Completion of Tax Return - Individuals

Upon receipt of the Tax Return, you are required to complete and send it back to the Inland Revenue Department within the time limit specified in the return so that the Department can assess whether or not you are liable to tax for that year of assessment. The Department may issue a Tax Return - Individuals to you in the following situations:

If you have no salaries tax liability after deducting allowances and deductions, or the tax reduction, and your case does not involve tax refund of previously paid provisional salaries tax for the relevant year, no notice of salaries tax assessment will be issued to you. If necessary, you may request the Department for a written confirmation of your salaries tax position and tax computation.

If, after adjustment of your assessable income, there is still no salaries tax payable or no change in salaries tax liability where no refund of tax is involved, no notice will be generated to you. If necessary, you may request the Department for a written confirmation of your salaries tax position and tax computation.

If you claim exemption of salaries income under section 8(1A)(c) of the Inland Revenue Ordinance or relief under Double Taxation Arrangements between Hong Kong and other jurisdictions, you should submit the supporting documents with the return (Please refer to Question 21). However, please do not submit any documentary evidence in support of other deduction claims. They should be retained for a period of 6 years after the expiration of the relevant year of assessment. You should be able to present them to the Assessor for verification when required.

Salaries Tax is assessed on the basis of actual income of the year of assessment (i.e. 1 April to 31 March of the following year). Since you had settled your tax liabilities in respect of the income for the period 1 April 2023 to 31 July 2023 before you departed Hong Kong on 1 August 2023 you will only be required to inform the Assessor in writing within 4 months after the end of the year of assessment (i.e. before 31 July 2024), of details of your employment income for the period 16 October 2023 to 31 March 2024, including the name of the employer, the capacity employed, the employment period and the amount of income. Upon receipt of this information, the Assessor will issue another Tax Return - Individuals for 2023/24 for you to report your income after you returned to Hong Kong.

If you filed your tax return by eTAX, you can correct the errors / omissions via "Contact Us" Section after you have logged in your eTAX Account. For details, please see Amendment or Supplement to Return already submitted through the Internet.

If you wish to amend the information in a paper tax return already submitted, you have to write to the Assessor. Please furnish the amended information according to the required format of the tax return; or, you may use the IR Forms for making the relevant claims. The following table illustrates the amended information to be furnished / the appropriate IR Form to be completed:

If you wish to dispute the assessment, you must lodge a notice of objection in writing stating precisely the grounds of objection within one month after the issue date of the notice of assessment.

If the incorrectness is due to errors or omissions in the return already submitted, and you wish to amend the information in the tax return, you have to write to the Assessor. The following table illustrates the amended information to be furnished / the appropriate IR Form to be completed:

Notes :

• You may obtain the relevant forms through our "Fax-A-Form Service" by dialing 2598 6001. Alternatively, you may download them under "Public Forms and Pamphlets" in the IRD Web site, www.ird.gov.hk.
• You have to quote your name, file reference number and the relevant year of assessment in all correspondence to the IRD.

If your business is a sole-proprietorship business or partnership business, salary paid to you should be included as part of your business profits and is chargeable to "Profits Tax" and not "Salaries Tax". For sole-proprietorship business, the salary paid should be declared as part of the business profits in item (7) [Assessable Profit] in Part 5 [Profits Tax] of the Tax Return - Individuals (please refer to the answer (ii) for Question 24) and should not be reported again under Part 4 [Salaries Tax] of the Tax Return. As for partnership business, the salary paid should be declared as part of the business profits and reported in Profits Tax Return (BIR52) for that business and should not be reported again under Part 4 [Salaries Tax] of the Tax Return - Individuals.

Note :
Do not file Employer´s Return of Remuneration and Pensions (IR56B) in respect of the amount of salaries drawn by you and / or your spouse from your sole-proprietorship / partnership business.

Whether an income should be assessed to "Salaries Tax" or "Profits Tax" depends on its nature. If an employer-employee relationship exists between the payer and the taxpayer, the income will be regarded as salary income and should be reported by the taxpayer in Part 4 (Salaries Tax) of the Tax Return - Individuals. The fact that you were accepted as a self-employed person for the purposes of Mandatory Provident Fund contributions will not alter the nature of your income. The Inland Revenue Department will consider the facts of the case and decide whether you should pay "Profits Tax" or "Salaries Tax".

If you are the sole owner of the property, please give details of the rent and other particulars in Part 3 [Property Tax] of the Tax Return - Individuals.

