Taxpayers missing out on tax-deductible benefits: Manulife survey
Hong Kongers were asked about tax-deductible solutions and only answered 4 out of 14 correctly.
A Manulife survey released on 15 March showed Hong Kong taxpayers still do not fully understand the characteristics and benefits of the tax-deductible products launched three years ago.
In the survey, taxpayers were asked about their knowledge of a trio of tax-deductible solutions: Voluntary Health Insurance Scheme (VHIS); Qualifying Deferred Annuity Policies (QDAP); and Tax Deductible Voluntary Contributions (TVC), under the Mandatory Provident Fund (MPF) schemes. Respondents answered just four out of fifteen questions correctly, suggesting that they are missing out on the full benefits of tax-deductible solutions and tax savings.
Some key takeaways from the survey were:
- Almost three out of four (73%) Hong Kong people know VHIS certified plans are administered by the Government with enhanced premium transparency. When asked about the key features of VHIS plans, however, only slightly over a quarter are aware of more than half of the key features.
- Knowledge of QDAP is similarly low. Only 30% of respondents are aware that the annuity period could start once the annuitant has reached the age of 50 or older.
- The survey also shows that the pandemic is the main factor of increased purchase intent of medical insurance. Despite half of the respondents already owning personal health insurance, more than a quarter are considering purchasing health insurance in the next six months. Moreover, 27% of those who do not own health insurance are also considering purchasing health insurance.
Chief product officer for Hong Kong and Macau Danny Lee said most of the respondents remain unfamiliar with the benefits of tax-deductible solutions.
"People often underestimate the added value these solutions provide. For example, regarding VHIS knowledge, while respondents are aware there is no ‘lifetime benefit’ limit for VHIS, over two in five are not aware VHIS plans offer guaranteed renewal for people up to the age of 100 years. Only slightly more than a third know that day case procedures, prescribed diagnostic imaging tests, and prescribed non-surgical cancer treatments are covered," Lee said. "The low literacy on the full benefits of tax-deductible solutions potentially stops taxpayers taking active planning measures to enhance their medical protection and retirement preparedness."
Lee emphasised it is advisable for taxpayers to take time and effort to educate themselves on these solutions so they can better understand their options and plan ahead.