Tax deductible products for assessment year 2022-23

As we approach the end of the 2022-23 assessment year on 31 March 2023, it is a good time to review the 3 tax deductible products in the market – Qualifying Deferred Annuity Policy (QDAP), MPF Tax-Deductible Voluntary Contribution (TVC) and Voluntary Health Insurance Scheme (VHIS) – as various providers have also introduced additional incentives, often in the form of first year premium discounts for QDAP and VHIS products and bonus unit rebates for MPF TVC.

Assessment year 2022-23 deduction amounts

For 2022-23 assessment year, the maximum tax deduction allowed for QDAP and TVC remains at $60,000 per person(for a maximum of $10,200 in tax savings) or $120,000 deduction per couple taking out a QDAP as long as both of them are taxpayers.  The maximum tax deduction for eligible VHIS plans remain at $8,000 for each insured person, for a maximum of $1,360 in tax savings.

Retirement savings – QDAP/TVC

While one can choose either QDAP or MPF TVC to help save for retirement, they have completely different product features.  QDAP is a long-term life insurance policy which converts accumulated premiums over a period of 5-year or 10-year into a steady (guaranteed and/or expected) income stream over an extended period of time during retirement.  MPF TVC is a new type of MPF contribution similar to MPF mandatory contribution where you will be responsible for fund selections and bear market risks.  It is more flexible than QDAP as you can adjust contribution amount each year based on your own earning situation. You can refer here for a more detailed comparison of these 2 tax deductible products.

Medical insurance protection – VHIS

VHIS helps provide more transparency in the medical insurance market as each plan must be approved by the Food and Health Bureau and conforms to standard policy terms and protection coverage.   Basic requirements for VHIS Standard plans such as guaranteed renewal up to age 100 and full coverage for unknown pre-existing conditions beginning the 4th policy year are marked improvements over some traditional plans.  While standard plans provide basic hospitalization coverage at the ward room level, most insurers offer Flexi plans, which include top-up protection such as higher coverage amount and more benefit items.

Summary

Please contact us if you would like to make use of the 3 tax saving products to enhance your retirement savings and medical protection for assessment year 2022-23 or learn more about the product features or offers from various providers in the market.

Last Update: 8 February 2023