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Hong Kong strikes to extend tax exemption to spice up uptake of annuity plans, voluntary MPF contributions – Information by Automobilnews.eu

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Hong Kong strikes to extend tax exemption to spice up uptake of annuity plans, voluntary MPF contributions



The Hong Kong authorities is contemplating a rise in tax deductible revenue from HK$36,000 (US$4,608) to HK$60,000 in an try to spice up public participation in deferred annuity schemes in addition to voluntary contributions to the town’s Obligatory Provident Fund.

In keeping with a authorities paper circulated amongst lawmakers on Thursday: “There have been calls from the business and Legislative Council members to increase the combination most tax deductible restrict from HK$36,000 to over HK$100,000, and to increase the protection of tax deductions to deferred annuity premiums for a taxpayer’s partner.

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As an annuity is a handy instrument for a taxpayer to plan for his or her retirement, in addition to that of his or her partner, we contemplate it justified to increase the tax deductions to cowl deferred annuity premiums for a taxpayer’s partner by rising the most restrict from HK$36,000 to HK$60,000.”

Monetary Secretary Paul Chan Mo-po had advised a tax profit in his price range in February to encourage individuals to purchase deferred annuity plans and improve voluntary contributions to the MPF, and he had proposed a most of HK$36,000 as tax deductible revenue.

“That is positively a superb step ahead, as the federal government has listened to an business name for rising the tax deductible revenue to HK$60,000,” stated Peter Tam, chief government of the Hong Kong Federation of Insurers.

The rise in exemption will, nonetheless, primarily profit high-income earners. If taxpayers declare the utmost exemption quantity towards the acquisition of an annuity product or voluntary contribution to the MPF, these incomes a month-to-month wage of HK$60,000, will see their exemption quantity improve to HK$10,200 from HK$6,120; those that pay the 15 per cent most will see their exemption improve to HK$9,000 from HK$5,400, in accordance with the federal government paper.

The tax profit for Hongkongers incomes between HK$15,000 and HK$30,000 a month will stay unchanged as their tax cost is already low and the brand new cap is not going to have an effect on them.

At the moment, those that earn HK$15,000 a month, which is near the median Hong Kong wage of HK$16,800, solely save HK$180 in tax funds a 12 months, supplied they apply for max exemption. Those that earn HK$20,000, save HK$720 in taxes, whereas those that make HK$30,000, save HK$2,820 in taxes.

The federal government has listened to an business name for rising the tax deductible revenue to HK$60,000

Peter Tam, chief government, Hong Kong Federation of Insurers

“The tax profit just isn’t excessive, and it’ll not cowl most staff in Hong Kong,” stated Robert Lee, government director at brokerage agency Grand Finance Group. “Many younger staff in addition to retirees wish to spend money on shares as an alternative of annuity merchandise for his or her retirement. A couple of hundred {dollars} in tax deductions is not going to appeal to these individuals to those retirement merchandise,” Lee added.

Elvin Yu, principal at pension advisers Goji Consulting, stated that whereas rising tax exemptions was a superb incentive, “elementary points” remained. “Annuity is but to be properly acquired by the general public,” he stated.

Annuity is a form of pension scheme the place staff contribute month-to-month to a plan for numerous years after which begin to take the cash out month-to-month for a time period. The federal government requires an annuity plan with a minimal complete premium of HK$180,000 and a five-year cost interval as qualification for tax deduction.

Hongkongers should save 12 instances their annual wage to afford pre-retirement life at 65, says Constancy

So far as the MPF is anxious, the tax profit will apply on voluntary contributions over and above the 5 per cent necessary contribution paid by staff and employers primarily based on salaries.



Hong Kong strikes to extend tax exemption to spice up uptake of annuity plans, voluntary MPF contributions – Information by Automobilnews.eu
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