PLC Paper No. LS 118

Paper for the House Committee Meeting
of the Provisional Legislative Council
on 6 March 1998

Legal Service Division Report on
Inland Revenue (Amendment) Bill 1998

Object of the Bill

The Bill amends the Inland Revenue Ordinance (Cap. 112)("the Ordinance") to give effect to certain revenue proposals in the 1998-99 Budget ("the Budget").

Provisional LegCo Brief Reference

2. FIN SCR 7/2201/97 issued by the Finance Bureau on 26 February 1998.

Date of First Reading

3. 4 March 1998.


4. The Bill gives legal effect to the proposals in paragraphs 81 to 86 and paragraphs 93 to 98 of the Budget Speech by :

  1. introducing new concessionary deductions for -

    1. elderly residential care expenses for supporting an elderly dependant in a residential care home;

    2. home loan interest, deductible for 5 years of assessment;

    3. contributions to a recognized retirement scheme, i.e. a registered scheme as defined in the Mandatory Provident Fund Schemes Ordinance (Cap. 485), or an occupational retirement scheme -

    1. approved by the Commissioner of Inland Revenue under section 87A of the Ordinance prior to 19 November 1993 and such approval has not been withdrawn;

    2. registered for the time being under the Occupational Retirement Schemes Ordinance (Cap. 426) ("ORSO");

    3. in respect of which an exemption certificate has been issued under ORSO and has not been withdrawn;

    4. operated by an employer who is the government of a country or territory outside Hong Kong, or who is any agency or undertaking of or by such a government which is not operated for the purpose of gain; or

    5. contained in or otherwise established by any Ordinance;

  2. widening the marginal tax bands and reducing the marginal tax rates;

  3. increasing the salaries tax allowances and prescribed amounts of contribution towards maintenance of parent or grandparent; and

  4. increasing the existing deduction for expenses of self-education.

5. Members may refer to Annex M of the PLC Brief for a table comparing the present and proposed rates. If passed, the Bill (except for those provisions relating to deduction of contributions to recognized retirement schemes mentioned in the above paragraph) applies to the year of assessment commencing on 1 April 1998 and to all subsequent years of assessment.


6. The Legal Service Division is still scrutinizing the legal and drafting aspects of the Bill. Members are recommended to form a Bills Committee to examine the practical aspects of the Bill in detail.

Prepared by

Wong Sze-man, Bernice
Assistant Legal Adviser
Provisional Legislative Council Secretariat
4 March 1998