Hon. Nixie Lam questioned the current child allowance system in Hong Kong, which requires married couples to claim child allowances jointly or separately, potentially leading to disputes. Mr. Joseph Chan, the Acting Secretary for Financial Services and the Treasury, responded by explaining the current system and stating that it is effective for reducing tax burdens on married persons. He noted that the government currently provides guidelines and a tax calculator for families to determine the optimal way to claim allowances. No specific plan to amend the legislation was discussed.
This article was generated using SAMS, an AI technology by Timothy Loh LLP.
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The Hon. Nixie Lam raised significant concerns regarding the current child allowance system in Hong Kong, questioning why married couples residing together must jointly decide on who claims child allowances, potentially leading to family disputes. She sought clarification on the rationale behind this arrangement and inquired if the government has considered amending the legislation, and whether plans exist to introduce guidelines or a default allocation mechanism for married couples with children.
The Acting Secretary for Financial Services and the Treasury, Mr. Joseph Chan, explained that Section 31 of the Inland Revenue Ordinance mandates that married couples must claim child allowances en bloc, either by the taxpayer or their spouse. This rule has been in effect since 1989 when married persons were given the option of separate taxation or joint assessment. Each child receives an allowance of $130,000, with additional allowances for newborns in the year of assessment.
The current system offers sufficient options for married couples to optimize their tax liabilities and provides flexibility in claiming child allowances over different years. Over 60 percent of taxpayers claim allowances for only one child, indicating the effectiveness of the current arrangement. The Inland Revenue Department ("IRD") currently does not interfere with family decisions regarding the allocation of child allowances.
The government has no immediate plans to introduce a default allocation mechanism, as it believes this would not address the diverse needs of all families. The IRD provides comprehensive guidelines and a tax calculator on its website to assist families in determining the most advantageous way to claim allowances. Post-individual tax return submission, the IRD extends its service hours for telephone inquiries to assist taxpayers with their tax returns.
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