Tax reductions proposed

February 01, 2012

Financial Secretary John Tsang proposes cutting salaries tax and tax under personal assessment for 2011-12 by 75%, benefiting 1.5 million taxpayers.
 
In his 2012-13 Budget address at the Legislative Council today, Mr Tsang proposed seven one-off measures to help ease the pressure of the economic downturn on the community. They are:
* reducing salaries tax and tax under personal assessment for 2011-12 by 75%, subject to a ceiling of $12,000;
* waiving rates for 2012-13, subject to a ceiling of $2,500 per quarter for each rateable property;
* granting each residential electricity account a subsidy of $1,800;
* providing an extra allowance to Comprehensive Social Security Assistance recipients, equal to one month of the standard rate payments, and an extra allowance to Old Age Allowance and Disability Allowance recipients, equal to one month of the allowances;
* paying two months’ rent for public housing tenants;
* allocating another $100 million to the short-term food assistance services when necessary; and,
* giving all student loan borrowers who complete their studies this year the option to start repaying their student loans one year after completing studies.
 
Tax measures
Mr Tsang also proposes seven tax measures starting from the 2012-13 year of assessment. They include:
* raising the basic allowance and the single parent allowance from $108,000 to $120,000, and increasing the married person’s allowance from $216,000 to $240,000;
* increasing the allowance for maintaining a dependent parent or grandparent aged 60 or above from $36,000 to $38,000;
* increasing the additional allowance for a taxpayer residing with a parent or grandparent continuously throughout the year from $36,000 to $38,000;
* increasing the allowance for maintaining a dependent parent or grandparent aged 55 to 59 from $18,000 to $19,000;
* increasing the deduction ceiling for elderly residential care expenses for taxpayers whose parents or grandparents are admitted to care homes from $72,000 to $76,000;
* raising the child allowance from $60,000 to $63,000 for each child, and increasing the additional one-off child allowance in the year of birth from $60,000 to $63,000 for each child;
* raising the dependent brother-sister allowance from $30,000 to $33,000;
* raising the disabled dependant allowance from $60,000 to $66,000;
* extending the entitlement period for the tax deduction for home loan interest from 10 years of assessment to 15 while maintaining the current deduction ceiling of $100,000 a year; and,
* increasing the maximum annual tax deduction for mandatory contributions to Mandatory Provident Fund schemes from $12,000 to $15,000.