A bill to implement the 2018-19 Budget initiative of introducing tax deductions for deferred annuity premiums and Mandatory Provident Fund (MPF) Tax Deductible Voluntary Contributions (TVCs) was gazetted today.
The maximum tax deductible limit for a taxpayer will be $60,000 per year. It will be an aggregate limit for MPF TVCs and deferred annuity premiums for greater flexibility.
Whether the taxpayer makes MPF TVCs of $60,000 or pays $60,000 of deferred annuity premiums, or makes the TVCs and purchases a qualifying deferred annuity as well, they can still claim deductions under salaries tax and personal assessment capped at $60,000.
The Government also proposes the taxpayer can claim tax deductions for deferred annuity premiums covering a spouse as joint annuitant, or either the taxpayer or the taxpayer’s spouse as a sole annuitant.
The taxpaying couple can also allocate tax deductions for deferred annuity premiums amongst themselves to claim the total deductions of $120,000, provided the deductions claimed by each taxpayer do not exceed the individual limit.
The Financial Services & the Treasury Bureau said the proposed tax deductions aim to encourage the working population to save more for retirement as early as possible to manage longevity risks.
The Inland Revenue & MPF Schemes Legislation (Tax Deductions for Annuity Premiums & MPF Voluntary Contributions) (Amendment) Bill 2018 will be introduced into the Legislative Council on December 12.