Tax Deduction Frequently Asked Questions
Q1. What is the purpose of this letter - Annual Summary of Voluntary Health Insurance Scheme (VHIS) Certified Plan?
A1. This letter is for demonstrating the Annual Summary of your Voluntary Health Insurance Scheme Certified Plan which is for the year of assessment from last 1 April to 31 March of this year.
Q2. When will the tax deduction under VHIS be effective?
A2. The tax deduction has been effective in the assessment year starting from 1 April 2019. This means that the policies issued under Certified Plan that are effective and with premium paid on or after 1 April 2019 are eligible for the tax deduction.
Q3. How can an insurance policy qualify for claiming tax deduction under VHIS?
A3. In order to be eligible for claiming tax deduction under VHIS, an insurance policy must meet all the following criteria -
(a) The policy provides coverage of a Certified Plan under VHIS;
(b) The policyholder is a personal income taxpayer or his/her spouse;
(c) The insured person is the policyholder or the policyholder’s “specified relatives” as defined under the Inland Revenue Ordinance (Cap. 112); and
(d) The insured person is a Hong Kong resident.
Q4. What is the definition of “specified relatives”?
A4. A specified relative of a policyholder refers to the policyholder’s -
(a) Spouse;
(b) Children aged less than 18 / aged 18 to less than 25 receiving full-time education / aged 18 or above but incapacitated for work by reason of physical or mental disability;
(c) Brothers or sisters aged less than 18 / aged 18 to less than 25 receiving full-time education / aged 18 or above but incapacitated for work by reason of physical or mental disability; or
(d) Parents or grandparents aged less than 55 but eligible to claim an allowance under the Government’s Disability Allowance Scheme / aged 55 or above.
Q5. Why is the amount of total premium paid different from the exact amount of tax deduction?
A5. The maximum tax-deductible amount is calculated by using qualifying premiums paid for each insured person. No matter how many certified plans you have purchase, the maximum tax-deductible amount is up to HKD8,000 per insured person. The actual amount of tax saved will be calculated based on the applicable tax rate of the taxpayer for personal income tax. Therefore, the amount of tax saved will depend on the number of VHIS policies claimed, the amount of premiums, and the tax rates that apply in your case.
Q6. What is the exchange rate of USD policy for tax deduction?
A6. For policy in currency other than the Hong Kong Dollars, policy holder may refer to the published rates on the website of the Inland Revenue Department ( https://www.ird.gov.hk/eng/tax/ind_stp.htm ).
Q7. Which exact amount should I fill in according to the letter?
A7. Please refer to the part of ‘Summary of premiums paid during the year of assessment’ on this letter. Please fill in the amount under the column of ‘Total amount of VHIS Certified Plan due and paid during the year of assessment’. For policy in currency other than the Hong Kong Dollars, policy holder may refer to the published rates on the website of the Inland Revenue Department (https://www.ird.gov.hk/eng/tax/ind_stp.htm).
Q8. Which column should I fill in the Tax Return – Individual (VIR60) for VHIS-related tax deduction?
A8. You may browse the relevant page maintained by the Inland Revenue Department (IRD), or refer to the picture shown as below. Website:https://www.ird.gov.hk/eng/pdf/ind_ctre_demo.pdf
Q9. Is there any limit on the number of eligible policies for which I can claim tax deduction?
A9. No, there is no any limit on the number of eligible policies for which you can claim tax deduction.
Q10. Who can claim tax deduction for the premium paid for an eligible VHIS policy?
A10. Any taxpayer who or whose spouse is the policyholder of an eligible insurance policy.
Q11. If an insurance policy covers a Certified Plan as well as a life insurance plan, will the total premium of this policy be eligible for tax deduction?
A11. No, only the premium paid in relation to the Certified Plan is eligible for tax deduction. Please refer to the part of ‘Summary of premiums paid during the year of assessment’ on this letter.
Q12. If a personal income taxpayer is already subject to the standard tax rate of 15%, can he/she save taxes by claiming tax deduction for qualifying premium of VHIS policies?
A12. You may contact the IRD. Website: https://www.ird.gov.hk/eng/welcome.htm
Q13. can the non-taxpayer make deduction claim for premiums paid by him/her?
