Tax Deduction Claim Letter (Hong Kong)

Hong Kong salaries tax payers can claim several deductions under the Inland Revenue Ordinance (Cap. 112) to reduce their assessable income. Home loan interest under Section 26E of Cap. 112 allows a deduction for mortgage interest paid on a loan secured on the taxpayer's residence, up to HKD 100,000 per year for a maximum of 20 years of assessment. Self-education expenses under Section 16B allow a deduction for fees paid to an approved educational institution for a course directly related to the taxpayer's current employment, up to HKD 100,000 per year. Mandatory provident fund contributions made by the taxpayer as an employee are deductible up to 5% of the employee's relevant income or the statutory cap, whichever is lower. Approved charitable donations under Section 26C are deductible at amounts between HKD 100 and 35% of assessable income. Elderly residential care expenses under Section 26D allow a deduction for fees paid to care for a dependent parent in a residential care home. Qualifying annuity premiums and mandatory MPF conservative fund contributions under Section 26J are deductible up to HKD 60,000 per year. A Tax Deduction Claim Letter submitted to the Commissioner of Inland Revenue should cite the specific section of Cap. 112 supporting the claim and enclose all relevant evidence, such as bank mortgage interest certificates for Section 26E claims or official donation receipts for Section 26C claims.

Section 26E of the Inland Revenue Ordinance (Cap. 112) allows a Hong Kong salaries tax payer to deduct home loan interest paid on a loan used to acquire or construct their principal place of residence in Hong Kong. The deduction is capped at HKD 100,000 per year and can be claimed for up to 20 years of assessment in total over the taxpayer's lifetime. To claim the deduction, the taxpayer must be the legal owner or beneficial owner of the property, the property must be their principal place of residence during the year of assessment, and the loan must be secured by a mortgage on the property and obtained from an approved financial institution, the Hong Kong Housing Authority, or the Hong Kong Housing Society. The claim is made by completing Box 11 of the BIR60 salaries tax return and, where the IRD requests supporting evidence, by submitting a Tax Deduction Claim Letter with the mortgage interest certificate issued by the lending bank, a copy of the deed of assignment showing ownership, and confirmation that the property was the taxpayer's principal place of residence. Where more than one person co-owns the property and each holds a separate mortgage, each owner may claim their share of the interest up to the HKD 100,000 cap. The HKD 100,000 cap applies per taxpayer, not per property.

Under Section 16D of the Inland Revenue Ordinance (Cap. 112), a company subject to Hong Kong profits tax may deduct approved charitable donations made to institutions or trusts of a public character exempted from tax under Section 88 of Cap. 112. The deductible amount must be not less than HKD 100, and the total deduction cannot exceed 35% of the company's assessable profits for the year after all other deductions. Donations of property, shares, or services are not deductible — only cash donations are eligible. The donation must be made during the basis period for the year of assessment in which the deduction is claimed. Supporting evidence includes official donation receipts from the approved charity, showing the charity's name, Section 88 exemption reference, the amount donated, and the date. Companies wishing to claim a charitable donation deduction should keep all receipts and submit a Tax Deduction Claim Letter with the deduction amount and the relevant Section 16D citation if the IRD queries the deduction. Donations to overseas charities, political organisations, or bodies that are not approved under Section 88 are not deductible, regardless of the charitable nature of the recipient.

Section 16B of the Inland Revenue Ordinance (Cap. 112) allows salaries tax payers to deduct expenses paid for self-education courses at approved educational institutions, up to HKD 100,000 per year. To qualify, the course must be related to the taxpayer's current employment, not a future or intended employment, and the educational institution must be approved by the Commissioner of Inland Revenue. Approved institutions include universities, polytechnics, and professional bodies listed by the IRD. The deductible expenses include tuition fees and examination fees, but not travel, accommodation, or study materials. The course must result in a qualification or the acquisition of knowledge relevant to the taxpayer's existing job — purely recreational or personal interest courses do not qualify even if offered by an approved institution. A Tax Deduction Claim Letter supporting a Section 16B claim should cite the course name, the approved institution, the dates attended, the total fees paid with official receipts, and an explanation of how the course relates to the taxpayer's current employment. Where the course is partly work-related and partly personal, only the work-related proportion is deductible. Employers who reimburse self-education expenses as a benefit must include the reimbursement in the employee's assessable income, but the employee can simultaneously claim the deduction — resulting in a net neutral position.

A Tax Deduction Claim Letter submitted to the Inland Revenue Department in Hong Kong should generally accompany the annual tax return or be submitted within the period allowed for objections to the final assessment. For salaries tax, the BIR60 tax return is issued annually in May and must be filed within one month. Deduction claims for items such as home loan interest under Section 26E, self-education expenses under Section 16B, and charitable donations under Section 26C should be included in the return when first filed. If a taxpayer omits a valid deduction claim from their original return, they can submit a Tax Deduction Claim Letter to the IRD requesting that the assessment be reopened. The IRD Commissioner has a general discretion to reopen assessments that have become final and conclusive if there is an error or omission, typically within six years of the end of the relevant year of assessment under Section 60 of Cap. 112, or within ten years in cases of fraud or wilful evasion under Section 60(2). If the taxpayer has already received a notice of assessment and believes it fails to allow a valid deduction, they should submit a formal notice of objection under Section 64 of Cap. 112 within one month of the date of the assessment notice, clearly citing the deduction entitlement and the relevant statutory provision. A Tax Deduction Claim Letter from forms-legal.com can be used for both initial claims and supplementary submissions to the IRD.

Mandatory Provident Fund (MPF) contributions made by an employee under the Mandatory Provident Fund Schemes Ordinance (Cap. 485) are deductible for Hong Kong salaries tax purposes under the Inland Revenue Ordinance (Cap. 112). The deductible amount is the lesser of the employee's mandatory MPF contribution (5% of monthly relevant income) or the annual statutory cap, which is currently HKD 18,000 per year. Voluntary contributions to an MPF scheme made above the mandatory level are not deductible. Contributions to Recognised Occupational Retirement Schemes (ORSO) are also deductible on the same basis where the scheme meets the IRD's requirements. Self-employed persons subject to profits tax may also deduct their MPF contributions under Section 16(1)(h) of Cap. 112, up to HKD 18,000 per year. Since 2019, taxpayers who make qualifying annuity premiums or MPF tax-deductible voluntary contributions under Section 26J of Cap. 112 can claim an additional deduction of up to HKD 60,000 per year for these tax-deductible voluntary contributions, which is separate from and in addition to the HKD 18,000 mandatory contribution deduction. A Tax Deduction Claim Letter supporting an MPF deduction claim should include the trustee's annual contribution statement confirming the total mandatory and voluntary contributions made during the relevant year of assessment.