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With cuts in spending come first before any other things in these days, taxpayers are naturally anxious to find out early how they can apply for and benefit from the deduction of home loan interest-one of the concessionary deductions announced in last year's Budget Speech by the Financial Secretary.

It is estimated that about 500,000 people may benefit from this tax concession and pay less tax.

According to Assistant Commissioner of Inland Revenue, Mr Luk Nai-man, home loan interest paid was deductible from a person's assessable income under salaries tax or from a person's total income under personal assessment, with effect from the year of assessment 1998/99.

The deduction from income is of a maximum of $100,000 a year. Applicants may claim the deduction in respect of interest paid in any five tax years. The actual allowable amount depends on, among other things, the actual amount of interest paid and the number of owners of the residence.

Elaborating on the eligibility, Mr Luk said this applies to all owner-occupiers for their place of residence in Hong Kong. They should have paid an amount of interest during the assessment year on a home loan for acquisition of the residence and the loan is secured by a mortgage or a charge.

Taxpayers paying income tax at the standard rate is also entitled to the deduction. Similarly, home loan interest paid by him will be deducted from his assessable income. The balance will then be subject to the standard tax rate.

Mr Luk said there is no need for taxpayers to file separate applications for the deduction as the 1998/99 tax return for individual has been revised to include a part for making a claim for the deduction.

"However, people need not send any copies of documentary proof of home loan interest payments together with their tax returns. They may be asked to provide the documents later on a request basis," he said. This is to facilitate the processing of tax returns and to ensure the taxpayers can know their tax liability as soon as possible.

The Hong Kong Association of Banks, Mr Luk said, has recommended their members to adopt a standard format for home loan interest payment statement so as to facilitate their clients in supporting their claims.

Mr Luk said any addition of new tax reductions will involve a whole range of preparatory work from changes in the tax return and in the computer programme to other back up services.

Anticipating a large number of enquiries on home loan interest deduction which can be claimed for the first time, the Inland Revenue Department (IRD) has, in line with its mission to provide courteous and effective service to the public, made the necessary preparations to help taxpayers understand details of the deduction.

Booklets and leaflets on the subject have been published to explain how a taxpayer is eligible for the deduction and what documentary evidence he may be required to submit.

These publications are now available at IRD headquarters at Revenue Tower in Wan Chai and its two sub-offices in Mong Kok and Tsuen Wan. The information is also uploaded to the IRD Homepage at http://www.info.gov.hk/ird.

Following the issue of tax returns for 1998/99 in early May this year, Mr Luk said the telephone enquiry service would be strengthened in the same month to help members of the public complete their returns.

And taxpayers having difficulties in completing their tax returns can seek advice and information from the IRD enquiry service centre, the Info Touch multi-media information kiosks and the automated telephone enquiry service.

"We will also provide an outreaching service to taxpayers. More than 7,000 enquiries were received last year at the eight temporary centres which were set up during one of the weekends in May last year," Mr Luk said.

This year, eight temporary centres, some in new residential districts, will also be set up in mid-May.

It is noteworthy to point out that more than 300 IRD staff would participate as volunteers - work without allowance and time-off - in the outreaching activities which were first introduced in 1996 by Commissioner for Inland Revenue, Mr Wong Ho-sang. Such enthusiastic response from its staff underlined the customer-oriented culture of the Department.

This also explains why the IRD won the Ombudsman Award for two consecutive years in 1997 and 1998 for its supportive stance towards good standard of customer service and positive complaint culture.

End/Sunday, February 21, 1999

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