萬國法律事務所

Taiwan's regulations concerning dependents’ age qualification for tax exemption for taxpayers at Article 17 of the Income Tax Act are soon to be revised. The Executive Yuan has passed a draft amendment of the Income Tax Act, and in accordance with the proposed amendment, if a taxpayer can enjoy the benefit of tax exemption if he can demonstrate that his relatives or family members, other than lineal ascendant(s), children, and siblings, are actually being supported by him. The original limitations on the dependent’s ages will be no longer be applied. Once the amendment is approved and finalized, the new rule will apply in 2013 and approximately one million people are expected to benefit.

According to the current Article 17 of Taiwan's Income Tax Act, as long as a taxpayer's lineal ascendant(s), children, and siblings are being supported by the taxpayer by reason of their student status, or being physically or mentally disabled, or being incapable of earning a livelihood, taxpayers may deduct a prescribed amount as exemption for these relatives, even if these relatives are not under twenty years of age, or have not attained sixty years of age. Nevertheless, a taxpayer cannot claim an exemption for an uncle, aunt, cousin, nephew, other relatives, and co-habitants, if any of these are aged between 20 to 60 regardless of their incapability or inability to earn a livelihood.

Taiwan's Constitutional Court has issued a decision ruling that the original limitation on age at Article 17 of the Income Tax Act violates the principle of equality. Therefore, the amendment aims to resolve this problem. Most government officials and civic groups have voiced support for and expect the amendment to be approved.