Hong Kong taxpayers suggests gaps in tax knowledge that could result in many missing out on the tax savings potential and benefits of tax-deductible solutions. In a survey conducted, only a quarter of the respondents (27%) correctly picked VHIS, TVC and QDAP. Some respondents wrongly thought that critical illness (13%) and savings products (17%) could also be used to reduce taxes. 27% of respondents were aware that the maximum tax-deductible amount for VHIS is HKD8,000 per insured person, similar to the 31% who knew the combined maximum for QDAP and TVC is HKD60,000. Also, only 25% of the respondents were clearly aware that the maximum tax savings for QDAP and TVC is HKD10,200, while 75% of the respondents were not sure how much they could save if they invested HKD60,000 into both or either of TVC and QDAP. Around 60% knew that eligible personal allowances for salaries tax include those for children, parents, grandparents and dependent siblings. Also, about 60% correctly said that home loan interest, expenses on self-education and approved charitable donations are eligible for tax deductions.
When filing tax returns, 64% of those surveyed said they used the same set of allowance and deduction items as in previous years, compared to 69% would discuss with others on how to maximize the allowance and deduction items for better tax-savings. Nearly two-fifths (39%) of respondents just paid the stated amount, while 61% said they checked the assessment to make sure the calculations were done correctly. In general, people who scored higher were typically older and paid more taxes. Also, people who have included QDAP, VHIS or TVC in the deduction tended to achieve higher scores, indicating that they are more tax conscious and understand how to maximize tax savings via deductions and financial products. If taxpayers can learn more about tax-deductible products and tools, they’ll be in a better position to maximize tax savings.