If you only own part of the property, please do not report the rental income in Part 3 of your tax return. This is because the rent received from a jointly owned or co-owned property should be reported separately in a Property Tax Return (BIR57). (Please refer to Question 33 for "Personal Assessment" and "Interest Deductions")

[Example]
In year of assessment 2023/24, Mr Lee had earned rental income from three properties, one of which was jointly owned or co-owned with another person. The particulars of these properties are as follows :-

Mr. Lee should not report the rental income from the jointly owned or co-owned property (i.e. Property 3). If Mr. Lee has not yet received his property tax return (BIR57), he should notify the department in writing.

You do not have to pay Property Tax if your property was vacant or occupied as your residence for the full year. There is no need for you to report such property in Part 3 of your tax return. However, you still have to complete Part 3 as follows :-

(a)	If you did not have any other solely-owned property which was let during the year, please put a"" in the box against "No" in Part 3:
(b)	If you had other solely-owned properties which were let during the year, please put a "" in the box against "Yes" in Part 3, and state full details of the solely-owned properties which were let (please refer to the example in Question 11).
	Note:	You should put down the total number of properties let in Box no. 8. Please do not include in this number the properties that were vacant or occupied as your residence for the full year.

Rates paid on properties that were vacant or wholly used as your residence are not deductible. Please do not include such in item (4) of Part 3 (or Box no. 9).

Thus, the management fees, government rent and decoration expenses incurred by you are not deductible and they should not be included in Box no. 9 of Part 3 of the Tax Return - Individuals.

You should add up all of these income and fill in Part 4.1 of your tax return by entering the total amount in item (1). You should also fill in Box no. 29 the grand total of all income from all of your employers (see example below). Besides, you should report the total amount of commission income in Box no. 32.

How to complete

As you had exercised the right to acquire shares on 1 August 2023, you must report the relevant gain in the Tax Return - Individuals for the year of assessment 2023/24, and whether the shares have been sold is not a relevant consideration. For tax purposes, the relevant gain is to be quantified and taxed as follows:

open market value of shares at time of exercise
Less : amount of consideration given for the shares

Sums paid to you as severance payments or long service payments strictly in accordance with the provisions of the Employment Ordinance are not assessable to salaries tax. The amount not assessable to salaries tax should be computed after the deduction of :

You need not report the sums computed as above in your tax return. However, you have to report sums that were paid in excess of your statutory entitlement. If you are not sure whether or not the long service or severance payment was made under the Employment Ordinace, you should report the total amount received by you and also supply full details.

Payment in lieu of notice accrued to you up to 31 March 2012 is not assessable to salaries tax. From 1 April 2012 and onwards, payment in lieu of notice, whether paid under an express or implied term of an employment contract (e.g. section 7 of the Employment Ordinance) will be assessed to salaries tax.

Any sum received by way of commutation of pension under a ROR scheme upon retirement is not taxable and you are not required to report the sum in your tax return. However, the exemption does not apply to monthly pension which is fully taxable and should be reported in your tax return.

Any sum received by way of commutation of pension under the Pensions Ordinance, Pension Benefits Ordinance and Pension Benefits (Judicial Officers) Ordinance is not taxable and you are not required to report the sum in the tax return. However, the exemption does not apply to monthly pension which is fully taxable. You should report the monthly pension received in your tax return.

You must report this lump sum gratuity payment in this year´s tax return. Please include the amount of contract gratuity in "Total amount" of item (1), Part 4.1 of the tax return. You may apply to have the lump sum related back to the period in respect of which the payment was made.

Contract gratuity may be related back to relevant years as follows:

How to complete

Section 2 of Appendix to BIR60 should be completed as follows:

Please refer to Answer 4 of the Frequently Asked Questions on Application for Holdover of Provisional Tax.

If your employer is a Hong Kong company but you only rendered services in Hong Kong during visits not exceeding a total of 60 days during the year of assessment, your salaries income for that year will be wholly exempt from tax. However, if you were present in Hong Kong for more than 60 days and had rendered services in Hong Kong during the relevant year of assessment, your income is wholly taxable. If you have paid Individual Income Tax in the Mainland on the income derived from services rendered in Mainland, you can claim relief by way of tax credit in respect of tax paid in Mainland under section 50 of the Inland Revenue Ordinance. 

If you wish to claim the above relief, you are required to put a "" in Box no. 6 of Part 2, then enter the gross amount of your income in Box no. 29 of Part 4.1 of the Tax Return - Individuals. Do not forget to provide details and supporting evidence (such as the tax receipts issued by the Mainland tax authorities, and detailed computation of amounts for which relief is sought) in Section 3 of the Appendix of the Tax Return - Individuals.

