For the year of assessment up to 2017/18:
You may elect personal assessment if:
you are 18 years of age or older, or under that age if both parents are dead; and
you are ordinarily resident in Hong Kong or a temporary resident, or your spouse is if you are married.
If you are married and you and your spouse are eligible to make an election for personal assessment and both of you have income assessable under the Inland Revenue Ordinance, the election for personal assessment must be jointly made with the spouse.
From the year of assessment 2018/19 onwards:
You may elect for personal assessment separately from your spouse; OR
you and your spouse may jointly make an election for personal assessment as in previous years of assessment.
However, if you are married, you and your spouse are jointly assessed under Salaries Tax, election for Personal Assessment must be made by both of you jointly.
For the purpose of personal assessment:
1."ordinarily resident " means a person resides in Hong Kong voluntarily and for a settled purpose (such as for education, business, employment or family etc.) with sufficient degree of continuity. Such person should habitually and normally reside in Hong Kong apart from temporary or occasional absences of long or short duration, and is living in Hong Kong as an ordinary member of the community for all the purposes of his/her daily life. Whether a person ordinarily resides in Hong Kong will ultimately depend on the facts of the case. 2."temporary resident" means an individual who stays in Hong Kong for a period or a number of periods amounting to more than 180 days during the year of assessment in respect of which the election is made or for a period or periods amounting to more than 300 days in 2 consecutive years of assessment, one of which is the year of assessment in respect of which the election is made.
How may personal assessment reduce your tax liability
Sole-proprietor or partners of a business and property owners who receive rental income are assessed to profits tax and property tax respectively at standard rate. Under personal assessment, income of the individual taxpayer chargeable to salaries tax, profits tax and property tax are aggregated, and from this total, the following may be deducted:
interest payable on money borrowed for the acquisition of the property let, (the amount deductible for each property would not exceed the assessed income from that property),
approved charitable donations,
home loan interest,
mandatory contributions paid to a Mandatory Provident Fund Scheme as an employee, contributions paid to a Recognized Occupational Retirement Scheme,
business losses incurred in the year of assessment,
losses brought forward from previous years under personal assessment, and
The balance, if any, will then be taxed at the same rates as those used for salaries tax. Depending on the income level, there may be cases that it would not be advantageous to be taxed under personal assessment and in that case, the tax assessor would disregard the application and tax under the respective salaries tax, property tax etc.
With the introduction of an one off tax exemption since fiscal year 2014/15, it may be more beneficial to elect to have your profits taxed under Profits Tax and your spouse taxed, for example, under Salaries Tax separately, due to the following reasons:
each of you and your spouse is eligible to a (short-term) tax exemption (HK$10,000 for 2020/21) or 100% of the tax payable, if lower;
with effect from the fiscal year 2018/19, Hong Kong Profits Tax is levied under a two-tiered profits tax rates regime with the first two million of profits taxed at 7.5% for un-incorporated business and 8.25% for corporate tax payers. Profits over HK$2 million continue to be taxed at the full (standard) rates of 15% and 16.5% for un-incorporated business and corporate tax payers respectively. This compares favourably with the progressive tax rates of between 2% to 17% under the Salaries Tax regime on net assessable income (after being reduced by the various personal (tax free) allowances), as caped at 15% of gross income
Source of info: Website of Hong Kong IRD https://www.gov.hk/en/residents/taxes/salaries/personal/personaleligibility.htm
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