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Tax reduction for 19/20

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  1. #31

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    Aug 2017
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    Quote Originally Posted by stickyears:
    Ah, so I got in there too early. Presumably a refund will appear at some point.

  2. #32

    Join Date
    May 2018
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    24
    Quote Originally Posted by bdw:
    Pay your tax first and then they will contact you in a few months to adjust your tax based on the new laws that are still under discussion, or maybe have just recently passed. Keep your HK bank account active so they can refund to you easily. If they don't contact you, you should contact them before end of August.

    I am in the same boat. Paid taxes for 2019/20 already when I left last December and this is what they told me. Then again just last month, I got paid a bonus for work related to last year, had to readjust all my taxes for 2019/20, still no reduction so I had to pay extra tax on this bonus. They told me again to readjust before August and I should get something back.
    Did you get your 20k back? I am in the same situation as you so I paid all my 2019 taxes in April and left since then.
    The told me they would mail me my refund (company address as i work for the same company overseas) but havent received anything

  3. #33

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    Aug 2017
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    Quote Originally Posted by strikerz19:
    Did you get your 20k back? I am in the same situation as you so I paid all my 2019 taxes in April and left since then.
    The told me they would mail me my refund (company address as i work for the same company overseas) but havent received anything
    I paid my 19/20 and 20/21 taxes in June. No 20K refund on either. Hoping that my 20K for 19/20 will be sent out at some point before April 2021.

  4. #34

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    Jul 2006
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    Quote Originally Posted by bdw:
    Well, if you are going to do it or not, there is a 6 week clock ticking down and March 31st is the deadline for this year if you want an instant $10k reduction in your tax bill for this year sign up for the TVC now!!

    In my opinion, if your taxable income (after married person/child allowance and all that shit) is over $200k per year (which is a low threshold), expat or planning to leave HK in the next 10 years, its a no-brainer and if you don't do it you are throwing away a $10k gift.
    So what you’re referring to is paying additional voluntary contributions into you company MPF account which are tax deductible? I.e. you save 17% tax payment on every dollar (up to 60k) you deposit.

    So let’s say you’d been paying a voluntary 2k per month into your MPF through your employer; before the end of the tax year (now passed for 19/20) you could deposit an extra $36k lump sum to get the max tax déduction for the year?

    So you just call up your MPF provider and say you want to deposit into TVC?

    Thanks.

  5. #35

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    Quote Originally Posted by Sage:
    So you just call up your MPF provider and say you want to deposit into TVC?

    Thanks.
    No, you create a separate TVC account and can add upto $60k yourself. This is on top of your existing contributions you do to your mpf with your employer.

    On your tax returns you will deduct $18k standard mpf deduction + $60k (if you max out contributions) = $78k reduction in taxable income.

    $60k x 17% = $10,200 tax savings.

    TVC account is subject to market risk, so you could make or lose money on your investments, or you can hold it in a money market fund and you will maintain your capital. I created two accounts (one for me and one for wife).
    MIne - HK Tracker fund - down 5%
    Wife - Global Equity Fund - Up 11%
    Last edited by wanderer01; 30-07-2020 at 07:23 AM.

  6. #36

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    Further clarity

    Quote Originally Posted by wanderer01:
    No, you create a separate TVC account and can add upto $60k yourself. This is on top of your existing contributions you do to your mpf with your employer.

    On your tax returns you will deduct $18k standard mpf deduction + $60k (if you max out contributions) = $78k reduction in taxable income.

    $60k x 17% = $10,200 tax savings.

    TVC account is subject to market risk, so you could make or lose money on your investments, or you can hold it in a money market fund and you will maintain your capital. I created two accounts (one for me and one for wife).
    MIne - HK Tracker fund - down 5%
    Wife - Global Equity Fund - Up 11%
    Ok thanks, appreciated.

    But just to be crystal clear it seems as though voluntary contributions to MPF count towards the 60K allowance in TVC? (see attached allowances PDF)

    i.e. In most company schemes, the employer pays a $1,500 per month into your MPF and you as the employee also pay 1.5k (18K per annum from each) These are mandatory contributions for which there is a separate tax deductible allowance of 18k per year.

