Newsletter

In our April 2022 Issue of Newsletter, we will discuss certain important Hong Kong Tax Updates in First Quarter of Year 2022.

1.  New Tax Deduction for Domestic Rent

Domestic Rent Tax deduction - a New Breakthrough in Hong Kong Salaries Tax available from the year of assessment 2022/23

The amendment bill for a new deduction for domestic rent had been gazetted on 6 May 2022, which will be effective from the year of assessment 2022/23. It applies to taxpayers who are liable to Salaries Tax and tax charged under Personal Assessment.

Taxpayer will be eligible to claim deduction on the rent paid for Hong Kong premises. The maximum amount of deduction would be HK$100,000 for each year of assessment.

The rented property must be the taxpayer’s principal place of residence in Hong Kong with a stamped tenancy agreement. It is worth to note that if the tenancy includes both domestic premise and car parking space (given that it is not sub-let), the whole amount of rental paid are eligible for tax deduction.

Below are some restrictions in pursuing domestic rent tax deduction:

  • Taxpayer and spouse cannot be a legal and beneficial owner of any premises in Hong Kong;
  • The landlord is not an associate of the taxpayer, spouse and their close relatives and corporation under their control; and
  • The property is not provided by the employer (including rent refund from employer).

For details, please refer to the website of the Inland Revenue Department:
https://www.ird.gov.hk/eng/tax/drd.htm

POINTS TO NOTE
The Domestic Rent Tax Deduction regime is going to offer a great relief to non-property owner in Hong Kong. Kindly note that no matter an individual holds a property on its own or via a company, he / she will be considered as a beneficial owner of property in Hong Kong.

On the other hand, taxpayers may also have to re-negotiate with their employers on their rental value arrangements (i.e., property rental reimbursement scheme) to maximise their savings on Hong Kong Salaries Tax since no domestic rent tax deduction on the amount already refunded by the employer.

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