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Income to be reported
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| (a) |
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Salaries Tax is charged on employment income arising in or derived from Hong Kong which includes income derived from services rendered in Hong Kong and remuneration paid to an employee under certain service company arrangements.
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| (b) |
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Complete the Name and Address of the non-Hong Kong company for those employees assigned or seconded to you and include the whole of income paid by the non-Hong Kong company in Income Details.
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| (c) |
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The gross income before any deductions rather than the net sum should be reported. For example, recoupment from employees in respect of expenses paid by you on their behalf; portions of income considered attributable to services rendered outside Hong Kong, etc. should be included in the gross income.
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| (d) |
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Contributions to Recognized Retirement Schemes by employer and employee
Report the GROSS income before deduction of contributions to recognized retirement schemes by employee in "Salary / Wages" of Income Details. Mandatory and voluntary contributions made by employer should NOT be reported. For example :-
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(i) |
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Monthly salary of employee = $20,000
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(ii) |
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Employer's and employee's respective monthly contribution to a recognized retirement scheme = $20,000 x 5% = $1,000
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(iii) |
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The net monthly sum received by employee = $20,000 - $1,000 = $19,000
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(iv) |
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The amount to be reported in "Salary / Wages" = $20,000 x 12 months = $240,000
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(v) |
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Employer's contributions of $12,000 (i.e.$1,000 x 12 months) should NOT be reported in Income Details.
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| (e) |
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Income received by owners and / or their spouses from their unincorporated businesses (such as sole proprietorship or partnership businesses) is not chargeable to Salaries Tax and thus should NOT be reported on the Form IR56B.
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| (f) |
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Income received by persons other than employees should not be reported on Form IR56B. Such payments should be reported on the Form IR56M. However, if the recipient is a corporation or non-local person, filing of Form IR56M is not required.
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Back Pay, Payment in Lieu of Notice, Terminal Awards or Gratuities
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| (a) |
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The amount to be reported here refers to the following sums accrued or paid during the period from 1 April 2017 to 31 March 2018 :-
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(i) |
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a lump sum payment or gratuity paid upon retirement or termination of any office or employment or any contract of employment;
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(ii) |
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payment in lieu of notice, whether paid under the term of an employment contract or the Employment Ordinance; and
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(iii) |
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deferred pay or arrears of pay resulting from a salaries or wages award.
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| (b) |
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However, severance payment or long service payment made in accordance with the Employment Ordinance should not be included. For example :-
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(i) |
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An employee working for 8 years with monthly salary of $12,000 terminated the employment
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(ii) |
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Retirement scheme benefits (that part attributable to employer's contributions) or contract gratuity = $50,000
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(iii) |
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Amount of severance payment actually made by employer = $96,000
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(iv) |
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The excess amount made to be reported
= $82,000 (i.e. $96,000 - $14,000*)
*Amount of severance payment required to be made under the Employment
Ordinance = ($12,000 x 2/3 x 8) - $50,000
= $14,000
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(Note : |
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If an employee ceased to be employed during the year, Form IR56B should not be completed. Instead, Form IR56F should be completed and filed for the employee not later than 1 month before the date of cessation. You may file Form IR56F electronically using GovHK (www.gov.hk/etax), download Form IR56F at www.ird.gov.hk or obtain it from the 'Fax-A-Form' Service at 2598 6001 (select the language and press keys (3)(2)(3)).)
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Certain Payments from Retirement Schemes
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| (a) |
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Occupational Retirement Scheme
The following payments from occupational retirement scheme should be reported :-
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(i) |
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Unrecognized scheme : so much of any amount received as is attributable to the employer's contributions.
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(ii) |
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Recognized scheme [ORSO scheme]: so much of any amount received by reason other than termination of service, death, incapacity, terminal illness or retirement as is attributable to the employer's contributions or in case of termination of service, so much of any excess of the amount received over the proportionate benefit as defined in section 8(4) and (5) of the Inland Revenue Ordinance which is attributable to the employer's contributions.
