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Salaries Tax

Scope of Charge
Hong Kong salaries tax is charged on income arising in or derived from Hong Kong as per regional source.
Assessment Period
From 1 April of one year to 31 March of the next year
Deductions and Allowances
Salaries tax clearly defines deductible items, that deductible portion includes donations from governmentally approved charitable organizations, contributions paid to recognized retirement schemes, self-education expenses, interest on personal home loans and all outgoing expenses incurred in order to fully or necessarily produce the assessable income. Below please find the deductions and allowances for year 2007/08 and 2008/09:
| Allowances in Computing Salaries Tax(HK$) | 2008/09 | 2007/08 |
|---|---|---|
| Basic allowance | 108,000 | 100,000 |
| Married person's allowance | 216,000 | 200,000 |
| Child allowance (each) year of birth other years |
100,000 50,000 |
100,000 50,000 |
| Allowance for dependent parents, grandparents and grandparents-in-law (each) | 30,000 | 30,000 |
| Additional allowance for dependent parents, grandparents, grandparents-in-law (dependent family members residing with taxpayer) (each) | 30,000 | 30,000 |
| Dependent siblings allowance (each) | 30,000 | 30,000 |
| Single parent allowance (each) | 108,000 | 100,000 |
| Disabled dependent allowance (each) | 60,000 | 60,000 |
| Maximum Deductions in Computing Salaries Tax | ||
|---|---|---|
| Deduction Items | Deductible Amounts (2008/09) |
Deductible Amounts (2007/08) |
| Self-education Expenses | 60,000 | 60,000 |
| Home loan interest | 100,000 | 100,000 |
| Mandatory contribution to Mandatory Provident Fund ("MPF Scheme") or contribution to recognized retirement schemes | 12,000 | 12,000 |
| Elderly residential care expenses | 60,000 | 60,000 |
| Approved charitable donations [(income – allowable expenses)×percentage] | 35% | 25% |
Rate of Taxation
Rate of Taxation Salaries tax is chargeable at progressive rates or standard rate, which will be the smaller of the following:
1) 15% (2007/08:16%) of net total income chargeable at standard rate
2) Net chargeable income at salaries tax progressive rates
| Salaries Tax Progressive Rates (income less deduction items and allowances) | |
|---|---|
| First $40,000 (2007/08: First $35,000) | 2% |
| Next $40,000 (2007/08: Next $35,000) | 7% |
| Next $40,000 (2007/08: Next $35,000) | 12% |
| On the remainder | 17% |
Provisional Salaries Tax
Before the related tax year ends, the Inland Revenue Department (IRD) will impose the provisional salaries tax on persons according to the tax payment assessed in the previous year. In the succeeding year, when the tax payment for the related year is assessed, the provisional tax paid will be used to pay the salaries tax payable in that year.
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