Hong Kong Salaries Tax,Tax Advisory - Conpak CPA Limited

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 organisations, 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. The information for tax allowances and tax rates for the year 2014/15 and 2015/16 is listed below:

Allowances in Computing Salaries Tax(HK$) 2015/16 2014/15
Basic allowance 120,000 120,000
Married person's allowance 240,000 240,000
Child allowance for each of the 1st to 9th child
- born within the year of assessment
- born in other years of assessment

200,000
100,000

140,000
70,000
Allowance for dependent parents, grandparents and grandparents-in-law who are 55 years old or above but below 60 (each) 20,000 20,000
Additional allowance for dependent parents, grandparents, grandparents-in-law who are 55 years old or above but below 60 (dependent family members residing with the taxpayer)(each) 20,000 20,000
Allowance for dependent parents, grandparents and grandparents-in-law who are 60 years old or above, or eligible to claim allowances under the Government’s Disability Allowance Scheme (each) 40,000 40,000
Additional allowance for dependent parents, grandparents and grandparents-in-law who are 60 years old or above, or eligible to claim allowances under the Government’s Disability Allowance Scheme (each) 40,000 40,000
Dependent siblings allowance (each) 33,000 33,000
Single parent allowance 120,000 120,000
Disabled dependent allowance (each) 66,000 66,000

Maximum Deductions in Computing Salaries Tax
Deduction Items Deductible Amounts
(2015/16)
Deductible Amounts
(2014/15)
Self-education Expenses 80,000 60,000
Home loan interest 100,000 100,000
Mandatory contributions to mandatory provident fund schemes or recognized retirement schemes 18,000 17,500
Elderly residential care expenses 80,000 80,000
Approved charitable donations [(income – allowable expenses – depreciation allowances)×percentage] 35% 35%

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% 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) 2015/16 2014/15
First $40,000 (2007/08: First $35,000)
2%
2%
Next $40,000 (2007/08: Next $35,000)
7%
7%
Next $40,000 (2007/08: Next $35,000)
12%
12%
On the remainder
17%
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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