Like Tree6Likes

Tax reduction for 19/20

Reply
Page 1 of 3 1 2 3 LastLast
  1. #1

    Join Date
    May 2018
    Posts
    20

    Tax reduction for 19/20

    I recently got my first tax bill showing 20,000 reduction for 18/19; but none yet (as the figure is not yet formally announced) for 19/20 provisional tax. Therefore, I paid the full amount that they billed me (18/19 and 19/20) but with no reduction for 19/20.

    My case is I am leaving HK in the end of March (last working day March 31). I will go to the tax office in maybe the 2nd or 3rd week of March to settle my taxes. Will they give me some figure reduction for year 19/20 and therefore return some of the money I paid in advance?

    Thanks for your help


  2. #2
    bdw
    bdw is offline

    Join Date
    Feb 2009
    Posts
    5,659

    They will not give you any reduction now and you will have to pay a higher amount, but then they will ask you for your overseas contact details and they will call you later in the year if there is any reduction announced and they will give you a refund. So keep your HK bank account open for this.

    Also don't forget to open a TVC account now, deposit $60k, then claim a $60k tax deduction (saving you $10k in taxes if you are earning more than $200k per year). As soon as your tax is settled, you can close the TVC account and get your $60k back. This is just a loophole in the system you might as well exploit and get a $10k departure gift from the government.

    GentleGeorge likes this.

  3. #3

    Join Date
    Jul 2011
    Posts
    1,101
    Quote Originally Posted by strikerz19
    I recently got my first tax bill showing 20,000 reduction for 18/19; but none yet (as the figure is not yet formally announced) for 19/20 provisional tax. Therefore, I paid the full amount that they billed me (18/19 and 19/20) but with no reduction for 19/20.

    My case is I am leaving HK in the end of March (last working day March 31). I will go to the tax office in maybe the 2nd or 3rd week of March to settle my taxes. Will they give me some figure reduction for year 19/20 and therefore return some of the money I paid in advance?

    Thanks for your help
    The budget for 2020/21 hasn't happened yet so there is no reduction yet proposed for income tax for the 2019/20 tax year. Even once announced in the budget it needs to pass Legco before the reduction can be applied by IRD. This is the problem when you have giveaways, so everyone expects them, every year as sweeteners rather than policy. Until passed the reduction doesn't exist You'll just have to pay in full and reclaim later.
    traineeinvestor and shri like this.

  4. #4

    Join Date
    May 2012
    Posts
    351

    Urelated but related. I just realized I paid my taxes late. Haven't received the usual automatic reminder email, and when I paid, no receipt confirmation either...

    ...so maybe that "civil servants work from home" was really just another government bs...🙄


  5. #5

    Join Date
    Jul 2004
    Posts
    3,344
    and when I paid, no receipt confirmation either...
    Do you use e-Tax account and when did you pay the tax? It usually takes few days for Tax receipt during normal times and probably few more during current time..

  6. #6

    Join Date
    Feb 2019
    Posts
    193
    Quote Originally Posted by bdw
    Also don't forget to open a TVC account now, deposit $60k, then claim a $60k tax deduction (saving you $10k in taxes if you are earning more than $200k per year). As soon as your tax is settled, you can close the TVC account and get your $60k back. This is just a loophole in the system you might as well exploit and get a $10k departure gift from the government.
    What's a TVC account? Does the $10K savings work only if you are leaving or every year :P?

  7. #7

    Join Date
    May 2012
    Posts
    351
    Quote Originally Posted by nivantj
    Do you use e-Tax account and when did you pay the tax? It usually takes few days for Tax receipt during normal times and probably few more during current time..
    Yes I do (who doesn't? 😁). I was under the impression that payments notification and receipts and the like were automated... ...looks like they aren't, and it depends on someone somewhere looking for my shroff no. in a transaction report & clicking a button.

    Why they can't do it while WFH, that's the remaining question.

  8. #8
    bdw
    bdw is offline

    Join Date
    Feb 2009
    Posts
    5,659
    Quote Originally Posted by rkenia852
    What's a TVC account? Does the $10K savings work only if you are leaving or every year :P?
    TVC is the extra voluntary MPF payments. You can put in a max $60k per year and you will save $10k per year in taxes if you are earning over $200k per year. You can do every year, but this $60k you are putting in is locked away until you retire, or leave Hong Kong. This is why I call it a "Loophole" or "Government departure gift". If you are a normal HKer it's something you need to think about and evaluate whether worthwhile or not, but for expats planning to leave HK at some stage it's a no brainer and you absolutely need to open a TVC account right now (before March 31st!!!) or you are just throwing $10k out the window.
    rkenia852 likes this.

  9. #9

    Join Date
    Oct 2006
    Location
    Hong Kong
    Posts
    13,687
    Quote Originally Posted by bdw
    TVC is the extra voluntary MPF payments. You can put in a max $60k per year and you will save $10k per year in taxes if you are earning over $200k per year. You can do every year, but this $60k you are putting in is locked away until you retire, or leave Hong Kong. This is why I call it a "Loophole" or "Government departure gift". If you are a normal HKer it's something you need to think about and evaluate whether worthwhile or not, but for expats planning to leave HK at some stage it's a no brainer and you absolutely need to open a TVC account right now (before March 31st!!!) or you are just throwing $10k out the window.
    Don't get me wrong, TVC is great, but I wouldn't say its a no-brainer. What you have to take into account is you'll be investing in the MPF which has very high management fees. The cheapest management fee is 0.75%, which if you go through a normal ETF for pretty much the same product that the MPF provider is offering you (and often just investing the money in that ETF anyway) the fees will be closer to 0.20%.
    Plutark likes this.

  10. #10
    bdw
    bdw is offline

    Join Date
    Feb 2009
    Posts
    5,659
    Quote Originally Posted by pin
    Don't get me wrong, TVC is great, but I wouldn't say its a no-brainer. What you have to take into account is you'll be investing in the MPF which has very high management fees. The cheapest management fee is 0.75%, which if you go through a normal ETF for pretty much the same product that the MPF provider is offering you (and often just investing the money in that ETF anyway) the fees will be closer to 0.20%.
    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.
    hongkong7 likes this.

Reply
Page 1 of 3 1 2 3 LastLast