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Keeping payroll records
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1. |
Your tax obligations commence when you hire the
first employee |
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2. |
On hiring the
employee, you have to maintain a record of that person's : |
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(a) |
personal particulars
(name, address, identity card or passport number, marital
status) |
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(b) |
nature of employment
(full time or part-time) |
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(c) |
capacity in which employed
(e.g. sales manager, salesman, worker, in-house lawyer, accountant,
director) |
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(d) |
amount of cash remuneration
(regardless of denomination in domestic or foreign currency
and remuneration paid overseas) |
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(e) |
non-cash and fringe benefits
(such as quarters, holiday journey benefits, share award,
share option) |
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(f) |
employer's and employee's
contributions to the Mandatory Provident Fund (MPF) or its
equivalent |
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(g) |
employment contract and amendments to terms of employment |
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(h) |
period of employment |
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3. |
You have to inform the IRD the following: |
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(a) |
any change in the employee's personal
particulars (such as change in residential and correspondence
address, and change in marital status) |
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(b) |
any change in the employee's employment
(such as a change from full time to part-time) |
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(c) |
the Hong Kong Identity Card No. of the employee |
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4. |
Business owners are required
to keep business accounting records, including payroll records,
for at least 7 years. For details of what and how records
should be kept, see |
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A
Guide to Keeping Business Records |
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Admissibility
of Business Records Kept in Electronic Form for Tax Purposes |
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Reporting remuneration
paid to an employee |
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General |
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A copy
of the completed I.R. 56B/56E/56F/56G should be provided
to the employee concerned so as to facilitate the correct
completion of his/her tax return. Also see Obligations
of An Employer (I.R. 56H) |
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The Hong Kong Identity Card
No. of the employee |
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If at the time when you complete
your Employer's return, an employee does not possess a
Hong Kong Identity Card, e.g. the employee was recruited
from overseas or seconded from an overseas corporation,
you can fill in his/her passport number. After filing
the Employer's Return, you have to follow up with the
employee. You should, soonest possible, write
in to inform the IRD when the Hong Kong
Identity Card No. of the employee is known. |
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Continuous Employment |
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You have to report
the employee on your Employer's Return (B.I.R. 56A and
I.R. 56B) for 2007/08 if he is |
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(a) |
paid an annual income of $100,000
or more (single person,see note) |
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(b) |
married (regardless of amounts) |
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(c) |
a part-time staff (regardless of amount) |
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(d) |
a director (regardless of amount) |
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Note: |
(1) |
The personal allownace for a single person for the year
of assessment 2007/08 is $100,000 |
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(2) |
You must complete your Employer's Return (B.I.R.56A)
and lodge with IRD within 1 month even if |
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you do not hire any employee (a Nil return should be made), |
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the business has not commenced, or |
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the business has ceased. |
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(3) |
If you have employed persons who have to pay Salaries
Tax but you do not receive an Employer's return for the
year of assessment 2007/08 by mid April 2008, you should
request the IRD to issue a return. Click here
for more information. |
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New employment |
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You have to file one
copy of I.R. 56E (green form) within 3 months of employing
a person if you anticipate that the employee is likely
to be chargeable to Salaries Tax. |
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See Example 1 |
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On termination of his service
(or death) |
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You have to file one
copy of I.R. 56F (blue form) one month before the date
of termination of his employment. |
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See Example 2 |
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On his leaving Hong Kong
for good or for a substantial period of time |
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(a) |
You have
to ascertain from the employee his expected date of
departure. |
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(b) |
You have
to file two copies of I.R. 56G (pink form) one month
before the expected date of departure. |
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(c) |
From the
date of filing I.R. 56G and until such time the employee
has made tax clearance and can produce to you a " letter
of release" issued by the IRD, you should
withhold all amounts due to be paid to him (including
salaries, commission, bonus, reimbursement of rent/expense,
money or money's worth included). |
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(d) |
See |
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Example 3 |
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Tax
Clearance - Things to be done/noted by Employer and Employee
(I.R. 6158) |
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You
or your employee is going to leave Hong Kong (What are
you required to do under the tax law?) |
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Examples |
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Example 1 |
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On 3 of April 2007, Company X employed a bookkeeper,
Ms Mary CHAN. |
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1. |
For this new employee, if she is likely
to be chargeable to Salaries Tax, Company X has the following
obligations: |
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(a) |
Filing of I.R. 56E |
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Company X should file ONE COPY of a
completed I.R. 56E (green form) by 3 July 2007. |
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(b) |
Filing of I.R. 56B |
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Subsequently, on receipt of the
annual Employer's Return for the relevant year of assessment
in early April 2008, Company X should complete an I.R.
