Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA. Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: Whether the HK$10,000 received from the Hong Kong Cash Payout Scheme by a Canadian taxpayer would be taxable in Canada?
Position: Likely no
Reasons: The amount does not appear to be income from a source under the Income Tax Act.
Author: Wirag, Eric
August 31, 2020
Costa Dimitrakopoulos Income Tax Rulings Directorate
Director General Eric Wirag, CMA, CPA
Income Tax Rulings Directorate
Canada Revenue Agency
Hong Kong Cash Payout Scheme
We are providing our comments regarding whether a payment received under the Hong Kong Cash Payout Scheme (the Scheme) by a Canadian taxpayer would be included in the income of that recipient for purposes of the Income Tax Act. The Hong Kong Government announced as part of their 2020 budget that the Scheme would disburse HK$10,000 to each Hong Kong permanent resident aged 18 or above. This initiative was created as an economic response to the “social incidents in the past months” (i.e. months long protests) and the COVID-19 pandemic.
Our understanding is that each Hong Kong permanent resident who is aged 18 or above on or before March 31, 2021, and who holds either a valid Hong Kong Permanent Identity Care Card or a Certificate of Exemption, is eligible to apply for the Scheme. Applications can be submitted electronically through participating retail banks, or paper registration through the Hong Kong Post. According to the Scheme website, the payment is not considered “income or profits derived from an office or employment or from carrying on a business or letting of premises” and therefore is not subject to tax in Hong Kong.
As we are unable to review any legislation for this scheme, and are relying on general details provided by the Government of Hong Kong website, we will be unable to provide a definitive assessment of whether the amounts will be taxable to the recipients. We can, however, provide general comments regarding the payment based on the available information.
If an individual is a resident of Canada for income tax purposes, they are subject to income tax in Canada on their worldwide income; that is, on their income, whether it be Canadian source or foreign source income.
In our view, the amount received from the Hong Kong Government under the Scheme by a Canadian resident individual, will likely not constitute income from a source, and therefore, will not be taxable under the Act.
We trust our comments will be of assistance.
Lita Krantz, CPA, CA
Tax Credits and Ministerial Issues
Business and Employment Division
Income Tax Rulings Directorate
Legislative Policy and Regulatory Affairs Branch
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