Everything You Need to Know About QDAP

Hong Kong's aging population has made retirement planning a major financial concern. In recent years, the market has launched various financial products to encourage citizens to save early for retirement—with the Qualifying Deferred Annuity Policy (QDAP) as one option. QDAP not only provides stable retirement income but also helps reduce your tax burden through deductions on annuity premiums. 

What Is an Annuity? 

An annuity is a financial product that converts your savings into a steady stream of income after retirement. Once you pay the premiums, the insurance company will start issuing regular annuity payments to you once you reach a certain age (for example, 60 or after retirement). The main benefit of annuities is that they provide stable, predictable income, reducing financial uncertainty during retirement. 

Difference Between Immediate and Deferred Annuities 

Annuities come in two main types — immediate annuities and deferred annuities — with the key difference being when you start receiving payments. 

Immediate annuities start paying out shortly after purchase, making them suitable for those who are already retired or about to retire and need an instant income stream. 

Deferred annuities, on the other hand, begin payments in the future (for example, 10 or 20 years later). During this deferral period, your premiums continue to accumulate returns. Deferred annuities are ideal for working individuals as a long-term retirement savings tool — and if you purchase a Qualifying Deferred Annuity Policy (QDAP), you can also enjoy additional QDAP tax deductions. 

What Is a Qualifying Deferred Annuity Policy (QDAP)? 

A QDAP is a type of deferred annuity certified by the Insurance Authority (IA) of Hong Kong.  

Who Can Enjoy the QDAP Tax Deduction? 

Individuals who meet the eligibility requirements for taxation under the Hong Kong Inland Revenue Ordinance and purchases a QDAP certified by the Insurance Authority is eligible. However, it should be noted that not all individuals are entitled to tax deductions, and not all annuity products qualify for QDAP tax deduction. Therefore, it’s important to check whether the plan meets the IA’s “qualifying deferred annuity” standards before purchase. 

QDAP Tax Deduction Limit 

• Each taxpayer can claim up to HK$60,000 per year in deductions. 
• The HK$60,000 limit applies to both QDAP annuity premiums and Tax-Deductible MPF Voluntary Contributions (TVC) combined (you can choose one or both, but the total cannot exceed HK$60,000). 
• Unused deductions cannot be carried forward to the next tax year. 
• Depending on your marginal tax rate (2%–17%), you can save up to HK$10,200 per year in tax. 

How to Calculate Your QDAP Tax Deduction 

1. Add up your total QDAP annuity premiums and any TVC contributions paid during the year. 

2. Add the two amounts together to obtain the ‘tax-deductible amount’ (the tax deductible limit is HKD 60,000) 

3. Multiply that amount by your applicable tax rate — marginal progressive rate (2%, 6%, 10%, 14%, or 17%) or the standard rate (15% on first HK$5M net chargeable income, 16% on the remaining amount thereafter) if you elect it, to estimate your potential tax savings 

Example of QDAP Tax Deduction Calculation 

Example 1: QDAP Only 

• Annual QDAP premium: HK$48,000, without TVC. 
• Eligible deduction: HK$48,000 
• Tax rate: 17% → Tax saved: HK$48,000 × 17% = HK$8,160 

Example 2: QDAP + TVC Combined (Exceeding Limit) 

• QDAP premium: HK$40,000 & TVC: HK$30,000 
• Combined: HK$70,000 → Deduction capped at HK$60,000 
• Tax rate: 10% → Maximum tax savings: HK$60,000 × 10% = HK$6,000 

The above examples are provided for illustration and reference purposes only. Actual circumstances may vary depending on individual situations. You are advised to seek professional advice before making any decision. 

How to Claim QDAP Tax Deduction on Your Tax Return 

When filing your tax return (Form BIR60), simply report the total amount of qualifying deferred annuity premiums under “allowable deductions.” You don’t need to attach proof documents, but keep your payment records and annual summary for at least six years after the expiration of the relevant year of assessment in case the Inland Revenue Department requests verification. 

Deciding on a QDAP for Tax Deduction? Generali’s LionHarvest Prime Deferred Annuity – Enjoy up to 30% Total Premium Discount^ upon Successful Policy Issuance! 

LionHarvest Prime Deferred Annuity, a Qualifying Deferred Annuity Policy certified by Insurance Authority, to assist you in preparing for your future and help you start saving for your retirement with tax deduction (if eligible). The Plan will provide you with Monthly Annuity Income1 for a period of 10 years. With the assurance of a reliable income during retirement, you can embrace your life to the fullest. Upon expiry of the Policy, the Plan will pay a Maturity Bonus2 which includes both Guaranteed Maturity Bonus2 and Non-guaranteed Maturity Bonus2. Successfully apply for LionHarvest Prime Deferred Annuity, a Qualifying Deferred Annuity Policy certified by the Insurance Authority, from 1 January to 31 March 2026, you can enjoy a up to Total Premium Discount of 30%^ (Terms and conditions apply to promotion offer). Download the product brochure to learn more policy details, exclusions, risk disclosures and premium details or contact our insurance advisors for a free consultation. 

^The premium discount amount will not be eligible for tax deduction. 

Frequently Asked Questions 

Q: Who can apply for the QDAP tax deduction? 

A: Any Hong Kong taxpayer who purchases an IA-certified Qualified Deferred Annuity Policy can claim the QDAP tax deduction. 

Q: How much tax can I save with a QDAP? 

A: The annual QDAP tax deduction limit is HK$60,000, allowing savings of up to HK$10,200. 

Q: What is the minimum premium for QDAP? 

A: To qualify as a QDAP, the minimum total premium is HK$180,000, with a minimum contribution period of five years. 

This blog post is provided by the team at Generali Life (Hong Kong) Limited ("Generali Life") and is for reference only. It does not represent the position of Generali Life. Generali Life assumes no responsibility for any loss or damage caused to any person due to the use or misuse of any information or content, or reliance on it. Any content related to Generali Life products in this blog post is for reference and educational purposes only. Customers should refer to the detailed terms and conditions on the relevant product webpage.