The "Total value of ALL places of residence provided" is the "rental value" less the rent, if any, suffered by you. The "rental value" is a certain percentage of the total income from the employer or associated corporation less outgoings and expenses (excluding charitable donations and self-education expenses). For a flat, that percentage is 10%. For accommodation in a hotel, hostel or boarding house, it is 8% for two rooms and 4% for one room. If this "rental value" is greater than the rateable value of the accommodation provided, you may elect to substitute it by the rateable value. If you share a flat with other employees, the rental value will be calculated as 4% if one room is provided to you and 8% for two.

If under the tenancy agreement you are responsible for the payment of rates and management fees, and your employer has accepted these as part of the costs of providing the accommodation for the purpose of making refund of rent to you, you may also include such rates and management fees in the column for "Rent paid by ME to landlord".

[Example]

Mr Wong´s income from Company A -- $600,000

Rent paid by him to landlord -- $300,000

Rent refunded to him by employer -- $288,000

Total value of ALL places of residence provided (Box no. 36)

=$600,000 x 10% - $(300,000 - 288,000)

=$48,000

How to complete

Deduction for SEE can be claimed if it is paid for a prescribed course of education. You are required to enter the amount of expenses paid during the relevant year of assessment in Box no. 38 of item (2), Part 4.3 of the Tax Return - Individuals.

However, if the expenses are reimbursed or reimbursable by your employer or other persons (such as the Government), they are not deductible and should not be claimed.

You need not attach any supporting documents to your completed tax return. You should retain them for future inspection, upon request by the Department. (Please refer to Question 5)

Cessation of business must be reported in writing to the Business Registration Office. To do so you may complete Form IRC3113 obtainable from the Business Registration Office. If you have a fax machine, you may dial 2598 6001 for our Fax-A-Form Service. You may also download the form under "Public Forms and Pamphlets" in the IRD Website, www.ird.gov.hk.

Even though there was no business activity, you still have to complete the business name and business registration number of the business in Part 5 and enter "0" for items (3) to (9) in this year's tax return. After you have cancelled the business registration of your business, you need not report it in your tax returns for the years following.

The point to remember is that you only need to furnish information in Part 5 of the Tax Return - Individuals in respect of businesses which were operated as sole proprietorships throughout the relevant year of assessment.

For a business that was partly operated as a sole-proprietorship and partly operated as a partnership during the year, the profits should be reported on a Profits Tax Return (BIR52). You are not required to report such a business in the Tax Return - Individuals.

Yes.

As the gross income of your sole-proprietorship business did not exceed $2,000,000, you are not required to submit the Balance Sheet, the Profits and Loss Accounts and the supporting schedules with your tax return.

However, according to Section 51C of the Inland Revenue Ordinance, any person carrying on a business in Hong Kong must keep sufficient business records of income, expenditure, assets and liabilities, in English or in Chinese, to enable his/her assessable profits to be readily ascertained. Records relating to any business transaction must be retained for at least 7 years. This period of 7 years should be counted from the date of completion of the transaction.

Profits from sole proprietorship/partnership businesses are taxed at the standard rate (15% for year of assessment 2023/24) under "Profits Tax". However, if you are eligible to elect "Personal Assessment", by doing so you may claim the following deductions and the tax on your income will be computed at the progressive rates applicable to "Salaries Tax":

If you are married and your spouse has assessable income, you can elect for "Personal Assessment" separately from your spouse or jointly with your spouse in Part 7 of the tax return. If you have elected "Personal Assessment" jointly with your spouse, the election must be made by both of you in Part 7 of the tax returns and each of you must sign in Part 12 of the other´s Tax Return - Individuals to confirm the election. Your total income (including salaries, rental income and business profits), net of the appropriate deductions, will be aggregated with that of your spouse to arrive at the joint total income of the couple for the purpose of computing your tax liabilities under "Personal Assessment". Normally, the tax payable on the joint assessment will be proportionately allocated to you and your spouse on the basis of your respective reduced total incomes. Notices of assessment will be issued to you and your spouse separately.

It all depends on the type of properties (solely-owned or jointly owned or co-owned) and the usage (let, vacant or used as residence).

For solely-owned properties, details of rent should be provided in Part 3 of your tax return. Rental income from jointly owned or co-owned properties should not be reported in the Tax Return - Individuals. (Please refer to Question 11)

For properties that were vacant or occupied by you as residence for the full year, you need not report such properties in Part 3 of your tax return. (Please refer to Question 12)

If you wish to claim interest deduction, you should complete Part 8 of your tax return. However, interest paid for vacant property is non-deductible. (Please refer to Question 33)

The table below summarizes those parts of the Tax Return - Individuals that should be completed under different scenarios:

The amount of Home Loan Interest paid by each of you is computed according to your respective share of ownership in the dwelling. In the case of a joint tenancy, it is regarded as in equal shares.

