The maximum amount of home loan interest deduction allowed under Salaries Tax has been increased from $100,000 to $150,000 for the current and the next years of assessment following the passage of the Inland Revenue (Amendment) Bill in the Legislative Council today (November 21).
The newly enacted Ordinance also provides a transitional arrangement. Taxpayers who pay more than $100,000 of home loan interest in the current tax year may apply to the Inland Revenue Department for holding over of the whole or part of the Provisional Salaries Tax payable in the first quarter of 2002. This is to ensure that the taxpayers concerned may enjoy benefits from this tax concession as early as the first quarter of 2002.
A Government spokesman said that the Bill was to implement the proposal made by the Chief Executive in his 2001 Policy Address to help ease the financial burden of home owners.
"We are pleased that the Legislative Council has supported the Administration's proposal to increase the maximum amount of home loan interest deduction, which will help ease the burden of home owners.
"We estimate that for each of the 2001/02 and 2002/03 tax years, over 110,000 taxpayers would benefit from the enhancement in the home loan interest deduction. The maximum tax saving for a taxpayer will be $8,500 a year, or $17,000 over the two years. The total cost to revenue is estimated to be of the order of $1 billion," the spokesman said.
Tomorrow (November 22), the Commissioner of Inland Revenue will announce the procedures and timeframe for application for holdover, in part or in whole, of the 2001/02 provisional salaries tax.
"The Inland Revenue Department will also send out application forms to individual taxpayers likely to be eligible for holding over part or whole of their 2001/02 provisional salaries tax in accordance with the transitional arrangement," the spokesman added.
The Inland Revenue (Amendment) Ordinance 2001 will be gazetted on Friday (November 23).
End/Wednesday, November 21, 2001