    If in my earlier example, if I pay an additional 2k voluntary contributions per month to my MPF (3.5k total per month), then that 24k p.a. of voluntary contributions counts towards the maximum 60k tax deduction that also applies to TVC? i.e. the attached PDF suggests that 60k is the maximum that can be claimed for these type of voluntary schemes, but you can do it through Voluntary MPF or TVC, or a combination of both?

    Unless I'm equating TVC's allowance of 60k with an additional voluntary MPF allowance of 60K?

    On balance these voluntary contributions do seem like a wise move:

    Just spelling out for everyones benefit - Looking at your examples:

    You - 60K - 5% loss - say 1.5% in fees = $3900 loss + 10,200 tax saving = $66,100 after 1 yr
    Wife - 60K +11% gain - say 1.5% in fees (1k) = $5,600 gain + 10,200 tax saving = $75,600 after 1 yr

    Investing in your own ETF at 0.2% fees would save only about $850 p.a. in fees, but lose you the 10k tax saving. (any ETF dividend excluded)
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  7. #37

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    Quote Originally Posted by Sage:
    Ok thanks, appreciated.

    But just to be crystal clear it seems as though voluntary contributions to MPF count towards the 60K allowance in TVC? (see attached allowances PDF)

    i.e. In most company schemes, the employer pays a $1,500 per month into your MPF and you as the employee also pay 1.5k (18K per annum from each) These are mandatory contributions for which there is a separate tax deductible allowance of 18k per year.

    If in my earlier example, if I pay an additional 2k voluntary contributions per month to my MPF (3.5k total per month), then that 24k p.a. of voluntary contributions counts towards the maximum 60k tax deduction that also applies to TVC? i.e. the attached PDF suggests that 60k is the maximum that can be claimed for these type of voluntary schemes, but you can do it through Voluntary MPF or TVC, or a combination of both?

    Unless I'm equating TVC's allowance of 60k with an additional voluntary MPF allowance of 60K?

    On balance these voluntary contributions do seem like a wise move:

    Just spelling out for everyones benefit - Looking at your examples:

    You - 60K - 5% loss - say 1.5% in fees = $3900 loss + 10,200 tax saving = $66,100 after 1 yr
    Wife - 60K +11% gain - say 1.5% in fees (1k) = $5,600 gain + 10,200 tax saving = $75,600 after 1 yr

    Investing in your own ETF at 0.2% fees would save only about $850 p.a. in fees, but lose you the 10k tax saving. (any ETF dividend excluded)
    HK tracker fund fees are probably closer to 0.8%. Yes high, but lower than what you have stated.

    You are probably right however on the global fund fees.

    Another option is just to go DIS, where the fees are 0.75 or lower.

  8. #38

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    , but you can do it through Voluntary MPF or TVC, or a combination of both?
    Wording is very clear in your attachment as well as the name itself, TVC = Tax deductible Voluntary contribution, which is a special account and different from regular voluntary contribution (Call it VC) which is not tax deductible and the reason is quite obvious, TVC you can not withdraw same as MPF while VC you can withdraw anytime..
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  9. #39
    dfc
    dfc is offline

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    Quote Originally Posted by Sage:
    Ok thanks, appreciated.

    But just to be crystal clear it seems as though voluntary contributions to MPF count towards the 60K allowance in TVC? (see attached allowances PDF)
    Voluntary and TVC contribuctions are separate.

    Only 60k in to a TVC will get the deduction.

    Tax Deductible Voluntary Contributions (TVC) see #9
    Sage likes this.

  10. #40

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    Quote Originally Posted by nivantj:
    Wording is very clear in your attachment as well as the name itself, TVC = Tax deductible Voluntary contribution, which is a special account and different from regular voluntary contribution (Call it VC) which is not tax deductible and the reason is quite obvious, TVC you can not withdraw same as MPF while VC you can withdraw anytime..
    OK gotcha now, I guess the wording is very clear if you're already certain that MPF voluntary contributions aren't tax deductible, less so otherwise.

    I'll get a TVC set up for this year. Thanks.

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