In this blog we will discuss on the topic of salaries tax that are imposed on the husband and wife. We will have discussion on the different allowances such as married person’s allowance, child allowance and single parent allowance that are obtained to one spouse among a married couple living apart. We will talk on property tax and which person is considered as owner of buildings and / or land in Hong Kong. Starting with a formation on how to calculate joint assessment salary tax.

This formation is for the calculation of assessment year 2015 – 16, to compute the salaries tax under joint assessment policy of Hong Kong:

Name of Individual

Joint assessment

Assessment year 2015 - 16

Basic period: 1 April 2015 to 31 March 2016

Joint assessment                              Husband          Wife                        Joint

Assessable income                          $ X                  $ X

Less: allowable expenses                $ X                  $ X

                                                -----------          ---------

Net assessable income (NAI)                  $ X                  $ X                  $ X

                                                -----------          ---------

Less: concessionary deductions:

Charitable donations that were approved (limited to 35% of NAI

Before the losses b / f and self-education expenses)                      $ X                 

Elderly expenses for residential care                                      $ X         

Interest for Home Loan                                          $ X                        

Contribution to recognized retirement scheme                       $ X                        




After concessionary deductions NAI is                                                 $ X

Less: Personal allowances         

Dependent parent allowance                                      $ X                                                                                            

Dependent grandparent allowance                             $ X

Dependent sister or brother                                $ X

Basic                                                           $ X

Child                                                           $ X

Disabled dependent                                            $ X


                                                                                                $ X


Net chargeable income                                                                    $ X 


Salaries tax                                                                                      $ X                                      

Less tax reduction (if applicable)                                                           $ X                                           


Payable salaries tax                                                                         $ X

By the nominated partner or the partner                                                 ---------Who under separation tax would liable to pay salaries tax                                                                               

Chargeable Income to One Partner

If husband and wife are living together, and in an assessment year the income of one partner is only allowable to salaries tax then for that assessment year the assessment of a single salaries tax will be applied on that partner, taken from Section 10 (1) of Hong Kong tax law. The same procedure is applicable to the cases where one partner has property or / and business income while other partner has income that is allowable to the salaries tax.

The person as a married individual having his own sole proprietorship HK and also having the income that he earns from working in a company as manager is allowable to salaries tax and would be granted with the married person’s allowance under Section 29 (2).

Charitable Donations that are approved

Under Section 26C (1), the charitable donations of both partners that are approved can be deductible. Discuss an example to understand such scenario, a person named Mr. Chan was working in a company as marketing manager. The annual salary of Mr. Chan is $ 480,000. The quarter as dwelling is provided by his employer having company incorporation HK. Employer was not charging anything for that quarter to Mr. Chan. He was also member of China society of marketing and Hong Kong society of marketing. A bonus of amount $ 50,000 was received by him during the assessment year 2014 to 15. Amounts of $ 1,000 and $ 2,100 were paid by him to the China society of marketing and Hong Kong society of marketing respectively as subscriptions of membership. He also donated an amount of $60,000 to the community chest of Hong Kong. An amount $ 40, 000 was paid by him in respect of fee for master’s degree in marketing. He also made an important contribution to a scheme of mandatory provident fund of amount $ 17,500. Mr. Chan is also married and having one child. The age of his child is almost 8 years. His mother is also part of his family. The age of his mother is 65 years. His wife does not earn salary by working and is a housewife.

The accountability of Mr. Chan who rendering services to Hong Kong company establishment during assessment year 2015 to 16 for the sack of salaries tax is as follow.

Mr. Chan

Computation of Salaries tax

Assessment year 2014 to 15

Basic period: year ended on 31 March 2015


Salary 12 * $ 40, 000                                                                      $ 480,000

Bonus                                                                                      $   50,000


                                                                                        $ 530,000

Add: rental value ($ 530,000 - $ 2,100) * 10 %                                     $   52,790


                                                                                        $ 582,790

Less: Professional subscription                                       $ 2,100

Expense for self-education                                 $ 40,000


Total expenses                                                         $ 42,100

Net assessable income (NAI) ($ 582,790 - $ 42,100)                     $ 540,690                       

Less: charitable donations:

Charitable donations that were approved (limited to 35% *

$ 540,690 + $ 40,000)                                                     $ 60,000

Contribution to mandatory provident fund scheme                       $ 17,500


                                                                        $ 77,500

After concessionary deductions net assessable income is ($ 540,690 - $ 77,500) = $ 463,190    

Less: Personal allowances         

       Dependent parent allowance                                    $  40,000                                                                                           

       Additional Dependent parent allowance                          $  40,000

       Child                                                         $  70,000

       Allowance of married person                                    $ 240,000


                                                            $ 390,000      


Net chargeable income ($ 463,190 - $ 390,000)                     $ 73,190              


Net income that is taxed at progressive rates:

On balance $ 33,190 at 7 %                                            $ 2,323

On 1st $ 40,000 at 2 %                                                    $ 800


                                                                        $ 3,123


After concessionary deductions net assessable income is ($ 540,690 - $ 77,500)  $ 463,190       

Tax at standard rate $ 463,190 * 15 %                                           $ 69,478


Lower of progressive rates and standard rates                                       $ 3,123

Less $ 20,000 relinquish or 75 %                                                    $ 2,342


Payable salaries tax                                                                 $ 781


Allowance for Married Person

In the case if only one spouse in a married couple earns income from working but other partner has no income and later one is maintained by former one then former partner can claim the married person’s allowance. And this married person’s allowance would be still applicable even though both are living apart. The reference for this statement is taken from Section 29 (4) of Hong Kong tax law. In the proceeding of case Sit Kwok Keung it was observed that, if partners are divorced then no married person’s allowance for the assessment year following the divorce, can be claimed by the partner who was maintaining the other partner before divorce. And this statement would still valid if a partner maintains the other partner after divorce.

