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  Home > Tax Information - Individuals/Businesses > Tax Reporting for Profits Tax (Sole Proprietorship & Partnership)

Tax Reporting for Profits Tax (Sole Proprietorship & Partnership)


Sole Proprietorship - How to complete Part 5 of BIR60 

1. Where a business is 100% owned by you, you should make tax reporting for that business on Part 5 of your Tax Return - Individuals (BIR60).
 
2. How to Complete the Boxes in Part 5 of BIR60

 

  (a) Put a 'tick' in the 'Yes' Box in the second line of Part 5 of BIR60 to indicate that you have a sole-proprietorship business, and complete the remaining items in that Part.
 
  (b) If you own more than 1 sole-proprietorship business

Supply details of the first and second sole-proprietorship businesses in the space provided in BIR60 and provide those particulars of the other businesses in the same format on a separate sheet.

Separate accounts and computations should be submitted for each business if its gross income exceeded $2,000,000.

 
  (c) Gross Income

This means ALL TYPES OF INCOME and should include sale of capital assets and any other non-taxable income, whether or not derived from the principal business activity.

 
  (d) Turnover

This means all income arising from your principal business activities. Items that arise incidentally or are exceptional in nature should be excluded (for example, profits from the sale of capital assets).

 
  (e) Gross profit/(loss)

Generally refers to the difference between turnover and cost of sales. If you are not engaged in the trading of goods and commodities and no such figure exists in the accounts, insert "0" in the Box.

 
  (f) Net profit/(loss) per accounts

Generally refers to the difference between income and expenses/deductions.

 

  (g) Assessable Profits/(Adjusted Losses)

You may obtain a pro forma tax computation to make the necessary adjustment. A separate computation should be prepared for each business. If you have more than one business, make sufficient copies of the pro forma before preparing the computations.

 
  (h) Approved charitable donations

Enter the total amount of approved charitable donations made during the year.

 
  (i)

Mandatory contributions to Mandatory Provident Fund Scheme

Enter the amount of mandatory contributions paid by you to a mandatory provident fund scheme as a self-employed person.

Year of assessment Maximum deduction ($)
2008/09 to 2011/12 12,000
2012/13 14,500
2013/14 15,000
2014/15 17,500
2015/16 onwards 18,000
 If you have claimed deduction for contributions to recognized retirement scheme under Salaries Tax (Part 4.3 of BIR60), your claim under Part 5 for Profits Tax should be limited to the balance. For example, if the maximum amount of deduction allowable to you in year of assessment 2013/14 is $15,000 and you have claimed deduction of $8,400 under Salaries Tax (Box 33, Part 4 of BIR60), the maximum amount of deduction you may claim under Profits Tax (Box 42, Part 5 of BIR60) will be $6,600.
 
  (j) Transactions for/with non-resident persons

If you have transactions for/with non-residents during the year, put a 'tick' in the 'Yes' Box and complete Section 5 of the Appendix to BIR60.

 
  (k) Dormant Businesses

Even if your business has been dormant during the year, you are still required to complete items (1) and (2) and enter '0' in items (3) to (9) under Part 5 of BIR60.

 
  (l) What if I have a business to report but Part 5 of BIR60 was left blank

We may estimate the amount of assessable profits and issue a notice of assessment demanding you to pay Profits Tax. To avoid the issue of an estimated assessment, even if your sole proprietorship business had ceased, was inactive or operating in losses for the year concerned, you should still complete all the Boxes in Part 5 of BIR60 and should not leave them blank. You may enter '0' where applicable.

We will impose penalty on omission / understatement of profits and on incorrect return. In computing penalties, where Part 5 of BIR60 is left blank (resulting in omissions), the amount of the ultimately assessed profits will be taken to be the amount of profits undercharged.

