Personal Tax Filing Guide – Maximizing Family Tax Exemptions

Filing taxes every year is a citizen’s responsibility, but not everyone is required to pay taxes. Employees are entitled to a basic tax exemption each year. There are also other tax deductions, including medical insurance, pensions, voluntary mandatory MPF contributions, and “family tax exemptions.” What qualifications are required to apply for a tax exemption for supporting parents?

• Are parents still employed, and can they be deducted?

Supporting parents is a way to show filial piety, but the amount of support provided is entirely up to the individual. Although there is no “benchmark” for family support, there is a minimum amount required to apply for a tax exemption for supporting parents. You or your spouse must pay at least HKD 12,000 per year to support the parent, and the supported person must be over the age of 55 and usually reside in Hong Kong. Even if the supported parent is still working and receiving income, and has already enjoyed personal tax exemption, it will not affect the taxpayer’s declaration if the above conditions are met, except for special situations, such as if the supported parent is receiving Comprehensive Social Security Assistance.

Note that the tax exemption for supporting one parent can only be claimed by one taxpayer and cannot be shared with a spouse or siblings. To avoid duplicate claims, it is recommended that the taxpayer with the highest net income apply for the exemption.

• “Living together” must be real, otherwise, it is a crime to falsely claim.

In addition to the tax exemption for supporting parents, those who live with their parents can also receive additional tax exemptions. In general, “living together” means living in the same residence for the whole year. If grandparents visit taxpayer’s home during the day to take care of their grandchildren and return home to sleep at night, they do not meet the requirements for living together. However, other situations may also be considered as “living together”, such as when elderly parents have health problems and taxpayers have to go back and forth and stay at their parents’ house irregularly throughout the year to take care of them. Taxpayers must retain relevant evidence, such as medical expense receipts, rental payment receipt and utility bills for the parents’ residence, etc., to provide proof if selected for inspection.

Do not falsely claim “living together” or falsely claim supporting parents to receive tax deductions, as this may result in criminal charges. If in doubt, it is recommended to consult a professional accountant.

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