56B, if Mary is on its payroll on 31 March 2008. |
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If, however, Company X is a new
company and does not receive any Employer's Return for
that year of assessment by mid April 2008, the Manager
of the company should write to the IRD and ask for the
issue of an Employer's Return for that year of assessment. |
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2. |
Company X should provide Mary
with a copy of I.R. 56E and I.R. 56B. |
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3. |
If Mary's annual income
does not exceed the basic allowance but she is married,
and the income position of her husband is unknown to
Company X, Company X should file I.R. 56E and I.R. 56B
in the manner described above. |
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4. |
If Mary is single but
employed as a part-time staff and Company X does not
know whether she has other part-time or principal employment,
Company X should file I.R. 56E and I.R. 56B in similar
manner. |
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Example 2 |
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On 5 July 2008, Mr. George
LAU terminated his employment with Company Y. |
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1. |
Company Y must
ask George to ascertain if he would leave Hong
Kong after leaving employment, |
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(a) |
If no, Company Y should file
ONE COPY of completed I.R. 56F (blue form) on
or before 5 June 2008. |
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(b) |
If yes, Company Y should
file TWO COPIES of completed I.R. 56G (pink form)
and withhold all moneys due to George. |
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See Example 3 for details |
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2. |
Company Y should provide
George with a copy of I.R. 56F. |
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3. |
Please
bear in mind that after filing I.R. 56F, Company
Y should NOT file any I.R. 56B for that year of
assessment for George again . Filing two I.R.
56s in respect of the same income may give rise
to charging of tax twice on that income. |
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Example 3 |
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On 5 July 2008, Mr.
Peter WONG terminated his employment with Company
Z. Subsequently he left Hong Kong on 8 July 2008
to study in Canada. |
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1. |
Company
Z should file a completed I.R. 56G (pink
form) in duplicate for Peter on or before
8 June 2008. |
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2. |
Apart from filing I.R.
56G, Company Z is also required to withhold
all amounts due to be paid to Peter (including
salaries, commission etc, money or money's
worth included) from the date of filing
the I.R. 56G. |
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3. |
Company Z should provide Peter with a copy
of I.R. 56G. |
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4. |
Company Z should advise
Peter to approach the IRD to make tax clearance
prior to leaving Hong Kong.
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5. |
On settlement of his
taxes, IRD will issue a "letter of
release". Upon sight of the release
letter, Company Z may release the amounts
withheld to Peter. |
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6. |
If Peter wants the
IRD to issue a "letter of release"
immediately, he should pay tax by means
of cash, EPS or cashier order at Post Office
payment counters at 1/F of Revenue Tower.
Then he should take the receipt to IRD's
Collection Office on the 7/F of the Revenue
Tower to request for a "letter of release".
Please note that IRD staff will normally
take 30 to 40 minutes to prepare the "letter
of release". |
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7. |
If Peter pays tax by
cheque, the "letter of release"
will normally be sent by post 10 days after
the receipt of cheque. |
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8. |
Even if Peter is exempt
from tax, the IRD will still issue a letter
of release upon completion of the tax clearance
procedures. |
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9. |
If Peter fails to pay
up his taxes, the IRD will issue a garnishee
notice (I.R. 113) to Company Z requiring
the company to settle Peter's taxes from
the money withheld. Company Z's compliance
with the I.R. 113 will constitute a valid
defence at court against any cliam for non-payment
of salaries to Peter. |
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10. |
Please bear in mind
that after filing I.R. 56G, Company Z should
NOT file any I.R. 56B for that year of assessment
for Peter again in April 2008. Filing two
I.R. 56s in respect of the same income may
give rise to charging of tax twice on that
income. |
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