 
3. Documents to be submitted
  (a) Small Businesses (i.e. gross income of which do not exceed $2,000,000)
   
  • So long as the gross income of your sole proprietorship business does not exceed $2,000,000, you are not required to attach any financial statements to your tax return. Otherwise, you must submit accounts.
  • Even if your business is a Small Business, you must prepare the accounts, complete the tax return in accordance with the accounts prepared, and retain the accounts and documents as we may ask you to submit them later for review or other tax purposes.
  (b) Businesses other than Small Businesses
   
  • You have to submit a set of certified accounts - Balance Sheet and the Trading and Profits & Loss Accounts.
  • You should also submit a tax computation with supporting schedules, showing how the declared amount of Assessable Profits/(Adjusted Losses) is arrived at.
4. To know about the completion of other parts of BIR60 and other matters relating to the completion and filing of BIR60, see
 

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Partnership - How to complete BIR52 

1. Where a business is not solely owned by you for the full year, you should not report it in Part 5 of BIR60. Rather, you should report on the Profits Tax Return (BIR52) for that business.
 
2.

How to Complete BIR52

See

 

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Sole Proprietorship changed to Partnership or vice versa 

For tax purposes,
1. We will not regard the business as ceased.
 
2. The sole proprietorship business and the partnership business will be treated as the same business.
 
3. You should have notified the Business Registration Office of the change in ownership of your business. Upon receipt of this information,
 
 
  • if a sole proprietorship business were changed to a partnership business (by admitting a partner),

    we will issue a Profits Tax Return (BIR52) in the name of the partnership for the year of change and for subsequent years.

  • if a partnership business were changed to a sole proprietorship business (by retirement of all other partners),

    we will stop to issue a Profits Tax Return (BIR52) in the name of the partnership as from the year after the year of change.

 
4. The profits for the year of change (the year of admission of a partner or retirement of all other partners) should not be reported in Part 5 of your BIR60.
 
5. The profits for the year of change (whole year) should be reported in BIR52 issued in the name of the partnership business.

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Commencement / Cessation of Business 

1. Commencement of Business during the year 2013/14
 
  • If you closed your first accounts after 31 March 2014, probably there would be no assessable profits for the year of assessment 2013/14.
  Example:

You commenced business on 1 October 2013 and your first account will be closed on 30 June 2014.

No accounts will be prepared during the year ended 31 March 2014 and there will be no assessable profits for the year of assessment 2013/14.

 
 
  • However, if you closed your first accounts on or before 31 March 2014 and you have assessable profits, you will have to pay Profits Tax or Provisional Profits Tax on those assessable profits. Further, you have to consider if you need to report for chargeability. See Notification of Chargeability for details.
 
2. Cessation of business during the year 2013/14
 
  • You should notify us in writing of the cessation of your business within 1 month.
  Example:

Your business ceased on 20 April 2014.

You should inform us on or before 19 May 2014.

 
 
  • You should prepare a set of accounts from the last accounting date to the date of cessation and declare the assessable profits/(adjusted losses) in the tax return for 2013/14.
  Example:

Your last accounting was prepared up to 31 December 2012 and your business ceased on 28 February 2014.

You should prepare cessation accounts covering the period from 1 January 2013 to 28 February 2014, declare the assessable profits/(adjusted losses) in the tax return for 2013/14 and retain the business records for at least 7 years.

 
 
  • You should submit IR56F 1 month prior to the cessation of employment of your employees. See Employers for details.

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Deceased / Bankruptcy Cases 

1. Deceased Cases
  Example: Peter, the proprietor has filed tax returns annually for many years. He died during the year 2013/14.
   
  • Peter's business should be regarded as ceased on the date of his death.

  • The executor should prepare accounts from the last accounting date up to date of death and declare the assessable profits/(adjusted losses) in the tax return for 2013/14.

  • The executor should retain the business records for at least 7 years.

  • Where there is a successor to the business, the successor will be treated as a new proprietor operating a new business by the same business name. The new proprietor must make a new business registration promptly.
 
2. Bankruptcy Cases
  Example: Mary, the proprietress went bankrupt during the year 2013/14.
   
  • Mary is still required to report the assessable profits/(adjusted losses) of her sole proprietorship business in her BIR60 until, if applicable, the business is ceased/sold.

 

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