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Any reason not to elect joint assessment?

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  1. #1

    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
    Feb 2011
    Location
    Hong Kong
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    6,317

    Does joint assessment still give 20k X 2 reduction?


  3. #3

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

    Thanks for the replies.


  4. #4

    Join Date
    May 2009
    Posts
    1,289

    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.

  5. #5
    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.

  6. #6
    Original Post Deleted
    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.

  7. #7

    Join Date
    Oct 2007
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    Currently living in Tsim Sha Tsui
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    Slightly to the side of the topic...

    Those of us in same sex marriages entered into elsewhere will also be able to opt for joint assessment subject to the caveats listed above for the very first time!! As with ALL issues relating to homosexuality this one has been appealed to the Court of Final Appeal.

    Here is a link to the SCMP article.

    https://www.scmp.com/news/hong-kong/...ppeal-backdate

    The relevant bit is cut and pasted below...

    On the tax aspect, the judges ordered that from now on the term “marriage” in the Inland Revenue Ordinance would include same-sex marriages registered overseas.
    Any references to “husband and wife” in the ordinance become “a married person and his or her spouse”, the judgment said.

    The judges gave the taxman six months to deal with administrative matters including updating the computer system and various guidelines and practice notes.

    They said the delay was unlikely to have an effect on anyone set to benefit from the change as it would be done before the end of the current tax year, which closes on March 31, 2020.
    ....

    An Inland Revenue Department spokesman said it would follow-up the judgment.
    shri, Sith and traineeinvestor like this.

  8. #8

    Join Date
    Mar 2010
    Location
    Hong Kong
    Posts
    715
    Original Post Deleted
    Apologies to revive an old thread... seems this is still the most recent on this topic. Spouse and I are about to submit our returns on eTax, so came here seeking final words of wisdom.

    Last year we both selected Joint Assessment and then, it turns out, we were surprised by our tax bills so after a couple of phone calls we were advised to submit a form requesting a change to non-Joint Assessment. It would appear, they don't automatically pick the most optimal for you here.

    With Personal Assessment they do.

    I also note that, after just using both PA and JA calculators on the IRD website for 2021/2022, it really doesn't take much income from the lower-earning party to make JA not beneficial.

  9. #9

    Join Date
    May 2009
    Posts
    1,289
    Quote Originally Posted by traineeinvestor:
    Our default arrangement is that the spouse with the higher income claims as many deductions as possible.
    Just a small correction here (a few years late), it should be the spouse with the higher tax rate not the higher income. It is more beneficial to deduct from the person who is taxed at 17% than the one taxed at the standard rate of 15%.
    traineeinvestor, hike and tparker like this.