A13. No. Only the taxpayer as policy holder or his spouse is eligible to lodge deduction claim.
Q14. Is there any limit on the amount of premium of eligible policies that can claim tax deduction?
A14. Yes, the premium that a taxpayer can claim tax deduction is up to $8,000 per insured person in each assessment year.
Q15. If I have any questions about tax deduction under VHIS, what should I do?
A15. You may browse the FAQs page maintained by the Inland Revenue Department (IRD), or contact the IRD. Website: https://www.ird.gov.hk/eng/welcome.htm
Remarks for Voluntary Health Insurance Scheme (VHIS) Certified Plan:
You must meet all the eligibility requirements set out under the Inland Revenue Ordinance and any guidance issued by the IRD of HKSAR before you can claim the tax deductions.
Any general tax information provided is for your reference only, and you should not make any tax-related decisions based on such information alone. You should always consult with a professional tax advisor if you have any doubts. Please note that the tax law, regulations or interpretations are subject to change and may affect related tax benefits including the eligibility criteria for tax deduction. We do not take any responsibility to inform you about any changes in the laws and regulations or interpretations, and how they may affect you. Please contact the IRD directly for any tax related enquiries.
Remarks for QDAP:
You must meet all the eligibility requirements set out under the Inland Revenue Ordinance and any guidance issued by the Inland Revenue Department of HKSAR before you can claim these tax deductions.
Any general tax information provided is for your reference only, and you should not make any tax-related decisions based on such information alone. You should always consult with a professional tax advisor if you have any doubts. Please note that the tax law, regulations or interpretations are subject to change and may affect related tax benefits including the eligibility criteria for tax deduction. We do not take any responsibility to inform you about any changes in the laws and regulations or interpretations, and how they may affect you. Further information on tax concessions applicable to QDAP may be found at www.ia.org.hk/en.
Q1. What is the purpose of this letter - Annual Summary of Voluntary Health Insurance Scheme (VHIS) Certified Plan?
A1. This letter is for demonstrating the Annual Summary of your Voluntary Health Insurance Scheme Certified Plan which is for the year of assessment from last 1 April to 31 March of this year.
Q2. When will the tax deduction under VHIS be effective?
A2. The tax deduction has been effective in the assessment year starting from 1 April 2019. This means that the policies issued under Certified Plan that are effective and with premium paid on or after 1 April 2019 are eligible for the tax deduction.
Q3. How can an insurance policy qualify for claiming tax deduction under VHIS?
A3. In order to be eligible for claiming tax deduction under VHIS, an insurance policy must meet all the following criteria -
(a) The policy provides coverage of a Certified Plan under VHIS;
(b) The policyholder is a personal income taxpayer or his/her spouse;
(c) The insured person is the policyholder or the policyholder’s “specified relatives” as defined under the Inland Revenue Ordinance (Cap. 112); and
(d) The insured person is a Hong Kong resident.
Q4. What is the definition of “specified relatives”?
A4. A specified relative of a policyholder refers to the policyholder’s -
(a) Spouse;
(b) Children aged less than 18 / aged 18 to less than 25 receiving full-time education / aged 18 or above but incapacitated for work by reason of physical or mental disability;
(c) Brothers or sisters aged less than 18 / aged 18 to less than 25 receiving full-time education / aged 18 or above but incapacitated for work by reason of physical or mental disability; or
(d) Parents or grandparents aged less than 55 but eligible to claim an allowance under the Government’s Disability Allowance Scheme / aged 55 or above.
Q5. Why is the amount of total premium paid different from the exact amount of tax deduction?
A5. The maximum tax-deductible amount is calculated by using qualifying premiums paid for each insured person. No matter how many certified plans you have purchase, the maximum tax-deductible amount is up to HKD8,000 per insured person. The actual amount of tax saved will be calculated based on the applicable tax rate of the taxpayer for personal income tax. Therefore, the amount of tax saved will depend on the number of VHIS policies claimed, the amount of premiums, and the tax rates that apply in your case.
Q6. What is the exchange rate of USD policy for tax deduction?
