Deductions

Along with the various allowances available, you may claim other deductions under salaries tax and personal assessment. This article explains what deductions are, the various types of deductions available and why you should retain your supporting documentation.

Deductions Allowable under Salaries Tax and Personal Assessment

You may claim the following deductions.

Outgoings and Expenses

You can claim outgoings and expenses that are wholly, exclusively and necessarily incurred in the production of the assessable income.  Exceptions are expenses of a domestic or private nature and capital expenditure.

Information on how the Inland Revenue Department considers allowances for capital expenses, outgoings and expenses, and some other expenses for which you can claim deductions is available through the link below.

Qualifying Premiums Paid under the Voluntary Health Insurance Scheme (VHIS) Policy

The Inland Revenue (Amendment) (No. 8) Ordinance 2018 was enacted on 9 November 2018. The amendment ordinance gives effect to a tax deduction under salaries tax and personal assessment to taxpayers who pay qualifying premiums under a Certified Plan of VHIS for themselves or their specified relatives. The deduction is applicable to a year of assessment commencing on or after 1 April 2019 (i.e. year of assessment 2019/20 onwards).

Tax Deductions for Qualifying Annuity Premiums and Tax Deductible MPF Voluntary Contributions

The Inland Revenue and MPF Schemes Legislation (Tax Deductions for Annuity Premiums and MPF Voluntary Contributions) (Amendment) Ordinance 2019 was enacted on 29 March 2019. The amendment ordinance provides tax deductions under salaries tax and personal assessment for qualifying annuity premiums and tax deductible MPF voluntary contributions (TVC). The deductions are applicable to a year of assessment commencing on or after 1 April 2019 (i.e. year of assessment 2019/20 onwards).

Tax Deduction for Domestic Rents

The Inland Revenue (Amendment) (Tax Deductions for Domestic Rents) Ordinance 2022 was enacted on 30 June 2022. The amendment ordinance provides tax deductions under salaries tax and personal assessment for domestic rents. The deduction is applicable to a year of assessment commencing on or after 1 April 2022 (i.e. year of assessment 2022/23 onwards).

Approved Charitable Donations

You can normally claim deductions for donations made to approved charitable organizations. However, not all payments you have made are deductible.

Expenses of Self-education

Expenses of Self-education (including tuition and the related examination fees) paid for a prescribed course of education may be deductible under salaries tax. The link below will take you to further information about what you can claim for and when you should make a claim.

Contributions to a Mandatory Provident Fund Scheme or Recognized Occupational Retirement Scheme

You can claim deductions for mandatory contributions made to a mandatory provident fund scheme or contributions to a recognized occupational retirement scheme. The link below will take you to further information on the deductions.

Depreciation

Depreciation and other capital allowances for plant and machinery can be considered as deductions when the use of the plant and machinery is essential to the production of your assessable income.

Loss

This refers to losses brought forward from previous years under personal assessment. Other information on personal assessment is available through the following link.

Home Loan Interest

Home loan interest that you pay for the acquisition of a dwelling situated in Hong Kong and any car parking space located in the same development of the dwelling can be deducted from your assessable income under salaries tax or from your total income under personal assessment, if prescribed conditions are met. A person who is charged tax at the standard rate is also entitled to the deduction. Information on eligibility criteria, deduction amounts and how deductions are allowed is available through the link below.

Interest Payments to Produce Rental Income from Properties

By electing Personal Assessment, you may claim deduction of interest incurred on money borrowed for the purposes of producing rental income chargeable to property tax. However the deduction cannot exceed the net assessable value of each individual property let. Interest payments relating to periods when the property was not let (e.g. occupation as residence for your own family or vacant) are not deductible.

Elderly Residential Care Expenses

If you or your spouse pays fees to a residential care home for the parent or grandparent of either one of you, you may claim a deduction under the salaries tax or personal assessment. The following link will lead you to more information on the conditions under which you can claim a deduction, the amount you can claim and how you can claim it.

Supporting Documents

You need not attach any supporting documents to your Tax Return – Individuals (BIR60), but the Inland Revenue Department can review your case to ascertain the proper amount deductible. This means that you should retain the receipts for a period of 6 years after the expiration of the year of assessment in which the payments were made. You are required to produce receipts if your case is selected for review.

Further Information

You can access common questions and answers on allowances and deductions through the following link.