LCQ18: Dependent parent or grandparent allowances

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Following is a question by the Hon Christine Loh Kung-wai and a written reply by the Secretary for the Treasury, Miss Denise Yue, in the Legislative Council today (Wednesday):

Question :

In relation to the handling of claims for the dependent parent or grandparent allowance under the Inland Revenue Ordinance (Cap. 112), will the Administration inform this Council:

(a) how the Inland Revenue Department ("IRD") verifies such claims;

(b) whether IRD will consider providing assistance to contending claimants in resolving who should claim such allowance in respect of the same dependent person; and

Reply :

(a) Under the Inland Revenue Ordinance (the Ordinance), the dependent parent or grandparent allowance in respect of a parent or grandparent claimed by a taxpayer for a year of assessment will only be granted if the following criteria are met -

(i) the parent or grandparent ordinarily resides in Hong Kong;

(ii) the parent or grandparent is of the age of 60 or more or, being under the age of 60, is eligible to claim an allowance under the Government Disability Allowance system; and

(iii) the parent or grandparent resides, otherwise than for full valuable consideration, with the taxpayer or the spouse of the taxpayer for a continuous period of not less than six months in that year of assessment, or the taxpayer or the spouse of the taxpayer contributes not less than $12,000 towards the maintenance of the parent or grandparent in that year of assessment.

Taxpayers who wish to claim the dependent parent or grandparent allowance are required to provide relevant particulars in their tax returns. When examining such tax returns, the Inland Revenue Department (IRD) will examine whether the criteria set out above are met. If so, the claims will be accepted in good faith. Because of the large number of tax returns processed each year, it is necessary for IRD to adopt an honour system. However, enquiries will be raised if there are doubts in any claim. The Ordinance provides heavy penalties for false claims. There have been instances where taxpayers were prosecuted or penalised for making false claims in respect of dependent parent or grandparent allowance. In addition, IRD uses computers to screen claims in order to identify multiple claims. Section 33(2) of the Ordinance requires that if there are two or more persons who have claimed the same allowance for the same dependent person in the same year of assessment, the claims will not be considered until the claimants concerned have agreed which of them should be entitled to claim in that year of assessment. As such, the claimants will have to reach an agreement among themselves before the allowance in question is granted.

(b) IRD is only in a position to verify whether a claim meets all the criteria set out under the Ordinance and hence is eligible for the dependent parent or grandparent allowance. Under section 33(1) of the Ordinance, the dependent parent or grandparent allowance shall not be given to more than one person in any year of assessment in respect of the same parent or grandparent. If two or more taxpayers satisfy the qualifying criteria for claiming an allowance in respect of the same dependent parent or grandparent, it should be up to the claimants to resolve who should claim the allowance. IRD has no objective means to determine whose claim is more justified, nor is it appropriate for the IRD to make such a judgment.

(c) We do not consider that enacting rules to require dependent persons to confirm who maintains them would be an effective means to address the issue of multiple claims. The proposal will not resolve the dispute between contending claimants as the dependent parent or grandparent may make a declaration in favour of two or more taxpayers. Such a requirement may also be a nuisance to the dependants concerned. We consider that the matter should be left to the claimants to resolve.

End/Wednesday, June 16, 1999

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