If your spouse has no income chargeable to tax for the relevant year of assessment, he /she can nominate you to claim deduction in respect of the "Home Loan Interest" paid by him /her. To do so, please insert "" in item (2)(a) under Part 8.4 (i.e. Box no. 72, 86 or 100). You should also complete Part 11.1 and invite your spouse to sign the declaration in Part 12 to indicate his/her agreement. Do not forget to complete the relevant boxes in Part 8 of your Tax Return - Individuals. (Please refer to Example 2 in Question 33) Your spouse would then be regarded as having been allowed the Home Loan Interest deduction for a year of assessment.

If your spouse has income chargeable to tax, nomination is not permitted under the law. He/she has to claim the deduction in his/her own Tax Return. However, you may consider election for "Joint Assessment" or "Personal Assessment" jointly with your spouse, so as to claim deduction of the full amount of Home Loan Interest paid. (Please refer to Question 32)

Since you own the dwelling as one of the joint owners or tenants in common, the amount of interest deductible is restricted to that portion of the total interest proportional to the number of joint tenants/share of your ownership. The amount allowable for deduction should not exceed the ceiling prescribed in the Inland Revenue Ordinance as proportionately reduced.

You should complete Part 8.1, 8.2 and 8.4. In Part 8.4, you should fill in your share of interest as mentioned above.

No.

Your spouse has to claim deduction for the "Home Loan Interest" in his/her own Tax Return. You may consider election for "Joint Assessment" or "Personal Assessment" jointly with your spouse under which you can claim the full amount of the relevant "Home Loan Interest" paid by you and your spouse.

However, any excess could not be carried forward to the following year.

[Example]
Year of assessment 2023/24:
Husband´s salary $500,000, Wife´s salary $150,000, Basic Allowance $132,000 each, Wife paid Home Loan Interest $80,000 for a property solely owned by her.

Under Joint Assessment:
The interest paid by the wife will be deductible from their aggregate assessable income. In other words, the whole amount of $80,000 can be deducted in this example.

The aggregate Net Chargeable Income
= $500,000 + $150,000 - $264,000 - $80,000
= $306,000

Salaries Tax payable after the 100% tax reduction (capped at $3,000)* = $31,020

For properties that were used as own residence or for letting purpose, no matter solely-owned or jointly owned or co-owned by you, you may claim interest deduction under "Salaries Tax" or "Personal Assessment" by completing Part 8 of the Tax Return.

Firstly, you have to provide details of the properties in Part 8.1 and 8.2. Secondly, depending on the usage of the properties, you have to complete Part 8.3 or 8.4. If a re-mortgaged loan is involved, you must also complete Section 10 of the Appendix.

[Example]
Two examples of jointly owned or co-owned properties (year of assessment 2023/24):-

(Home Loan Interest will be apportioned according to the share of ownership, maximum amount allowable $100,000)

$100,000 x 50% = $50,000

How to Complete

 

Whether you may claim interest deductions in the Tax Return depends on the usage of your property and the purpose for which the loan was borrowed:

If you re-mortgaged the property before the original mortgaged loan was fully repaid and you used the money borrowed under the re-mortgaged loan to repay the original loan (e.g., you re-mortgaged in order to enjoy a lower rate of interest offered by another lending institution), the Assessor must be informed of the amount of the re-mortgaged loan as well as the balance of the original loan that was repaid. You will not get full deduction of the interest paid under the re-mortgaged loan, if only part of it was applied for repayment of the original loan.

For example, you still owed Bank A $1,000,000 and you obtained a re-mortgaged loan of $1,500,000 from Bank B. Interest will be prorated on the basis of 1/1.5. In other words, only 2/3 of the interest paid by you to Bank B will be considered for deduction. If the re-mortgaged loan was obtained after the initial loan had been fully repaid, the whole of the interest paid to Bank B is non-deductible.

If you wish to claim interest deductions for your re-mortgaged loan, you have to furnish full details in respect of your re-mortgaged loan and the previous mortgaged loan in Section 10 of the Appendix.

[Example]
A few years ago Mr. Lee obtained a loan from Bank A to purchase a property for letting. On 1.10.2023, that property was re-mortgaged to Bank B for a loan of $1,500,000. On the same day the loan from Bank A was redeemed and the amount of principal redeemed was $1,000,000. Mr. A incurred the following interest payments for the year of assessment 2023/24:-

Computation of deductible interests
 

The total deductible amount is $(58,000 + 40,000) =    $98,000.

This amount should be entered in Part 8.3 (If the property concerned was used as residence and "Home Loan Interest" Deduction is claimed, the amount should be entered in Part 8.4).

Part 8 of the Tax Return and Section 10 of the Appendix should be completed as follows: