents, you are entitled to a tax allowance of up to HKD100,000 for each dependent parent.

 

Dependent parent and dependent grandparent allowance (by each dependent)
Age 55 - 59	HKD 25,000
Age 60 or above	HKD 50,000
Additional dependent parent and dependent grandparent allowance (by each dependent)*, 1 *If the dependant has lived with you continuously throughout the whole year without paying the full cost, you are also entitled to an additional allowance.
Age 55 - 59	HKD 25,000
Age 60 or above	HKD 50,000

 

If you have siblings, the person with the higher net chargeable income can claim the dependent parent allowance. If the net chargeable income is similar, you all may take turns claiming it. The additional allowance is applicable to people who live with the dependent throughout the year.

 

#Tips 2：HKD 0 tax for an annual salary of nearly HKD 1M?

 

Taking a married couple, who support 2 children and parents on both sides (aged 60 or above), as an example:

 

Income	HKD 1,000,000
Married person’s allowance1	HKD 264,000
3 children allowance1	HKD 360,000 (120,000*3)
4 dependent parents allowance1	HKD 200,000 (50,000*4)
Total tax allowances	HKD 824,000
Qualifying premium paid under 8 VHIS policy ^,1	HKD 64,000
Qualifying annuity premiums #, 1	HKD 120,000
Total tax deductions	HKD 184,000

 

^You can apply for the VHIS for your spouse/ children/ grandparents/ siblings and get the tax deductions. (Capped at HKD 8,000 per insured person)

 

^#and/ or tax-deductible MPF voluntary contributions. (Capped at HKD 60,000 per insured person)

 

QDAP Tips

 

Deferred annuities (QDAP) allow you to balance your assets and save for retirement. Some products/premium term offer up to 4.2% p.a. expected internal rate of return.

 

VHIS Tips

 

Tax deduction for VHIS capped at HKD 8,000 per insured person, and there is no limit on the number of insured people, i.e., you can apply for the VHIS for your spouse/ children/ grandparents/ siblings and get the tax deductions.

 

Insured person	Annual premium paid	Tax-deductible amount&	Amount of Tax Saved$
Taxpayer	$5,000	$5,000	$750
Spouse	$6,000	$6,000	$900
Daughter	$2,000	$2,000	$300
2nd daughter	$3,000	$3,000	$450
Father	$8,000	$8,000	$1,200
Mother	$12,000	$8,000	$1,200
Total	HKD 36,000	HKD 32,000	HKD 3,600

 

^&Capped at HKD 8,000 per insured person

 

^$Assuming the applicable tax rate is 15%²

 

#Tips 3: Is it good for couples to file taxes together?

 

Assuming husband & wife are required to pay tax and have purchased QDAP, they can enjoy a joint tax deduction of HKD 120,000. However, for personal assessment jointly with spouse, the tax reduction will be capped at HKD 10,000³ for the married couple.

 

¹The above tax allowances and deductions are based on the figures provided by Inland Revenue Department (IRD) for the tax year of 2021/22. For details, please refer to https://www.ird.gov.hk/chi/pdf/pam61c.pdf

 

²As from the year of assessment 2018/19, the standard tax rate is 15% and the marginal tax rates are 2%, 6%, 10%, 14% & 17%.

 

³The maximum amount of tax reduction is based on the figures provided by the Inland Revenue Department for the tax year of 2021/22.