VHIS tax deduction strategy in 2024

One of the biggest selling points of the VHIS is the tax deduction. The maximum deduction limit for each insured person is $8,000. However, note that you cannot deduct $8,000 directly from your taxes.

To calculate your tax deductions, follow this formula:

VHIS premium x Tax rate = Tax deductions

Let’s say your VHIS premium is $6,000, but your tax rate is 2%. In that case, lucky you, you can now deduct $120 from your taxes.

Since this article is written with the average office worker in mind, we must include salaries tax and allowances. 

Personal tax assessment = (Total income - Tax deductions - VHIS tax-free allowance) x Tax rate

For instance, your annual income is $180,000, and your personal allowance is $132,000. After calculating with the formula above, 

Your tax payable under personal assessment should be: 

($180,000 - $132,000 - $120) x 2% = $957.6

After confirming your personal information on the eTax platform, click on the tab: “Select Each Section on the Tax Return Form”. Then, check “Eligible premiums paid under the VHIS policy” (Pictured below).

As soon as you’re done filling in your income and other information, you’ll be brought to the "Eligible Premiums Paid under the VHIS" page. If you are purchasing an insurance plan for yourself, you only need to fill in the "Eligible premium paid for yourself" in item (1) (See the red circle in the picture below).

Paying the premiums for your relatives? You need to fill in the required information and premiums in item (2) "Eligible premiums paid for specified relatives" (See the blue circle below).

Whether a taxpayer like yourself is buying VHIS for you or your eligible relatives, you can deduct the premiums paid in the past year from the "taxable income". Again, the maximum annual deduction for each insured person under the VHIS is $8,000. On the other hand, there is no upper limit on the number of insured persons under the same plan. 

You might be wondering, “what counts as an ‘eligible’ relative?”. The Tax Bureau clearly stipulates that only qualified "dependants" can deduct from taxes on their premiums. These dependants can include:

• Spouse and children of the taxpayer
• Taxpayer's parents, paternal grandparents, maternal grandparents and brothers and sisters
• Parents, paternal grandparents, maternal grandparents and siblings of the taxpayer’s spouse

Suppose you have purchased VHIS for yourself, your father and your daughter at the same time, and your tax rate this year is 15%.

Finally, if you have brothers and sisters, you should discuss with them in advance. Decide on who is responsible for buying the VHIS for your parents and who can declare the relevant tax "deductions”. This is so that your family could avoid repeatedly applying for tax exemptions.

In addition to the VHIS, Kwiksure also provides a variety of products such as car insurance (third-party and comprehensive), motorcycle insurance, and domestic helper insurance. Get a free quote today with our online quotation system! If you want to chat with us, contact our expert insurance advisors. They are happy to offer impartial guidance and help you find the perfect insurance solution!