HKSAR Government Budget 2012-13

On 1 February 2012, Mr. John Tsang, Financial Secretary, delivered his fifth and last budget speech. He forecasts GDP to grow 1 to 3 percent in 2012 after growing 5 percent in 2011 and a surplus of HKD66.7 billion in the Consolidated Account for 2011/12.

In the face of perceived worsening external economic environment, Mr. Tsang proposed a series of measures to help enterprises by reducing their operating costs and enhancing competitiveness so as to protect employment. The following are some of the major relief measures: -

1. Profits tax

• Reducing profits tax by 75% for 2011/12, subject to a ceiling of HKD12,000. 

2. Salaries tax and tax under personal assessment

• Reducing 75% of salaries tax and tax under personal assessment for 2011/12, subject to a ceiling of HKD12,000.

3. Basic allowance, single parent allowance and married person's allowance

• Raising both the basic and single parent allowance from HKD108,000 to HKD120,000.
• Raising the married person's allowance from HKD216,000 to HKD240,000.

4. Rates

• Waiving rates for 2012/13, subject to a ceiling of HKD2,500 per quarter for each rateable property.

5. Child allowance

• Raising both the child allowance and the additional one-off child allowance in the year of birth from HKD60,000 to HKD63,000 for each child.

6. Dependent parent/grandparent allowance

• The allowance for maintaining a dependent parent/grandparent aged 60 or above will increase from the present HKD36,000 to HKD38,000. At the same time, the additional allowance for a taxpayer residing with his/her parent/grandparent will increase from HKD36,000 to HKD38,000.
• The allowance for maintaining a dependent parent/grandparent aged between 55 and 59 will increase from the current HKD18,000 to HKD19,000. The same increase applies to the additional allowance for taxpayers residing with these parents/grandparents continuously throughout the year.

7. Elderly residential care expenses

• For taxpayers whose parents/grandparents are admitted to residential care homes, the deduction ceiling for elderly residential care expenses will be raised from HKD72,000 to HKD76,000.

8. Dependent brother/sister allowance

• Raising dependent brother/sister allowance from HKD30,000 to HKD33,000 for each dependant.

9. Disabled dependant allowance

• Raising disabled dependent allowance from HKD60,000 to HKD66,000 for each dependant.

10. Home loan interest deduction

• Extending the entitlement period for the tax deduction for home loan interest from 10 years of assessment to 15 while maintaining the current deduction ceiling of HKD100,000 a year.

11. Mandatory Provident Fund ("MPF")

• Increasing the maximum annual tax deduction for mandatory contributions to MPF schemes from HKD12,000 to HKD15,000.

12. Capital duty abolishment

• Abolishing capital duty levied on local companies.

13. Business registration fee concession

• Waiving the business registration fees for 2012/13.

14. Import and export declarations

• Halving the charges for import and export declarations.

15. Other relief measures

• Granting each residential electricity account a subsidy of HKD1,800.
• Providing one more month of CSSA payment, Old Age Allowance and Disability Allowance.
• Paying two months' rent for public housing tenants. 

16. iBond

• Further issuance of Hong Kong-dollar inflation-linked retail bonds ("iBond") worth not more than HKD10 billion to further promote the sustainable development of the local retail bond market.

17. SME Loan Guarantee Scheme

• Enhancing the existing SME Financial Guarantee Scheme by increasing the maximum loan guarantee ratio from 70% to 80% for which the Government will provide a guarantee commitment of HKD100 billion.