I received the green envelope in my mailbox today reminding me that I need to file my annual tax return. I have been filing my taxes for many years, and am always very careful about not overlooking any tax deductions. Whether you are an experienced professional or new to the job market, a single or married person, do take a look at these 10 commonly asked questions before filing your tax returns.
1. As a low-paid freelancer, do I still need to file a tax return?
Whether you’re a freelancer, part-timer, full-timer or self-employed, you are required to file your tax returns.
2. Since I haven’t received the tax forms, can I assume that I don’t need to file my taxes?
No, you have to file a tax return as long as your income exceeds the basic allowance (the basic allowance for 2019/20 is HK$132,000). If you’re an eligible tax payer but have not received your tax returns, do contact the Inland Revenue Department (IRD).
3. Can I just copy all the information from my employer’s annual tax return?
Your employer can make mistakes too, so don’t just copy the information directly from your employer’s return. A single digit added to your income by mistake can make a huge difference in your tax payable amount. Be sure to verify the information carefully.
4. What kinds of allowances are available?
Apart from the basic allowance, taxpayers may also be eligible for the following tax allowances according to their individual circumstances:
| Allowances for 2019/20 | HKD ($) |
|---|---|
| Basic allowance | 132,000 |
| Married person’s allowance | 264,000 |
| Child allowance (for each child) | 120,000 |
| Dependent brother or dependent sister allowance (for each person) | 37,500 |
| Dependent parent and dependent grandparent allowance (for each person) | 25,000 to 50,000, depending on age |
| Single parent allowance | 132,000 |
| Personal Disability Allowance | 75,000 |
| Disabled dependant allowance(for each person) | 75,000 |
5. Can I enjoy the dependent parent allowance if my parents are still working?
Even if your parents have incomes, you can still enjoy the parent allowance if they are 55 years old or above. As the allowance cannot be shared among siblings, your family needs to reach a consensus before applying for the allowance.
6. Will the MPF mandatory contributions be automatically deducted from the calculation?
While it is a common assumption that the IRD will automatically deduct MPF mandatory contributions from the calculation as they’re compulsory in nature, this is not the case. You will be giving up $18,000 worth of allowance if you leave this item blank.
7. Which tax deductions are easily overlooked?
You should pay attention to the approved charitable donations and self-education expenses. Any cash donations of HK$100 or above are eligible for tax deduction as long as you can provide the receipts. If you have enrolled in courses directly related to your work that are organised by eligible universities or trade associations, you can also enjoy a tax deduction for the tuitions and related examination fees.
Read more:
5 tax deductible items not to be missed!
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8. Are there any new tax deductions?
The three ne-added tax deductions include the Qualifying Deferred Annuity Policy (QDAP), Tax Deductible MPF Voluntary Contributions (TVC) and Voluntary Health Insurance Scheme (VHIS).
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Tax savings
How much tax will I save through VHIS?
9. What are the differences between using a printed tax return and an online one? What are the consequences of filing the tax return late?
A printed tax return should be returned within one month from the date of issue, while the submission deadline for online tax returns is extended automatically by one month. If you don’t file your tax return on time, you may be subject to a fine or prosecution. You may end up paying more tax as the IRD, without your completed tax returns, will have to assess your tax payable according to your basic allowance only.
10. What if I missed some information for the allowance entitlements and deductions?
If you use a printed tax return, you can provide the supplementary information in the format stated in the tax return or using the specific form from the IRD. If you are filing your taxes online, you can log in to your account and provide the supplementary information in the “Return Supplement” section.
After filing your tax returns, it’s time to…. start saving!
Before the demand note arrives, you can get an estimation on your tax payable by using the “Tax Calculator”. You can also use the “Savings Goal Calculator” to develop and implement your savings plan, or buy Tax Reserve Certificates to save for your taxes in advance.
Read more：Paying tax without pain / Savings Goal Calculator / Tax Calculator
