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7. Who are eligible to claim deductions under “Elderly Residential Care Expenses”(ERCE)? What is the maximum deduction?

With reference to Section 26D of the Inland Revenue Ordinance, persons may claim deductions for elderly residential care expenses paid by them (or their spouses) to residential care homes in respect of their parents or grandparents or (their spouses' parents or grandparents). The deduction may be allowed under salaries tax and Personal Assessment. A person subject to tax at the standard rate is also entitled to the deduction.


The following conditions must be satisfied before the deduction is granted:


i. The parent/grandparent is a parent/grandparent of the taxpayer or his/her spouse. 
ii. The parent/grandparent is aged 60 or above at any time in the year of assessment, or under 60 but entitled to claim an allowance under the Government's Disability Allowance Scheme. 
iii. The parent/grandparent was receiving residential care in a residential care home in the year of assessment. 
iv. The expenses were paid to a residential care home or any person acting on its behalf. 
v. The expenses were paid by the taxpayer or his/her spouse in the year of assessment. A husband may claim deduction for payments made by his wife, and vice versa. 
vi. The residential care home is situated in Hong Kong and is licensed or exempted from licensing under the Residential Care Homes (Elderly Persons) Ordinance, or is a nursing home registered under the Hospitals, Nursing Homes and Maternity Homes Registration Ordinance
vii. Only one person may be granted the deduction in respect of the same parent or grandparent for a year of assessment. Where more than one person, who is entitled to claim the deduction, contributes to the payment of the residential care expenses of a parent or grandparent, it is necessary for them to agree amongst themselves as to which of them will claim the deduction for the year of assessment. In the event that they are unable to agree, no deduction may be allowed.

"Parent" means:


  1. A natural father or mother of the taxpayer or his/her spouse; or 
  2. A parent by whom the taxpayer or his/her spouse was legally adopted; or 
  3. A step-parent of the taxpayer or his/her spouse; or 
  4. A parent of the taxpayer's deceased spouse.

"Grandparent" means:


  1. A natural grandfather or grandmother of the taxpayer or his/her spouse; or 
  2. An adoptive grandparent of the taxpayer or his/her spouse; or 
  3. A step-grandparent of the taxpayer or his/her spouse; or 
  4. A grandparent of the taxpayer's deceased spouse.

Allowable deduction amounts


The deduction allowed is for expenses actually paid in the year of assessment to a residential care home in respect of the residential care received, subject to a maximum of $80,000 for the year of assessment 2014/15 and onwards for each parent or grandparent . The deduction covers only the cost of care provided to the parent or grandparent who is resident in a residential care home. Medical expenses, for example, paid to doctors and/or hospitals are not deductible.


In respect of the same dependant, you can claim Dependent Parent Allowance or ERCE, but not both.