FS Offers Tax Breaks

Financial Secretary Paul Chan today proposed measures to reduce the burden on taxpayers, such as by widening the tax bands for salaries tax and adjusting the marginal tax rates.

Delivering his 2018-19 Budget Speech, Mr Chan said: "These measures will reduce the tax burden of 1.34 million taxpayers and reduce the tax revenue by $4.09 billion a year."

Tax bands for salaries tax will be widened from the current $45,000 to $50,000, the number of tax bands increased from four to five and the marginal tax rates adjusted to 2%, 6%, 10%, 14% and 17%.

Mr Chan said he will increase the allowance for maintaining a dependent parent or grandparent aged 60 or above to $50,000.

The allowance for maintaining a dependent parent or grandparent aged 55 to 59 will go up to $25,000.

Under the proposed tax band and tax rate, a person with a total income of $300,000 who resides with a dependent parent aged 60 or above will be taxed $1,180 for 2018-19, saving the person $840.

Similarly, for a couple where only one person is working and earning $500,000 with a dependent child and not residing with a dependent parent aged 60 or above, they will be taxed $960 for 2018-19, which is $1,830 less than the previous year.

For a family of four where a working couple earns $700,000 in total with two dependent children, they will be taxed $10,540 for the period, saving them $10,055.

Mr Chan also proposed allowing a husband and wife the option to decide whether to elect for personal assessment to provide greater flexibility to taxpayers starting in the 2018-2019 period.