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Pay-As-You-Earn scheme extended to civil service pensioners
The Government has decided to extend the Pay-As-You-Earn (PAYE) scheme to cover civil service pensioners to provide a convenient tax saving alternative for them, especially for those residing overseas.
The Secretary for the Treasury, Mr K C Kwong, has made the relevant rules which will be gazetted on Friday (October 25).
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The rules the Tax Reserve Certificates (Fourth Series) (Amendment)Rules 1996 - also provide for the payment of part-month interest on tax reserve certificates (TRCs) which are redeemed for tax payment purposes, and the redemption of TRCs held by a taxpayer for the settlement of his default tax payment.
A Finance Branch spokesman said the voluntary PAYE scheme provides an automatic and convenient saving alternative for tax payment.
The scheme was offered initially to serving civil servants and there are so far about 1,400 participants.
"We have reviewed the operation of the scheme and consider it opportune to extend it," he said.
"After the extension, we will continue to examine how the scheme should further develop."
He said the Government had also reviewed the payment of interest on TRCs only on a complete month basis, but not for period constituting only a part of a month.
"We consider it fair and reasonable to pay interest on TRCs on the entire period for which the certificates are held, that is, including the part of the period which does not constitute a complete month," he said.
The amendment rules provided for the change and the new arrangement would apply to all TRCS redeemed on or after the date that they come into operation, regardless of whether they were purchased before or after that date, the spokesman said.
The amendment rules will also empower the Commissioner of Inland Revenue to redeem TRCs held by a person for settling his tax payment which is in default.