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- MPFA welcomes LegCo's passage of the amendment bill related to tax deductions for MPF voluntary contributions
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MPFA welcomes LegCo's passage of the amendment bill related to tax deductions for MPF voluntary contributions
The Mandatory Provident Fund Schemes Authority (MPFA) welcomed the passage today (20 March) of the Tax Deductions for Annuity Premiums and MPF Voluntary Contributions (Amendment) Bill 2018 (Amendment Bill), providing tax deductions incentive to Mandatory Provident Fund (MPF) scheme members who make Tax Deductible Voluntary Contributions (TVC), further strengthening the retirement protection function of the MPF System.
According to the Amendment Bill, MPF scheme members who hold contribution accounts or personal accounts, or members of Occupational Retirement Schemes (ORSO schemes) that have been granted MPF exemption, can open a TVC account in an MPF scheme of their own choice. They are entitled to claim a tax deduction up to $60,0001 under salaries tax and personal assessment by directly making MPF contributions to this account. This tax deductions incentive will be effective from the year of assessment 2019/2020. Taxpayers can claim deductions when filing their tax returns.
An MPFA spokesperson said the tax deductions incentive for TVC not only helps eligible scheme members save tax, but also strengthen their financial discipline with a view to saving early for retirement.
TVC is a simple, convenient and flexible solution, whereby scheme members and members of ORSO schemes that have been granted MPF exemption can enjoy tax deductions for TVC by opening a TVC account in an MPF scheme starting from next month (1 April). The withdrawl of TVC, including the contributions exceeding the tax deductible limit, will be subject to the same withdrawal restrictions on mandatory contributions, which require scheme members to preserve their TVC until they have reached the age of 65 (except as specified in the legislation).
The MPFA has set up a working group with MPF trustees to co-ordinate the implementation details of TVC to ensure that they stand ready to handle TVC applications. MPF and ORSO scheme members may visit the dedicated webpage on TVC and the Trustee Service Comparative Platform on the MPFA website for details from 1 April 2019.
– Ends –
20 March 2019
1. The maximum tax deductible limit is an aggregate limit for MPF TVCs and deferred annuity premiums.
According to the Amendment Bill, MPF scheme members who hold contribution accounts or personal accounts, or members of Occupational Retirement Schemes (ORSO schemes) that have been granted MPF exemption, can open a TVC account in an MPF scheme of their own choice. They are entitled to claim a tax deduction up to $60,0001 under salaries tax and personal assessment by directly making MPF contributions to this account. This tax deductions incentive will be effective from the year of assessment 2019/2020. Taxpayers can claim deductions when filing their tax returns.
An MPFA spokesperson said the tax deductions incentive for TVC not only helps eligible scheme members save tax, but also strengthen their financial discipline with a view to saving early for retirement.
TVC is a simple, convenient and flexible solution, whereby scheme members and members of ORSO schemes that have been granted MPF exemption can enjoy tax deductions for TVC by opening a TVC account in an MPF scheme starting from next month (1 April). The withdrawl of TVC, including the contributions exceeding the tax deductible limit, will be subject to the same withdrawal restrictions on mandatory contributions, which require scheme members to preserve their TVC until they have reached the age of 65 (except as specified in the legislation).
The MPFA has set up a working group with MPF trustees to co-ordinate the implementation details of TVC to ensure that they stand ready to handle TVC applications. MPF and ORSO scheme members may visit the dedicated webpage on TVC and the Trustee Service Comparative Platform on the MPFA website for details from 1 April 2019.
– Ends –
20 March 2019
1. The maximum tax deductible limit is an aggregate limit for MPF TVCs and deferred annuity premiums.
