Tax Deduction Guide for Working Professionals

In Hong Kong, tax filing is often a tedious task for employees, but by making good use of various tax deduction items, you can effectively reduce your tax burden and even enhance your personal protection. This article provides employees with a comprehensive tax deduction guide, so you no longer feel confused during tax season.

1. Understand the Tax Filing Timeline
   Every year, employees typically receive their tax return forms from the Inland Revenue Department around May to June and must complete and submit them within one month. If you choose to use the "eTAX" system for online filing, you get an extra month to submit. Remember to file on time to avoid penalties!

2. Tax Deductions and Allowances
   Common Deductible Items:

• Self-education expenses

• Recognized charitable donations

• Mandatory Provident Fund (MPF) employee contributions

• Home loan interest

• Residential rental payments

Recommended “Three Pillars” for Tax Deductions:

In Hong Kong, employees can consider purchasing the following three products, known as the “Three Pillars of Tax Deductions,” which not only provide protection but also enjoy tax benefits:

A. Voluntary Health Insurance Scheme (VHIS): Each insured person can enjoy a deduction of up to $8,000. These plans provide medical coverage and ensure continued protection even as your health changes.

B. Qualified Deferred Annuity Policies (QDAP): Investing in a qualified deferred annuity plan is eligible for a tax deduction, with a minimum total premium of $180,000, payable within five years. Such annuities offer stable retirement income and can increase your annual tax-deductible limit up to HK$60,000.

C. Tax Deductible Voluntary Contributions (TVC) to MPF: This encourages employees to set aside more funds for retirement, offers flexibility in contribution amounts, and allows yearly deductions up to $60,000. Note that the tax-deductible limit is shared with deferred annuities.

3. Make Good Use of Allowances
   When filing taxes, pay attention to claiming various allowances such as the basic allowance, married person’s allowance, and child allowance. These can directly reduce your assessable income and further lower your tax burden.

By fully utilizing tax deductions and allowances when filing your taxes, you can significantly reduce your tax liability. Additionally, purchasing VHIS, QDAP, and TVC not only strengthens your personal protection but also lets you enjoy tax benefits. Careful planning and utilization can make your tax strategy even more efficient!
Contact Adviser Grace now to get professional assistance.