Personal Assessment vs Separate Assessment

In Hong Kong, apart from Salaries Tax, some taxpayers may also have property tax, profits tax or the option of Personal Assessment. Personal Assessment is a method of aggregating an individual's various taxable incomes and calculating tax at progressive rates. For people with rental income, business profits and employment income, electing Personal Assessment may reduce the overall tax bill because allowances and deductions can be shared.

Personal Assessment is not suitable for everyone. If your income comes mainly from employment and you have no other property or business income, paying Salaries Tax directly is usually the most favourable. On the other hand, if you have rental income that is still subject to property tax after deducting basic expenses, or if your business profits are high, Personal Assessment may offer a tax advantage. The Inland Revenue Department will automatically calculate and adopt the lower tax after you elect.

HK FinBox's Personal Assessment comparison calculator lets you enter salary, rental income, business profits, deductions and allowances to compare the tax payable under separate taxation with that under Personal Assessment. The calculator helps you decide which method is more favourable.

Personal Assessment must be actively elected with the Inland Revenue Department and reassessed each year. Because tax situations vary from person to person, consult a professional accountant or tax adviser before filing to ensure you choose the best arrangement. At the same time, keep complete income and expense records to help with accurate calculations and responding to Inland Revenue Department enquiries.