In case D 43/08 it was observed that a married couple having names T and madam A were living in Hong Kong. Both were divorced in the assessment year 2005 to 06. For assessment year 2006 to 07 the deductions were claimed by the T of:

  • A married person’s allowance.
  • His payment that he spent in maintenance of madam A.

 Following decision was held by board of revenue.

  • In accordance with the Section 29,
  • The applicant for a married person’s allowance should be married at the time of claim.
  • The partner of T did not have assessable income.
  • The applicant must maintain his partner, if in case they were not living together.
  • The Section 2 of Hong Kong tax law defines ‘spouse’ or partner as a married person. And that is why the married person’s allowance is not applicable to divorcees.
  • Under Section 12 (1), the expense in the form of the payments for maintenance of his wife were of private or domestic nature, in spite of being ordered by court. And these could not be included in the production of income for pension of T that is why such payment was not allowable.
  • In the relevant assessment year in which T demanded for the married person’s allowance, he was not in a marriage with madam A. And due to this reason the stance of T was not in accordance with the Section 2 and Section 29. That is why he was not given such married person’s allowance.

Allowance for Child

If a child is maintained by a spouse, then he / she as a result of maintaining such child can claim the child allowance. It would be decided by the CIR that how allowance for child would be apportioned between the partners if both spouses contributed in the maintenance of the child. In accordance with the Section 31 (2), the decision would be made by CIR by keeping in view the contribution made by each partner form the education and maintenance of child during an assessment year.

This scenario is different form the position in which husband and wife live together. Under such scenario the claim for child allowance should be done by either wife or husband in respect of all the children they have or they are maintaining.

Allowance for Single Parent

If a partner is not living with his / her partner, then he / she can claim the single parent allowance. And during the assessment year such partner is also allowed to allowance for child and have dominant or sole care of the child. In the proceeding of case Sit Kwok Keung it was observed that, if a partner is made as custodian of a child or children then the partner who is not granted with the custody of the of the child cannot claim such single parent allowance even though he might have contributed in the maintenance of child. As such partner has no legal dominate or sole care of child.

Marriage, Separation, Divorce or Death Year

Year of Marriage

If a couple have income that is allowable to salaries tax but they are not elected for joint assessment, then both of them will be assessed separately. A couple will be considered to be married on 1 April of the relevant assessment year if in a year of marriage, the couple are eligible for joint assessment.    

If only one partner rendering services to Hong Kong company establishment and has income that is chargeable to salaries tax in a year of marriage, then with assessable income a full married person’s allowance might be granted to the spouse.

Separation, Divorce or Death Year

There is no criteria or rules defined in the inland revenue ordinance on that how the aggregation of income of both partners is done if they are elected for joint assessment in the year of death, separation or divorce. The common practice in such scenarios is to aggregate the income for full year of both partners. The full married person’s allowance would be granted to partner. The spouse who maintain the other spouse that have no income that can be allowed to salaries tax can claim for the married person’s allowance.

Property Tax

If a person is an owner of any land and / or building that is located in Hong Kong, he / she would be chargeable to property tax for each assessment year. Under Section 5 (1), on the net assessable value of the property that is chargeable, the amount of tax on property is computed.

Chargeable Properties

All buildings and lands that are either for commercial use like for HK company formation or non-commercial use and being held by residents of Hong Kong including the new territories are chargeable to property tax. Piers, landing stages and other structures are included in the buildings and lands. Under Section 7A, buildings include every part of the building. Hence, letting a part of flat or apartment such as room will create an accountability of property tax. The other structures include wall, car parks, dams, roads, bridges, sewers and ponds etc.

Buildings and/or Land Owners

Under Section 2 (1), the owners of buildings and / or land include:

  • A loan agreement that is in possession.
  • Because common parts are concerned;
  • A corporation that is registered under Section 8 Ordinance of Building Management.
  • A person who
  • On his own behalf or
  • On behalf of some other person
  • In regards of having the right to use any parts solely by himself or with another accommodation in money or worth of money.
  • A person who is holding buildings and/or lands from HKSSAR Government.
  • A person doing loan agreement.
  • A person who is receiving the rent from other structures erected on the land or buildings with a various title to land.
  • A person who by the conveyance or assignment acquires possession of building and/or land from the person who hold buildings and/or land.
  • A person who holds buildings and/or land with respect to other annual charge or ground rent.
  • A person who is beneficial owner of buildings and/or land.
  • A person who for the purpose of HK company formation, purchase the land and make payment to co-operative society that is register under Ordinance of Co-operative Societies.  
  • A person who is an executor of estate of another owner.
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