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How to better prepare for retirement is a common concern to many employees in Hong Kong. Hence, in the previous two Budgets, I put much emphasis on how to assist them to prepare financially for retirement. In this year’s Budget, I initiated the provision of tax deduction for deferred annuity premiums and Mandatory Provident Fund Tax Deductible Voluntary Contributions (MPF TVCs).
The society responded positively to the initiative. After taking into account views from different sectors, I decided to raise the maximum tax deductible limit from the originally proposed $36,000 to $60,000. This amount is the aggregate limit for deferred annuity premiums and MPF TVCs, which allows a greater flexibility for the taxpayers to claim tax deduction according to their financial plans.
In addition, we propose to allow a taxpayer to claim tax deductions for deferred annuity premiums covering his/her spouse as a sole annuitant. A taxpaying couple can also allocate tax deductions for deferred annuity premiums amongst themselves in order to claim the total tax deductions with flexibility.
We shall introduce the Bill into the Legislative Council. Subject to the Council’s approval, we expect the new measures would take effect on 1 April 2019. At the same time, the Insurance Authority will publish the list of eligible deferred annuity products on its website for public information and members of the public can set up their new separate MPF TVC accounts. I also entrusted the Insurance Authority and Mandatory Provident Fund Authority to enhance public understanding of annuity products and MPF TVCs, and how to evaluate different retirement planning tools to suit one’s needs.
With an aging population, the demand on healthcare would definitely increase. With this in mind, I announced in this year’s Budget that, starting from the 2019-20 financial year, a tax deduction will be provided for people who purchase eligible health insurance products for themselves or their dependents under the Voluntary Health Insurance Scheme. The annual tax ceiling of premium for tax deduction is $8,000 per insured person, without ceiling on the number of beneficiaries for each taxpayer.
The Government’s recurrent expenditure on social welfare has increased by 86% over the past 6 years. Whilst this demonstrates Government’s effort to support the poor and low-income group, we cannot ignore the needs and pressures faced by the middle-class. Therefore, in the past Budgets, I introduced measures from the structural and long-term perspective to relive the tax burden of the middle-class, while at the same time avoid narrowing tax base.
The consultation for the 2019-20 Budget has started to gauge views from the public and different sectors. This year, we have introduced a dedicated Facebook Page to collect views. You can also find relevant information at the Budget website . I sincerely invite you to express your views to assist us to better prepare the Budget.
December 9, 2018
