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 2017/18 and 2016/17 is listed below:

Allowances in Computing Salaries Tax (HK$) 2017/18 2016/17
Basic allowance HK$132,000 HK$132,000
Married person's allowance HK$264,000 HK$264,000
Child Allowance
1st to 9th child (each):
Year of birth HK$200,000 HK$200,000
Other years HK$100,000 HK$100,000
Dependent Parent / Grandparent Allowance
Aged 60 or above:
Not residing with taxpayer HK$46,000 HK$46,000
Residing with taxpayer throughout the year HK$92,000 HK$92,000
Aged 55 to 59:
Not residing with taxpayer HK$23,000 HK$23,000
Residing with taxpayer throughout the year HK$46,000 HK$46,000
Dependent Brother / Sister Allowance
(for whom no child allowance has been claimed by his / her parent)
HK$37,500 HK$33,000
Single Parent Allowance HK$132,000 HK$132,000
Disabled Dependent Allowance
(in addition to any allowances already granted for the disabled person)
HK$75,000 HK$66,000
Maximum Deductions in Computing Salaries Tax (HK$) 2017/18 2016/17
Charitable donation 35% of assessable income 35% of assessable income
Expenses of self-education HK$100,000 HK$80,000
Home loan interest HK$100,000 HK$100,000
Elderly residential care expense HK$92,000 HK$92,000
Contribution to recognized occupational retirement scheme HK$18,000 HK$18,000

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

Tax Band Tax Rate
2017/18 2016/17
First HK$45,000 First HK$40,000 2%
Next HK$45,000 Next HK$40,000 7%
Next HK$45,000 Next HK$40,000 12%
On the remainder 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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