What is Personal Assessment?

Under the Hong Kong Inland Revenue Ordinance, there are 3 types of direct taxes, namely, Salaries Tax, Profits Tax and Property Tax. Personal Assessment is not a tax levy. It is a method of computation of tax that may lighten the tax burden of certain taxpayers who are also subject to Profits Tax and/or Property Tax, aside from Salaries Tax. However, there is no merit for electing Personal Assessment if the relevant taxpayer is only liable to pay Salaries Tax.

Deductions and Allowances under Personal Assessment

Sole-proprietor or partners of a business and property owners who receive rental income are assessed to Profits Tax and Property Tax respectively at standard rate. By choosing Personal Assessment, they may claim the following deductions and/or allowances on their income/profits and their tax liabilities will be computed at progressive rates applicable to Salaries Tax:

1. Interest incurred on money borrowed for the purpose of producing property income, (the amount deductible should not exceed the net assessable value of each individual property);
2. Approved charitable donations;
3. Elderly residential care expenses;
4. Home loan interest;
5. Qualifying premiums paid under Voluntary Health Insurance Scheme Policy;
6. Qualifying annuity premiums and tax deductible MPF voluntary contributions;
7. Business losses incurred in the year of assessment;
8. Losses brought forward from previous years under Personal assessment; and
9. Personal allowances as follows:

• Basic allowance;
• Married person’s allowance;
• Child allowance;
• Dependent brother/sister allowance;
• Dependent parent/grandparent allowance;
• Single parent allowance;
• Personal disability allowance; and
• Disabled dependant allowance.

Eligibility for Electing Personal Assessment

From the year of assessment 2018/19 onwards:
An individual may elect for personal assessment if:

(1)	he/she is 18 years of age or over, or under that age if both of his/her parents are dead; and
(2)	the elector is either ordinarily resident in Hong Kong or a temporary resident.

 
Treatment of Married Couple under Personal Assessment

From the year of assessment 2018/19 onwards, taxpayer may elect for personal assessment separately from his/her spouse. If a taxpayer is married, he/she may elect for Personal Assessment jointly with his/her spouse if either one or both of them are eligible to make an election for Personal Assessment and both of them have income assessable under the Hong Kong Inland Revenue Ordinance. However, if taxpayer and his/spouse are jointly assessed under Salaries Tax, election for Personal Assessment must be made by them jointly.

When a married couple elect for Personal Assessment jointly, the total income of an individual, as appropriately reduced, will be aggregated with that of his/her spouse to arrive at the joint total income of the couple for assessment purposes. Normally, the total tax payable is proportionally allocated to the married person and the person’s spouse on the basis of their respective reduced total income, and a notice of assessment will be issued to each of them.

Source：Hong Kong Inland Revenue Department’s website

- https://www.ird.gov.hk/eng/pdf/pam37e.pdf