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Career Centre > Tax Tips

Tax returns for a returnee

Clarifying allowances if a taxpayer's family is resident overseas

Brenda and Eddie migrated to Canada in 1996 along with Eddie's parents. They have three children aged 20, 17 and 15. In early 2005, Eddie's employer asked him to move back to Hong Kong to work for a group subsidiary, but the rest of the family remained in Canada. During the year of assessment 2005/06, Eddie's job required him to work in the mainland for more than 183 days. He was still supporting his family and all three children were in full-time education throughout the year. Therefore, when it came to completing his 2005/06 Tax Return—Individuals, Eddie had the following questions:

Q1.	How should he report his salaries income in the 2005/06 tax return, since he had paid Individual Income Tax (IIT) to the mainland authorities for the period he was working there?
A1.	Where a taxpayer renders services in the mainland and pays IIT in respect of income derived from such services, that part of income can be excluded from the chargeable income in calculating Hong Kong salaries tax. However, for the completion of the tax return, the taxpayer is required to report the whole amount of income received, but to claim an exemption for the part of the income for which mainland IIT has already been paid. Eddie should submit his tax return together with supporting documents, such as the tax receipt issued by the PRC tax authorities, showing that he has paid mainland IIT.

Q2.	Was he able to claim the married person allowance, child allowance and dependent parent allowance, which are available under Hong Kong salaries tax?
A2.	In such a case, Eddie is still eligible to claim the married person and the child allowance. However, he cannot claim the dependent parent allowance. Provided that a spouse does not have any income chargeable to tax, their husband or wife is entitled to claim the married person allowance. Eddie is also entitled to claim child allowance if he is maintaining his children during the year of assessment. Although the eldest child is now over 18, he is still under 25 and receiving full-time education, so Eddie is entitled to claim the appropriate allowance. However, in order to be eligible for the dependent parent allowance, the law requires that the parent is an ordinary resident in Hong Kong. Since, Eddie's parents are not, he is not entitled to claim any dependent parent allowance, even though he has been maintaining his parents during the year of assessment.