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.

Departmental Interpretation and Practice Notes No. 9: Major Deductible Items under Salaries Tax (pdf file)Departmental Interpretation and Practice Notes No. 33: Insurance Agents (pdf file)

Approved Charitable Donations

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

More on deductions for approved charitable donations

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.

More on deductions for expenses of self-education

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. For contributions to a mandatory provident fund scheme, you should note, however, that all contributions other than mandatory contributions are voluntary contributions and cannot be claimed as deductions.

More on deductions for contributions to mandatory provident fund scheme and recognized occupational retirement schemes

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.

More on personal assessment

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.

More on deductions for home loan interest paid

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.

More on deductions for elderly residential care expenses

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.

Last review date: May 2017