1. I am the sole-proprietor and a partner of 2 companies who is liable to pay Profits Tax. Am I entitled to the basic or other tax allowances (such as child, single parent, dependent parent, dependent grandparent or dependent brother/sister allowances), and Home Loan Interest deduction?
Profits from sole-proprietorship or partnership businesses are taxed at the standard rate (15% for year of assessment 2014/15 onwards) under "Profits Tax". However, if you are eligible to choose "Personal Assessment", you may also claim the following deductions and the tax on your income will be computed at the progressive rates applicable to "Salaries Tax":
- interest incurred on money borrowed for the purpose of producing property income (the amount deductible should not exceed the net assessable value of the individual property let);
- approved charitable donations;
- elderly residential care expenses (from year of assessment 1998/99 onwards);
- home loan interest (from year of assessment 1998/99 onwards);
- business losses incurred in the year of assessment;
- losses brought forward from previous years under "Personal Assessment"; and
- Personal allowances (include but not limited to basic allowance, child allowance, dependent parent allowance, etc.).
If you are married and your spouse has assessable income, the option of Personal Assessment must be chosen by both of you in the tax returns (so that you and your spouse can enjoy the above allowances and deductions).