What is Tax Deductible Voluntary Contributions?

Tax Deductible Voluntary Contributions(TVC) is a new type of contributions under the MPF system. Members with contribution accounts or personal accounts of MPF schemes, or members of MPF Exempted ORSO schemes are all eligible to make TVC. Scheme members can open a TVC account under an MPF scheme of their own choice and make TVC directly to the account without going through the employers. Only contributions made to TVC accounts not exceeding the tax deduction cap are tax deductible. Other types of MPF voluntary contributions are not tax deductible.

Scheme members can enjoy the flexibility to make TVC to their TVC accounts at any time and in varying amounts. They can also increase or reduce the amount of contributions, or cease to make contributions, or resume the making of contributions at any time, having regard to their personal circumstances. However, same as the MPF mandatory contributions, TVC has to be preserved until the age of 65 (unless exempted on other statutory grounds).

The tax deductions, allowable under salaries tax or personal assessment, is subject to a cap of $60,000 per year. Depending on your TVC amount, based on the prevailing highest tax rate (i.e. 17%), the maximum tax savings can reach $10,200.

Source: Investor and Financial Education Council

Features of TVC

  • TVC is voluntary in nature, employer involvement is not required;
  • To be eligible for tax concession, your TVC must be paid into a TVC account of an MPF scheme;
  • TVC account is independent from the MPF contribution account or MPF personal account;
  • In your TVC account, you may make your own fund selection according to your risk appetite, or choose to invest in Default Investment Strategy (DIS);
  • You may transfer the accrued benefits derived from TVC to another MPF scheme which offers TVC at any time;
  • Each eligible person can only have one TVC account under an MPF scheme;
  • TVC is subject to the same vesting, preservation and withdrawal restrictions applicable to MPF mandatory contribution;
  • A TVC account holder can only withdraw benefits from the TVC account upon reaching the age of 65 or on other statutory grounds.