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6 Common “Tax” Questions Answered for Office worker!

Facing tax problems? Friends who have just entered the workplace are most confused when they file their taxes in May when this “green bomb” come? 

Don’t know what to do when filing a tax return(also known as tax declaration form)? What are the serious consequences of underreporting information?

To summarize the frequently asked questions about tax filing, here are a few tips for tax filing to help taxpayers who don’t know where to start.

Tax filing for the first time?

Simply, as long as it is an employment produced in Hong Kong, its salaries, commissions, bonuses, etc. must be taxed after deduction of tax allowances.

If it is the first time to file a tax return, the Hong Kong Inland Revenue Department (IRD) will need to open a file for you before sending the tax return. And within 5 months after the employer completes the tax return, the employee will generally receive the tax return.

Once the tax return is not received, the tax return shall be requested to the IRD within 4 months of the end of the tax year. Regardless of the written or fax format, it must list: your  name, Hong Kong ID card number, mailing address, day contact telephone number and other related information.

How much income is taxable?

From April 1st to March 31st of the following year, salaries tax is calculated according to two methods, the lower of which is the actual taxable amount:

The actual amount of taxable income:

Total Income – Total Deductions – Total Allowance

Net income:

Total Income – Total Deduction

In short, as long as the annual salary income does not exceed the deduction and allowance – $132,000, there is no need to pay taxes in Hong Kong. If this amount is exceeded, the IRD will issue a tax return to notify the tax amount.

Entity Tax Filing VS Online Tax Filing?

In case of entity method (completing the tax return), it must be completed and returned within 1 month of the date of issuance of the tax return. 

If you don’t know how to fill in the tax return, you can check with your tax consultant or refer to the “Guide to Individual Tax Return” of the Inland Revenue Department.

Remember to pay attention to the full amount of the stamps when sending the tax return back by mail, so as not to cause any trouble.

For online tax declaration, it can be made through the government’s “eTax” service. The time limit for online tax filing is one month longer than that of the entity form, and tax returns can be filed within 2 months of the date that tax return is issued.

After opening an account, you can change relevant information online at any time, and check the unpaid taxes and unsubmitted tax returns, which is very convenient.

What are the consequences of late Tax filing?

Inland Revenue Department will assess the tax based on the tax return, which will affect the total amount of deductions and tax exemptions in the future.

Therefore, late filing of the tax return will be fined $10,000 Hong Kong dollars, and even face the risk of prosecution.

Not only that, people who submit their tax returns late can only enjoy the “basic tax allowance”, that is, there will be no deductions or total tax exemptions, and more taxes will be paid.

What to do if the information is not reported?

In case of accidental omission of information, especially deductions and allowances, please file a claim with the IRD within the time limit.

For online tax file, please go to the “Supplementary Information” of the account to fill in the supplementary information; for entity tax file, you can fill in the relevant supplementary forms, which can be downloaded from the Inland Revenue Department website.

Apply for deferment of tax payment?

To postpone the payment of salaries tax due to reasons such as salary reduction, unemployment, retirement, etc., so that the income is 90% lower than the actual taxable income of the previous year…

All such reason may be accepted for the suspension of tax payment. Applicants must be sent to the IRD in the form of a letter within 28 days before the tax deadline.

The above information is for reference only. If you have any questions about tax, we welcome your inquiries.

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