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Q:
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What if I am employed by two companies during the year of assessment 2020/21 and I have made annual mandatory contribution of $18,000 to the MPF Scheme established by each employer, can I claim $36,000 under Salaries Tax?
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A:
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No, you cannot. Even you have contributed $36,000, the maximum amount of deduction that you can claim is still restricted to $18,000 for the mentioned year of assessment.
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Q:
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My employer operates a recognized retirement scheme (“ROR Scheme”) to provide me with retirement benefit. There are several options I can choose to contribute to the Scheme at 0%, 5%, 7.5% or 10%. What if I choose to contribute 10% of my salary per month, is the whole amount fully exempt from Salaries Tax?
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A:
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Under ROR Scheme, there is no mandatory contribution. The law allows ROR Scheme participants to get the same tax deduction as MPF Scheme participant. Let say your monthly salary is $12,000, you contribute $1,200 per month, you may claim deduction in the amount of $7,200 ($600 x 12 months). Any contributions exceeding 5% of your salary are considered as voluntary contributions and are not deductible for tax purposes.
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Q:
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I received a lump sum and commenced to receive a monthly pension under ROR Scheme upon retirement. Are those amount taxable?
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A:
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The lump sum amount is not taxable while the exemption does not apply to monthly pension which is fully taxable.
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Q:
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If I am self-employed, are contributions made to MPF Scheme deductible under Profits Tax?
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A:
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Yes, you can claim mandatory contributions made for yourself to MPF Scheme as allowable business expenses under Profits Tax. But the maximum deductible amount should not exceed $18,000.
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Q:
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If I am self-employed and I employ my spouse to work for my business, are contributions made for my spouse to MPF Scheme deductible under Profits Tax?
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A:
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No. Contribution to an MPF scheme for the spouse of sole proprietor is not deductible under Profits Tax.
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FAQ
