How to fill in the “BIR60 Personal Tax Return” for a sole proprietorship? How to declare income in Part 5?

If the taxpayer owns a sole proprietorship, how should he complete the tax return for individuals (Form BIR60)? In particular, “Reported Income” in Part 5. As long as the taxpayer owns at least one business, you must declare your income in the department. The following will summarize the common terms used in them, with the explanations given on the website of the Inland Revenue Department, hoping to help you who do not know how to fill out tax returns.

Operating more than one sole proprietorship

If a taxpayer operates a sole proprietorship business, he/she can put a “tick” next to the “Yes” box on the second line of Part 5 on the Tax Return for Individuals (Form BIR60) and complete the rest of the items in this Part.

If the taxpayer has more than one sole proprietorship, it is necessary to provide details in the place provided in the form and provide details of other sole proprietorships in the same format on a separate sheet. If the business income exceeds HK$2,000,000, separate accounts and calculations for the business are required.

How to declare income?

In the BIR60 form, there are many terms that refer to some tax information. Taxpayers need to know the content before they can file an accurate tax return. The following are some common income terms and the explanations given by the Inland Revenue Department:

• “Gross income” represents all income, including income from the sale of capital, assets, and other non-taxable income whether or not derived from the principal business activity.

• “Turnover” refers to the taxpayer’s income from the business, and non-general income should not be included (eg income from the sale of capital assets).

• “Gross Profit/Gross Loss” refers to the difference between the turnover and the cost of goods sold. If the Namao does not have a profit and loss account for the sale of goods or commodities, this column should be filled with “0”.

• “Net profit/loss as shown in the accounts” refers to the difference between income and expenses.

• “Assessable Profit/Adjusted Loss” can be calculated on behalf of the “Profits Tax Calculation Table” provided by the government, and each sole proprietorship business should be calculated with one calculation table.

• For the “Approved Charitable Donations” column, simply enter the total amount of approved charitable donations made for the year of assessment.

• “For mandatory contributions to Mandatory Provident Fund Schemes (MPF), please fill in the corresponding contributions paid by the taxpayer as a self-employed person, with a maximum deductible of HK$18,000 (comparable to contributions to recognized retirement schemes) Shared deduction cap).

• “Two-tiered Profits Tax Rate”, if the business is taxable at two-tiered rates and does not have any related entities, put a “tick” in the “Yes” box; if the business has other related entities but no related entities Any related entity that elects a two-tier tax rate must also complete Part 5 of the Appendix.

• “Transactions on behalf of/with non-resident persons in Hong Kong”, if the taxpayer transacted with non-resident persons in Hong Kong during the year of assessment, please tick the “Yes” box and complete the Appendix to BIR 60 of part 6.

• “Research and Development Expenses/Environmental Protection Facilities Expenses/Intellectual Property Expenses”, if the business has claimed deductions for the relevant expenses, tick the “Yes” box and complete Part 7 of the Appendix.

• “Inactive business”, if the taxpayer’s business has not been in operation for the entire year of assessment, it is still necessary to complete items (1) and (2) of Part 5 of Form BIR60, and items (3) to (3) to Fill in “0” for the item (9).

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