March 2019 / Hong Kong

March 26 2019

Tax deductions for annuity premiums and MPF voluntary contributions approved

The Inland Revenue and MPF Schemes Legislation (Tax Deductions for Annuity Premiums and MPF Voluntary Contributions) (Amendment) Bill 2018 was approved by the Legislative Council on 20 March 2019. The new Ordinance gives effect to the tax deductions that were proposed in the 2018-19 Budget. From the year of assessment 2019/20, taxpayers are entitled to tax deductions under salaries tax and personal assessment for their premiums paid to qualifying deferred annuities and contributions made to tax deductible Mandatory Provident Fund (MPF) voluntary contribution accounts. The maximum tax-deductible limit for a taxpayer is HKD 60,000 per year. Under the new arrangement, a taxpayer can claim tax deduction for deferred annuity premiums covering the taxpayer's spouse as joint annuitant, or either the taxpayer or the taxpayer's spouse as a sole annuitant. A taxpaying couple is allowed to allocate tax deduction for deferred annuity premiums between themselves in order to claim total annual deductions of HKD 120,000, provided that the deduction claimed by each taxpayer does not exceed the individual limit. Tax-deductible MPF voluntary contributions are subject to "preservation requirements", meaning that the accrued benefits can be withdrawn only upon reaching the age of 65 or based on statutory grounds.