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Any reason not to elect joint assessment?

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  1. #1

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    Dec 2018
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    Any reason not to elect joint assessment?

    Question on joint assessment. If I have read the following from the IRD website, there is no downside to electing joint assessment - if you don't benefit from joint assessment the IRD simply assesses you separately? In which case, is there any reason not to elect joint assessment?

    "Joint Assessment

    Joint assessment can be advantageous for a married couple if the assessable income of one spouse is less than his or her tax allowance. If this is the case, you and your spouse should each complete a Tax Return - Individuals (BIR60) and elect joint assessment in part 4.4 and both you and your spouse have to sign in part 10 of each tax return. The election must be made on a yearly basis.
    Under joint assessment, the incomes of the couples will be aggregated and the married person’s allowance or other allowances that the couple is eligible for will be deducted from the couple’s joint total income. This could result in some tax savings, and a notice of assessment will be issued. However, if joint assessment does not result in less tax, each spouse will receive a separate notice of assessment."


  2. #2

    Join Date
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    You tick the box "joint assess me/us IF it is more beneficial to me/us" and let the IRD calculate which is more beneficial to you.
    I believe your personal circumstances are pretty similar to mine and I don't see why you wouldn't want to tick the box.

    traineeinvestor, MandM! and shri like this.

  3. #3

    Join Date
    Jul 2011
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    Always opt for joint assessment assuming you meet the marital criteria. If the earnings are above what qualifies, or doesn't result in a lower tax amount, then they will assess separately as you noted so you always get the best outcome. (Where else in the world do the tax authorities work out the best option for you!).

    Note that joint assessment does require both of the couple to sign or electronically approve the tax submission for joint assessment and I guess this means both are jointly liable to ensure the full tax amount is paid. For separate assessment, the couple would be individually liable for their own assessed tax payment.

    [edit to add]
    The tax calculation you get from IRD shows both the calculation for joint and separate assessment and bills you the lower amount.

    traineeinvestor and spode like this.

  4. #4

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    Does joint assessment still give 20k X 2 reduction?


  5. #5

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    Quote Originally Posted by MandM!
    Does joint assessment still give 20k X 2 reduction?
    No special extra monetary benefits, it just gives one partner the ability to use the unused allowances of the other and average the tax thresholds over both. For someone earning double the tax free allowance whose partner has no salary in the year, the tax owed would be $0 as the earning partner is assumed to split their income with the other. A sensible policy so as not to penalise workers who earn more so the partner can stay at home for child or parent care.

    IRD does the calculation for you here:
    https://www.ird.gov.hk/eng/ese/st_comp_2018_19/stc.htm
    traineeinvestor likes this.

  6. #6

    Join Date
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    Of course it also helps if both spouses tick the "elect joint assessment" box on their tax returns.

    Thanks for the replies.


  7. #7

    Join Date
    May 2009
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    Just one thing to keep in mind. Do you own calculations on who should get the deductions (child allowance, rental etc...)
    Rental can be split between the 2 persons but child allowance not. In any case if both are working better to calculate the total tax for both with all the variables as it can make a big difference.
    E.g. if one of the two is in the 15% flat rate it might be better to give all the deductions to the person who pays the 17% rate.

    Oh and about the joint assessment, I think it is only beneficial if one is not working or earning not enough to use all benefits (e.g. doesn't earn enough to be in the 17% bracket) If both earning substantial more then it doesn't really matter if you choose joint assessment or not (we have never done a joint assessment as it has no impact)

    But do always you own calculations with the different variables.

    traineeinvestor likes this.

  8. #8

    Join Date
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    Quote Originally Posted by Sith
    Just one thing to keep in mind. Do you own calculations on who should get the deductions (child allowance, rental etc...)
    Rental can be split between the 2 persons but child allowance not. In any case if both are working better to calculate the total tax for both with all the variables as it can make a big difference.
    E.g. if one of the two is in the 15% flat rate it might be better to give all the deductions to the person who pays the 17% rate.

    Oh and about the joint assessment, I think it is only beneficial if one is not working or earning not enough to use all benefits (e.g. doesn't earn enough to be in the 17% bracket) If both earning substantial more then it doesn't really matter if you choose joint assessment or not (we have never done a joint assessment as it has no impact)

    But do always you own calculations with the different variables.
    Good advice - we've gone through that exercise every year. It also applies to home loan interest.

  9. #9

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    @traineeinvestor, may I ask, how do you derive your taxable income ?


  10. #10

    Join Date
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    Quote Originally Posted by jrkob
    @traineeinvestor, may I ask, how do you derive your taxable income ?
    For income tax purposes, most years we've been taxed at the standard rate. Since I shifted from full time to part time consulting, that has changed in some years as my income has fluctuated. Our default arrangement is that the spouse with the higher income claims as many deductions as possible.

    When the profits tax rate was moved to a two tier system things got a little more complicated because I get to choose whether to take money out of my company as director's fees or dividend. Current arrangement is to pay myself a non-executive director's fee equal to the sum of (i) basic allowance + (ii) the married person's allowance + (iii) charitable donations + (iv) an amount equal to the income taxed at less than the 8.25% corporate rate. Anything else I am better off taking as dividends.

    At least, I think I've got it right?
    shri likes this.

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