Tax Deduction for 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).

What is a VHIS Policy

An insurance policy that is in whole or in part issued under an insurance plan that is certified by the Secretary for Health to be in compliance with the Government’s VHIS.

You may go to VHIS’s website for List of Certified Plans

Qualifying Premiums

"Qualifying premiums" means the net sum of moneys that is payable under a VHIS policy to the insurer for writing or renewing the policy in so far as it relates to the insurance plan certified by the Secretary for Health to be in compliance with the Government’s VHIS.

Eligibility for Deduction

From the year of assessment 2019/20 onwards, you may claim a deduction for qualifying premiums paid by you or your spouse (not being a spouse living apart) as a policy holder of a VHIS policy for an insured person.

The insured person must be yourself or your specified relative in the year of assessment and must be:

• a HKID card holder at any time during the year of assessment; or
• if aged under 11 and not a HKID card holder at any time during the year of assessment, his natural parent or adoptive parent must be a HKID card holder when the insured person was born or adopted.

Meaning of Specified Relative

An individual is your specified relative if the individual is, at any time during the year of assessment -

• your spouse;
• a parent or grandparent of you or your spouse, who is at any time during the year of assessment -
  1. aged 55 or more; or
  2. under the age of 55 but eligible to claim an allowance under the Government’s Disability Allowance Scheme;
• a child or sibling of you or your spouse, who is at any time during the year of assessment unmarried and
1. under the age of 18; or
2. aged 18 or more but under the age of 25 and receiving full time education at a university, college, school or other similar educational establishment; or
3. aged 18 or more but incapacitated for work by reason of physical or mental disability.

Amount of Allowable Deduction

• The deduction allowable to each taxpayer for each insured person should not exceed the qualifying premiums paid or the specified maximum deduction, whichever is lower. The specified maximum deduction for the year of assessment 2019/20 onwards is $8,000.
• There is no cap on the number of specified relatives claimed by a taxpayer. Taxpayer may claim deduction for qualifying premiums paid for the same insured person under one or more than one VHIS policy. If there are more than one policy holders for a VHIS policy, the premium paid is taken as paid by all policy holders in equal share.
• If an insurance policy covers a Certified Plan and a life insurance plan, only the premium paid for the Certified Plan is deductible.
• More than one taxpayers may claim deduction for the same insured person.
• The deductible amount is net of the refunded premiums. If refund is made after taxpayer has been allowed for deduction in respect of the qualifying premiums, taxpayer must notify the Commissioner in writing within 3 months after the date of refund and despite any time limit for making an additional assessment, an assessor may make an additional assessment on the taxpayer under section 60 of the Inland Revenue Ordinance.

Penalties may be incurred if a taxpayer fails to notify the Commissioner in writing of the refund within the specified period without reasonable excuses. Fine or additional tax may be imposed in respect of the undercharged amount.

Claim of Deduction by Married Persons

Married taxpayer may claim deduction for qualifying premiums paid by him/her or spouse (not living apart), but premiums already claimed by spouse should be excluded. They must agree on how to divide the amount of deduction. If no agreement is reached, the claim would not be entertained. If deduction has already been allowed, additional assessment will be raised to withdraw the deduction allowed in consequence of such an agreement reached by the married person and the person’s spouse within a reasonable time; or their failure to reach such an agreement within a reasonable time.

How to Lodge a Claim

You may claim the deduction for qualifying premiums paid in your Tax Return – Individuals (BIR60) from the year of assessment 2019/20. If you wish to claim for the deduction after submitting the tax return, you may complete form IR831 and return it to the Department. The claim should be lodged not later than 6 years after the end of the year of assessment in which the claim relates.

Download form IR831 (pdf file)

Supporting Documents

When you file your tax return, you need not attach documents to support your claim. However, you should retain documentary evidence (e.g. Premium receipts and annual premium statement) for 6 years after the expiration of the relevant year of assessment for verification when required.

Further Information

More information on the Voluntary Health Insurance Scheme is available through the following links.

• Frequently asked questions
• The website of Voluntary Health Insurance Scheme