2014/15 Hong Kong SAR Budget Highlights

Highlights of the Budget’s major proposed changes

Tax Rebates
- A 75% profits tax rebate, capped at HK$10,000 for the year of assessment 2013/14 final tax payable
- A 75% salaries tax and tax under personal assessment rebate, capped at HK$10,000 for the year of assessment 2013/14 final tax payable
An increase of approximately 5% to the following allowances and deductions (see table below):
- Dependent parent and grandparent allowances;
- Deduction ceiling for elderly residential care expenses.
Extending the exemption of First Registration Tax on electric vehicles to 31 March 2017;
Increase the duty on cigarettes by 20 cents per stick;
Waive the stamp duty for the trading of all exchange traded funds;
Others
- Waive the rates for the first two quarters of 2014/15, subject to a cap of HK$1,500 per quarter for each rateable property;
- Paying one month base rent for public housing tenants and two-thirds of rent for one month for the non-elderly tenants of the Hong Kong Housing Society's Group B estates;
- Providing an extra allowance to Comprehensive Social Security Assistance (CSSA) recipients, equal to one month of the standard rate CSSA payments, and an extra allowance to Old Age Allowance, Old Age Living Allowance and Disability Allowance recipients, equal to one month of the allowances;
- Increasing the annual voucher value under the Elderly Health Care Voucher Scheme to HK$2,000 per person;
- Issue of iBond of up to HK$10 billion with a maturity of three years, with interest payable to bond holders once every six months at a rate linked to the inflation rates of the last half-year period;
- Review the requirements under the Inland Revenue Ordinance for interest deductions in the taxation of corporate treasury activities, and clarify the criteria for such deductions.

Salaries Tax

Progressive Tax Rates (Remain unchanged)

2013/14 and 2014/15
Net chargeable income	Marginal tax rate
First HK$40,000	2%
Next HK$40,000	7%
Next HK$40,000	12%
Remainder	17%

Standard Rate (Remain unchanged)

2013/14 and 2014/15

15%

Allowances and Deductions

	2013/14 (HK$)	2014/15 (HK$)¹
Personal Allowances:
Basic	120,000	120,000
Married	240,000	240,000
Single parent	120,000	120,000
Child:
1st to 9th child
Year of birth	140,000	140,000
Other years	70,000	70,000
Dependent parent/grandparent (aged 60 or above):
Basic	38,000	40,000
Additional allowance (for each dependant living with taxpayer)	38,000	40,000
Dependent parent/grandparent (aged between 55-59):
Basic	19,000	20,000
Additional allowance (for each dependant living with taxpayer)	19,000	20,000
Dependent brother/sister	33,000	33,000
Disabled dependant	66,000	66,000

Deductions (maximum amount):
Self-education expenses	80,000	80,000
Home loan interest	100,000 (15 years of assessment)	100,000 (15 years of assessment)
Elderly residential care expenses	76,000	80,000
Contributions to recognised retirement schemes	15,000	17,500
Approved charitable donations	35% of income	35% of income

One-off Measure on Salaries Tax and Tax under Personal Assessment

Reduction of 75% of final tax payable under Salaries Tax and Tax under Personal Assessment for 2013/14, subject to a ceiling of HK$10,000, is proposed.¹

Profits Tax (Remain unchanged)

	2013/14 and 2014/15
	Tax rate
Incorporated	16.5%
Unincorporated	15%

One-off Measure on Profits Tax¹

Reduction of 75% of final tax payable under Profits Tax for 2013/14, subject to a ceiling of HK$10,000 is proposed.

Property Tax (Remain unchanged)

2013/14 and 2014/15

Tax rate

15%

Rates¹

The Budget would waive rates for first two quarters of 2014/15, subject to a ceiling of HK$1,500 per quarter for each rateable tenement.

Summary of allowances, deductions & tax rates