A6. For policy in currency other than the Hong Kong Dollars, policy holder may refer to the published rates on the website of the Inland Revenue Department ( https://www.ird.gov.hk/eng/tax/ind_stp.htm ).
Q7. Which exact amount should I fill in according to the letter?
A7. Please refer to the part of ‘Summary of premiums paid during the year of assessment’ on this letter. Please fill in the amount under the column of ‘Total amount of VHIS Certified Plan due and paid during the year of assessment’. For policy in currency other than the Hong Kong Dollars, policy holder may refer to the published rates on the website of the Inland Revenue Department (https://www.ird.gov.hk/eng/tax/ind_stp.htm).
Q8. Which column should I fill in the Tax Return – Individual (VIR60) for VHIS-related tax deduction?
A8. You may browse the relevant page maintained by the Inland Revenue Department (IRD), or refer to the picture shown as below. Website:https://www.ird.gov.hk/eng/pdf/ind_ctre_demo.pdf
Q9. Is there any limit on the number of eligible policies for which I can claim tax deduction?
A9. No, there is no any limit on the number of eligible policies for which you can claim tax deduction.
Q10. Who can claim tax deduction for the premium paid for an eligible VHIS policy?
A10. Any taxpayer who or whose spouse is the policyholder of an eligible insurance policy.
Q11. If an insurance policy covers a Certified Plan as well as a life insurance plan, will the total premium of this policy be eligible for tax deduction?
A11. No, only the premium paid in relation to the Certified Plan is eligible for tax deduction. Please refer to the part of ‘Summary of premiums paid during the year of assessment’ on this letter.
Q12. If a personal income taxpayer is already subject to the standard tax rate of 15%, can he/she save taxes by claiming tax deduction for qualifying premium of VHIS policies?
A12. You may contact the IRD. Website: https://www.ird.gov.hk/eng/welcome.htm
Q13. can the non-taxpayer make deduction claim for premiums paid by him/her?
A13. No. Only the taxpayer as policy holder or his spouse is eligible to lodge deduction claim.
Q14. Is there any limit on the amount of premium of eligible policies that can claim tax deduction?
A14. Yes, the premium that a taxpayer can claim tax deduction is up to $8,000 per insured person in each assessment year.
Q15. If I have any questions about tax deduction under VHIS, what should I do?
A15. You may browse the FAQs page maintained by the Inland Revenue Department (IRD), or contact the IRD. Website: https://www.ird.gov.hk/eng/welcome.htm
Q1. What is the tax deduction amount? How much can I save?
A1. Starting from 1 April 2019, retirement savings of taxpayers via qualifying deferred annuity premiums of a qualifying deferred annuity policy (QDAP) and TVC under MPF schemes can enjoy tax deductions of up to a maximum of HK$60,000 per year. The said maximum tax deductible limit is an aggregate limit for qualifying deferred annuity premiums and TVC to allow for greater flexibility.
Q2. When will the tax deductions become effective? When can I declare the deductions?
A2. For the qualifying deferred annuity premiums paid and TVC made starting from 1 April 2019, you can claim deductions when you file the tax return for the year of assessment 2019/20.
Q3. What supporting documents are required from a taxpayer when a review by the Inland Revenue Department is made? How long do I need to keep those documents?
A3. When you file your tax return, you need not attach documents to support your tax deduction claim. However, you should retain the supporting documents for a period of 6 years after the expiration of the year of assessment in which the payments were made. You are required to produce supporting documents if your claim for deduction is selected for review.
For QDAP, the supporting documents should show the amount of qualifying deferred annuity premiums paid during the year of assessment (e.g. the annual summary or premium payment record issued by the insurance company).
Q4. Do the tax deductions cover the premiums for QDAP made by the taxpayer’s spouse?
A4. A taxpayer is allowed claiming tax deductions for qualifying deferred annuity premiums paid for QDAP covering the couple as joint annuitants, or either the taxpayer or the taxpayer’s spouse as a sole annuitant. A taxpayer earning salary income may claim deductions under salaries tax, while a taxpayer earning income from business profits or properties has to elect for personal assessment and claims deductions under personal assessment.
