Before the end of the fiscal year (on 31 March), many may consider saving tax with the help of the three tax deductible products, namely Tax Deductible MPF Voluntary Contributions (TVC), Qualifying Deferred Annuity Policy (QDAP) and Voluntary Health Insurance Scheme (VHIS).
While the three tax deductible products – QDAP, TVC and VHIS offer tax reduction benefits – offer great tax savings, their capacity in growing retirement savings and offering health protection is not to be overlooked. Most importantly, before deciding on which product to take out, it is vital to do our homework and understand their nature and features.
Tax Deductible MPF Voluntary Contributions (TVC)
If you are a MPF scheme member, you can open a TVC account under your chosen MPF scheme and make contributions directly to the account without involving your employer.
Most MPF schemes offer TVC accounts and a wide array of funds for members to choose from.
What are tax deduction voluntary contributions ("TVC")?
TVC Webpage
Qualifying Deferred Annuity Policy (QDAP)
Annuity is a long-term insurance product, under which the policyholder will pay premiums to the insurance company in order to receive regular annuity payouts immediately, or starting from a designated date or age until the expiry date specified in the contract.
Only eligible QDAPs approved by the Insurance Authority (IA) are tax deductible.
What is a qualifying deferred annuity policy ("QDAP")?
An overview of the features of TVC and QDAP
Voluntary Health Insurance Scheme (VHIS)
Citizens voluntarily taking out certified individual indemnity hospital insurance plans provided by insurance companies participating in VHIS may opt for private healthcare services.
Those who are interested should compare the different plans in the market, to understand their product features, premiums, policyholder’s rights and responsibilities, and the insurers’ scope of service. It is also important to a select a product that is the best fit for your needs and budget.
How much tax can I save through QDAP, TVC and VHIS?
The maximum total tax reduction allowed for QDAP and TVC is HK$60,000 per year per person. For couples taking out a QDAP, they can freely allocate their premium payments for tax reduction, while their total tax deduction is up to HK$120,000 as long as both of them are taxpayers, and the deduction claimed by each party does not exceed his or her individual limit. As for TVC, couples can only enjoy tax deduction for their individual contribution , instead of that of their spouse.
For VHIS, taxpayers can claim deductions from their VHIS certified plans and those of their designated family members. The annual maximum amount of reduction for each insured person is HK$8,000.
Please note that these are just tax deduction caps that can be deducted from the amount of your salaries tax or personal assessment, but they do not represent the amount that you can actually save.
How much tax will I save through QDAP and TVC?
How much tax will I save through VHIS?