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(iii) |
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Any payment received pursuant to a judgment given under section 57(3)(b) of the Occupational Retirement Schemes Ordinance that is attributable to the employer's contributions. The aforesaid payment is awarded by the court in respect of the shortfall between the employee's vested benefits and the amount received by him / her upon the winding up of the scheme.
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| (b) |
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Mandatory Provident Fund Scheme (MPF Scheme)
The following payments from MPF Scheme should be reported :-
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(i) |
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so much of any amount received by reason other than termination of service, death, incapacity, terminal illness or retirement as is attributable to the employer's voluntary contributions; or
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(ii) |
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in case of termination of service, so much of any excess of the amount received or taken to have been received #over the proportionate benefit as defined in section 8(4) and (5) of the Inland Revenue Ordinance which is attributable to the employer's voluntary contributions.
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# |
Upon termination of service, if the employee chooses to retain his accrued benefits as is attributable to the employer's voluntary contributions within the MPF Scheme or transfer them to another MPF Scheme, section 8(9) of the Inland Revenue Ordinance deems the employee to have received the accrued benefits at the date of termination of service. Accordingly the proportionate benefit rule needs to be considered and the excess amount should be reported.
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Accrued benefit under the scheme* x
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completed months of service
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120
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* For a MPF Scheme, the accrued benefit is equal to the employer's voluntary contributions and the investment return attributable to the employer's voluntary contributions. For an ORSO Scheme, the accrued benefit is equal to the employer's contributions and the investment return attributable to the employer's contributions. .
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For example, where:-
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- the accrued benefit received under an ORSO Scheme or a MPF Scheme is $100,000
- the number of completed months of service is 72
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The proportionate benefit would be-
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$100,000 x 72/120 = $60,000
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Accordingly, the amount to be reported would be -
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Amount received - Proportionate Benefit
= $100,000 - $60,000 = $40,000
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Gain realized under Share Option Scheme
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| (a) |
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If, during the year from 1 April 2017 to 31 March 2018, an employee or a director exercised, assigned or released any share option granted by the employer or by any other corporation in respect of his / her employment with or office in the employer, any resulting gain calculated in accordance with section 9(4) of the Inland Revenue Ordinance ("share option gain") should be reported here.
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| (b) |
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Any share option gain realized by a former employee or a former director during the year from 1 April 2017 to 31 March 2018 should also be reported here. If there was only one exercise, assignment or release transaction, the date of transaction should be shown as both the start date and the end date in the Period of Employment. If there were more than one transaction, the date of the first transaction should be shown as the start date and the date of the last transaction should be shown as the end date in the Period of Employment. A list should be provided, containing the following information in respect of each such former employee or former director :-
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(i) |
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name and HKIC no. / passport no.; and
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(ii) |
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the sheet number of Form IR56B.
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| (c) |
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If an employee or a director was granted a share option by the employer or by any other corporation in respect of his / her employment with or office in the employer during the year from 1 April 2017 to 31 March 2018, a list should be provided, containing the following information in respect of each such employee or director :-
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(i) |
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name and HKIC no. / passport no.;
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(ii) |
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name of the corporation in respect of which the option was granted; and
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(iii) |
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the number of shares subject to the option.
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Any other Rewards, Allowances or Perquisites
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The amount to be reported here should include any :-
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| (a) |
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perquisites in cash or of such a nature that either they may be converted into cash or are money's worth. Examples are motor car as a gift, award of shares, etc.;
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| (b) |
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cash allowances for food, travelling, servants, housing, cost of living, etc.;
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| (c) |
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"Dim Yung" commission;
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| (d) |
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payment or reimbursement by the employer of personal expenses contracted and incurred by the employee;
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| (e) |
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tips, including sums known by the employer to have been received by the employee from other persons; and
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| (f) |
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amount paid by the employer for holiday journey benefits enjoyed by the employee or his family members.
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