The Taipei National Taxation Bureau of the Ministry of Finance stated that in order to cooperate with the government in promoting long-term care policies and reduce the burden of caring for the physically and mentally disabled in low- and middle-income families, starting from January 1, 2019, taxpayers, spouses, or dependent relatives who are physically or mentally disabled and need long-term care in accordance with the announcement of the central health and welfare authority can deduct a long-term care special deduction of NT$120,000 per person per year when filing their personal comprehensive income tax.
The bureau explained that the special deduction for long-term care has a wealth exclusion clause and is not applicable in the following three situations: 1. The applicable comprehensive income tax rate is above 20%. 2. Dividends and profits are taxed separately at a rate of 28%. 3. The basic income calculated in accordance with the Basic Income Tax Act exceeds the deduction amount prescribed by the same Act (NT$7.5 million for fiscal year 2015). The qualifications for the physically and mentally disabled persons who need long-term care and meet the provisions of the long-term care special deduction are the following three situations: 1. The person being cared for who is qualified to employ a foreign domestic caregiver according to the law. 2. A person who is physically or mentally disabled and whose degree of disability falls within the long-term care needs level 2 to 8 as stipulated in the Regulations on Application and Payment of Long-term Care Services, and who uses long-term care services. 3. Starting from 2013, the physically or mentally disabled persons have stayed in residential service institutions or group homes for 90 days per year during the tax year. However, if the person has lived in the residence for 90 days in the previous year and has continued to live in the residence until his death in the taxable year, the number of days of his stay shall not be subject to the 90-day limit.
The bureau gave an example. In Mr. A's 2013 comprehensive income tax settlement return, he reported a special deduction of NT$120,000 for the long-term care of his dependent relative, Mr. B. The bureau denied the deduction based on the applicable tax rate of 20% for Mr. A. Mr. A was dissatisfied and applied for a review, claiming that his applicable tax rate did not exceed 20% and that he could still apply for the special deduction for long-term care. The bureau rejected Mr. A’s application for review based on the Income Tax Act’s applicable tax rate of 20%, which means he should be included in the category of the rich.
The bureau specifically reminds taxpayers that when reporting the special deduction for long-term care, they should pay attention to the applicable requirements and attach supporting documents. However, if during the comprehensive income tax settlement and declaration period, they inquire about the annual income and deduction information from the Ministry of Finance's Financial Information Center through the Internet or go to the National Tax Bureau to inquire about the special deduction for long-term care, they can directly declare the deduction based on the inquired information without attaching relevant certificates. If the public has any related reporting questions, they can also consult the local tax bureau to protect their own rights.
(Contact person: Mr. Hong, Legal Affairs Section; Tel: 2311-3711 ext. 2051)
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