Taxation
Question: Do I need to pay Salaries Tax for the mandatory contributions, voluntary contributions and SDSC made by Government or me?
Answer: The information below on taxation arrangements is for reference only. The actual tax liabilities of mandatory and voluntary contributions and accrued benefits are subject to determination by the Commissioner of Inland Revenue in accordance with the then prevailing provisions of the relevant legislation.
Member’s Contributions
Mandatory contributions made by you to the CSPF Scheme up to a limit of $18,000 for each tax year are deductible for Salaries Tax purposes whereas voluntary contributions made by you are not, except for the Tax Deductible Voluntary Contributions.
Government’s Contributions
Government’s contributions made to the CSPF Scheme for you during your membership are not regarded as income and as such you are not required to pay Salaries Tax on such contributions.
Accrued Benefits
On retirement/leaving service, benefits that are attributable to mandatory contributions are exempt from Salaries Tax.
The tax treatment for benefits attributable to the voluntary contributions made by the Government (i.e. in respect of your GVC and SDSC, if applicable) is summarised below -
| Withdrawal circumstances | Salaries Tax Implications |
|---|---|
| Retirement, death, incapacity or terminal illness | Exempted, subject to Sections 8(7) and 8(8) of the Inland Revenue Ordinance (Cap. 112( (“IRO”), i.e. the sum exceeding the amount calculated in accordance with the following formula will be taxable: 15% x EI x YCS – RAB, where
|
| Termination of service (other than retirement, death, incapacity or terminal illness) | Exempted, subject to Sections 8(4), 8(5), 8(7) and 8(8) of the IRO |