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Tax Deduction Scheme

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With effect from 1 April 2019, the Inland Revenue Ordinance (cap. 112) has introduced a new ex gratia tax deduction for salaries tax and personal assessment. Taxpayers who purchase approved products under the voluntary medical insurance scheme (VMS) for themselves or their specified relatives can apply for tax deduction. If the taxpayer or his or her spouse is the policyholder of an approved product under voluntary medical insurance, he or she will be able to apply for a tax deduction for the premium paid for the purchase of the approved product. The maximum amount of tax deduction claimed is HK $8000 per insured person per year of assessment. The insured person of the approved product shall be the taxpayer himself or any specified relative, including the taxpayer's spouse and children, grandparents, grandparents, parents and siblings of the taxpayer or his spouse. Tax deductions are effective for the year of assessment beginning April 1, 2019 and all subsequent years of assessment. On or after April 1, 2019, premiums for the purchase of approved products are eligible for tax deduction. The taxpayer should keep the premium receipt or annual premium statement issued by the product provider of voluntary medical insurance as the supporting document for tax deduction.

Example 1: taxpayers purchase insurance policies for their own recognized products

①Annual premium (depending on age / product)

②Amount of tax deduction (up to HK $8000 per insured person)

③Tax savings (assuming 15% *)

Situation1:①HK$3000 ②HK$3000 ③HK$450
Situation2:①HK$4000 ②HK$4000 ③HK$600
Situation3:①HK$4800 ②HK$4800 ③HK$720
Situation4:①HK$8000 ②HK$8000 ③HK$1200
Situation5:①HK$12000 ②HK$8000 ③HK$1200

Example 2: taxpayers purchase multiple insurance policies for themselves and their designated relatives

①Annual premium (depending on age / product)

②Amount of tax deduction (up to HK $8000 per insured person)

③Tax savings (assuming 15% )

Taxpayer:①HK$5000 ②HK$5000 ③HK$750
Spouse:①HK$4100 ②HK$4100 ③HK$615
Grandmother:①HK$16000 ②HK$8000 ③HK$1200
Father:①HK$12000 ②HK$8000 ③HK$1200
Mother:①HK$11000 ②HK$8000 ③HK$1200
Son:①HK$2500 ②HK$2500 ③HK$375
Total:①HK$50600 ②HK$35600 ③HK$5340

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