Married taxpayers may claim deductions for qualifying deferred annuity premiums paid by himself/herself or his/her spouse not living apart from him/her but the amount already claimed by his/her spouse must be excluded. If the couple both have income chargeable to tax, they can freely allocate the qualifying deferred annuity premiums for tax deductions in order to claim a maximum amount of deductions of $120,000, so long as the deductions claimed by each taxpayer do not exceed the individual limit (i.e. a maximum of $60,000 per individual).
Q5. I purchased a Qualifying Deferred Annuity Policy together with some riders. Are the premiums for the riders’ tax deductible?
A5. No. Premium for the riders is not tax deductible
Q6. Is the insurance levy paid together with the qualifying deferred annuity premiums tax deductible?
A6. No. Insurance levy paid is not tax deductible.
Q7. What is the exchange rate of USD policy for tax deduction?
A7. For policy in currency other than the Hong Kong Dollars, policy holder may refer to the published rates on the website of the Inland Revenue Department ( https://www.ird.gov.hk/eng/tax/ind_stp.htm ).
Q8. Taxpayer purchased two qualified deferred annuity policies for himself and paid the qualifying annuity premiums of $30,000 and $20,000 respectively. Can taxpayer claim deductions for the premiums paid for two policies in the same year of assessment?
A8. Yes. Taxpayer may claim deduction for qualifying annuity premiums paid under one or more than one policy. However, the deduction allowable to the taxpayer should not exceed the aggregate of qualifying annuity premiums and deductible MPF voluntary contributions actually paid; or the specified maximum deduction of $60,000, whichever is lower.
Q9. Taxpayer purchased a qualifying annuity policy for his spouse who is not a HKID card holder. Can taxpayer claim deduction?
A9. To be deductible, the annuitant must be an HKID card holder at any time during the year of assessment. As taxpayer’s spouse is not an HKID card holder, no deduction would be allowed.
Q10. During the year of assessment of 2019/20, taxpayer paid qualifying annuity premiums of $50,000 and a tax deductible MPF voluntary contribution of $40,000, for a total exceeding the specified maximum deduction of $60,000. In this case, what is the deduction order?
A10. If taxpayer paid both qualifying annuity premiums and tax deductible MPF voluntary contribution, deduction of $40,000 for tax deductible MPF voluntary contribution should be firstly allowed, and the remaining of $20,000 will be allowed for deduction of qualifying annuity premiums, with the aggregate not exceeding the specified maximum deduction of $60,000.
Q11. Taxpayer purchased a qualifying deferred annuity policy and the premiums of $40,000 were due and payable on 31 March 2020. Taxpayer paid premiums of $30,000 on or before the due date and settled the outstanding premiums on 7 April 2020. What is the amount of deduction can taxpayer claim in year of assessment 2019/20?
A11. Deduction is only allowed for qualifying annuity premiums paid in a year of assessment. Qualifying annuity premiums of $30,000 paid by taxpayer during the year of assessment 2019/20 would be allowable. The remaining balance would be allowable in year of assessment 2020/21.
Q12. What is the purpose of this letter?
A12. As you are policy owner of Qualifying Deferred Annuity Policy, according to regulatory requirement, we need to issue an Annual Summary to you within 40 days after the end of the year of assessment (i.e. 31 March), listing the total amount of qualifying deferred annuity premiums you paid during the year of assessment. Premiums paid for riders and those that do not qualify for a tax deduction will be deducted from the Annual Summary.
Q13. Which exact amount should I fill in?
A13. Please fill in “Total amount of Qualifying Annuity Premiums due and paid during the year of assessment” on “Annual Summary of Qualifying Deferred Annuity Policy (QDAP)”. For policy in currency other than the Hong Kong Dollars, policy holder may refer to the published rates on the website of the Inland Revenue Department (https://www.ird.gov.hk/eng/tax/ind_stp.htm).
Q14. Which column should I fill in the Tax Return – Individual (BIR60) for Qualifying Deferred Annuity Policy -related tax deduction?
A14. For details of completion and fling of Tax Return - Individuals (BIR60), please refer to https://www.ird.gov.hk/eng/tax/ind_ctr.htm
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