The Financial Secretary announced the 2017-18 Budget on 22 February 2017. In his Budget speech, the Financial Secretary proposed a number of tax measures. All of proposed measures require legislative amendments before implementation. Highlights of the measures are;
One-off reduction of profits tax, salaries tax and tax under personal assessment-Similar to the previous two years, the Financial Secretary has again proposed a one-off 75% reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2016/17, capped at $20,000 per case. The Inland Revenue Department will automatically effect the reduction for any final assessment and as such, there is no need to make a separate application. The proposed reduction does not apply to property tax. However, individuals receiving rental income who are eligible for personal assessment can still enjoy the relief.
Widening the marginal tax bands for salaries tax– Marginal tax bands are proposed to increase from USD 40,000 to USD 45,000. As a result, the top rate of 17% now applies to income in excessive of USD 135,000 instead of the previous USD 120,000.
Extending the entitlement period for home loan interest deduction– Entitlement to deduction for home loan interest is proposed to be extended from 15 to 20 years. The cap remains unchanged at USD 100,000 per year.
Raising the deduction ceiling for self-education expenses– The cap for deduction for self-education expenses will be raised from USD 80,000 to USD 100,000. Rules governing claims of deduction for self education expenses remain unchanged.
Increasing the disabled dependent allowance and dependent brother/sister allowance– Disabled dependent allowance is proposed to increase from USD 66,000 to USD 75,000, and dependent brother/sister allowance from USD 33,000 to USD 37,500.