Salaries Tax - 攀誠報稅會計中心-前香港稅局評稅職工約廿年(PTAC)

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Salaries Tax

Taxation
What income
needs to be taxed
(Assessable income):

Directors' emoluments, employee salaries, commissions, bonuses, additional rewards, pensions, employee benefits ...
Employee benefits
For example, employer provides the employee a residence (A portion of the salary is given in the form of rental payment)
The Quater value will be included in the assessable income
Quater value = [total salaries minus expenses (but not self-education expenses)] x 10%

Deductions
- There are three main categories of deductions from assessable income:
   Expenses deduction, concessionary deductions and eligible allowances

1. Expenses deductions
  • Outgoings and expenses that are wholly, exclusively and necessarily incurred in the production of the assessable income.
  • Self-education expenses (up to $ 100,000)

2. Concessionary deductions
  • Approved Charitable donations
  • Mandatory Provident Fund (up to $18,000)
  • Home Loan Interest (up to $100,000)
  • Domestic Rent (up to $100,000)
  • Elderly Residential Care Expenses (up to $100,000)
  • Qualifying Premiums Paid under Voluntary Health Insurance Scheme (VHIS) Policy (up to $8,000)
  • Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contributions (up to $60,000)
3. Eligible Allowances (2022/23)
Basic
$132,000
Married person
$264,000
Child
$120,000
Child born during the year
$120,000
Dependent Brother and Sister
$37,500
Additional Dependent Parent/Grandparent
(resided with you whole year)over 60

$50,000
Dependent Parent/Grandparent over 60
$50,000
Additional Dependent Parent/Grandparent
(resided with you whole year)over 55

$25,000
Dependent Parent/Grandparent over 55
$25,000
Single Parent
$132,000
Personal Disablity
$75,000
Disabled Dependent
$75,000

Salaries Tax Calculation (2020/21)
Tax calculated cannot exceed 15% (Standard Rate) of the Net Chargeable Income
Progressive Rate

On the First $50,000 2%
On the Next $50,000 6%
On the Next $50,000 10%
On the Next $50,000 14%
Remainder 17%

Tax Reduction
100% deduction (maximum $6,000 relief)

Net Chargeable Income =
Assessable Income - deductions - allowances

Standard Rate

15% of Net Assessable Income

Net Assessable Income =
Assessable Income - deductions

Joint assessment

If a spouse earns yearly income less than $132,000 (Basic Allowance), he or she has no tax to pay.  In this case, the couple can elect joint assessment where both yearly income will be combined for assessment.  The couple enjoy married person allowance $264,000.  As a result, the overall tax payment will be reduced.

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