Donations to tax-exempt charities or to Government for charitable proposes is tax deductible. The amount can deduct from your net assessable income or assessable profits. Thus, a qualified donations is tax deductible for both an individual or a company.
Eligibility for Deduction
You may claim a deduction for a donation of money to any approved charity under section 88 of the Inland Revenue Ordinance or to the Government for charitable purposes. You can also claim a deduction for any approved charitable donation made but not claimed by your spouse.
Donations Not Accepted as Tax Deductions
Not all payments to tax-exempt charities are deductible. The following are not the examples of payments allowable donations:
- Payments for lottery or raffle tickets; admission to film shows or charity shows; grave spaces
- Payments made for services such as saying prayers or the reservation of a space for ancestral worship
- Purchase of goods in bazaars
- Payments made to a church, a tax-exempt charity, through dropping cash in the donation bag without donation receipt.
What is the tax-deductible ceiling?
Donors may claim up to 35% of total assessable income or profits for the tax year. This provides substantial benefits for donors in Hong Kong. For example, if the assessable income is HK$500,000 after allowable expenses, individuals may claim up to HK$175,000 in approved charitable donations. On the other hands, the aggregate deduction of donations cannot be less than HKD100.
Lodging a Claim for a Deduction
To lodge a claim, you should enter the total amount of approved charitable donations made during the relevant year of assessment in your Tax Return – Individuals (BIR60). This donation can be claim once.
You need not to submit any documentary evidence to your tax return. However, you must ask for donation receipts from the tax-exempt charity or the Government. Furthermore, you should retain the receipt for 6 years after the expiration of the year of assessment.
For further information, please contact us.
You may want to read: Tax Deduction for Charitable Donations in Hong Kong