Tax Return – Individuals (BIR60)

If you receive Tax Return – Individuals (BIR60) from the Inland Revenue Department, you must complete, sign and file it in time even if you do not have any income to report.

If you are married for all or part of the year and have elected joint assessment or personal assessment or have been nominated by your spouse to claim home loan interest deduction, your BIR60 should also be signed by your spouse.

Property Tax Return (BIR57 or BIR58)

You have to report income from property jointly owned or co-owned by yourself with other person(s) (including corporation and body of persons) in the Property Tax Return (BIR57).

To report income from property held by corporations or bodies of persons, you have to complete Property Tax Return (BIR58).

Profits Tax Return (BIR51 or BIR52 or BIR54)

If you carry on a trade, profession or business in the form of a corporation, partnership business or if a non-resident person is chargeable to profits tax in your name, you must complete all items in the following profits tax returns (if applicable) to report the profits tax liability:

• Profits Tax Return - Corporations (BIR51)
• Profits Tax Return - Persons Other Than Corporations (BIR52)
• Profits Tax Return - In Respect Of Non-Resident Persons (BIR54)

Failure to Submit Tax Return

In all cases if you cannot lodge a tax return by the due date or the extended due date, estimated assessment will be issued and you may be required to pay more tax. You may also be subject to penalty proceedings which include payment of penalty, or even prosecuted.

Keeping payroll records

1. Your tax obligations commence when you hire the first employee
2. On hiring the employee, you have to maintain a record of that person's :
   (a) personal particulars (name, address, identity card or passport number with country of issue, marital status)
   (b) nature of employment (full time or part-time)
   (c) capacity in which employed (e.g. sales manager, salesman, worker, in-house lawyer, accountant, director)
   (d) amount of cash remuneration (regardless of denomination in domestic or foreign currency and remuneration paid overseas)
   (e) non-cash and fringe benefits (such as quarters, holiday journey benefits, share award, share option)
   (f)  employer's and employee's contributions to the Mandatory Provident Fund (MPF) or its equivalent
   (g) employment contract and amendments to terms of employment
   (h) period of employment
3. You have to inform the Inland Revenue Department ("IRD") the following:
   (a) any change in the employee's personal particulars (such as change in residential and postal address, change in marital status)
   (b) any change in the employee's terms of employment (such as a change from full time to part-time)
   (c) the Hong Kong Identity Card No. of the employee
4. Business owners are required to keep business accounting records, including payroll records, for at least 7 years.

Reporting remuneration paid to an employee

According to the Hong Kong Inland Revenue Ordinance Section 51C:
• Every person carrying on a trade, profession or business in Hong Kong, to be his income and expenditure to Chinese or English keep sufficient records, so that it is easy to determine the assessable profits;
• such records shall be retained for at least seven years;
• without reasonable excuse Failure to observe the provisions of the Inland Revenue Ordinance, a maximum fine of $ 100,000
• For details of what and how records should be kept, see Guide to Keeping Business Records.

(Source : Information Services Department)

Taxpayer jailed for falsely claiming deduction of approved charitable donations

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     A taxpayer was convicted on July 13 at Fanling Magistrates' Courts of making false statements in six tax returns wilfully with intent to evade salaries tax. She was sentenced today (July 27) to six weeks' imprisonment and fined $157,474, equivalent to 200 per cent of the tax evaded, after being remanded for 14 days.

     The defendant, aged 51, is a former regional sales director of a property agency company in Hong Kong. She pleaded guilty to six counts of evading tax, wilfully with intent, by making false statements in connection with claims for deduction of approved charitable donations in her tax returns for the years of assessment 2005-06 to 2010-11, contrary to section 82(1)(c) of the Inland Revenue Ordinance (Cap. 112) (IRO).
     
     The court heard that the defendant claimed in her tax returns deductions of approved charitable donations totalling $469,400 for the years of assessment 2005-06 to 2010-11. When being investigated by the Inland Revenue Department (IRD), the defendant claimed to have made donations mainly to a particular charity, but she failed to produce any evidence in support of her claims for deduction of approved charitable donations. After making enquiries, the IRD found that that charity received two donations in the amounts of $20 and $2,000 from donors whose names were the same as the defendant's during the years of assessment 2005-06 and 2010-11. After excluding the said two donations, the total amount of false deduction claims for the six years was $467,380 and the total tax evaded was $78,737.

     The IRO provides that a donation of money to any charitable institution or trust of a public character which is exempt from tax under section 88 of the IRO or to the Government for charitable purposes is tax deductible. Documentary evidence in support of deduction claims should be retained for seven years (i.e. six years after the expiration of the relevant year of assessment). The IRD will conduct random checks on deduction claims. Taxpayers will be asked to produce supporting documents when their cases are selected for audit.

     A spokesman for the IRD reminded taxpayers that tax evasion is a criminal offence under the IRO. Upon conviction, the maximum penalty for each charge is three years' imprisonment and a fine of $50,000 plus a further fine of three times the amount of tax evaded.

(Source : Information Services Department)

Taxpayer jailed for falsely claiming expenses of self-education and approved charitable donations after review of sentence

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     With regard to a taxpayer convicted of evading salaries tax earlier, a review of her sentence was heard today (July 26) in Kwun Tong Magistrates' Courts. The defendant was sentenced to 21 days' imprisonment and fined $60,000 ($5,000 for each charge) plus a further fine of $132,852 (equivalent to 200 per cent of the tax evaded). The defendant had been remanded in custody for 21 days before sentence and hence she was released immediately.

      The defendant, aged 39, was convicted by the court on May 18 of 12 counts of evading tax, wilfully with intent, contrary to section 82(1)(c) of the Inland Revenue Ordinance (Cap. 112) (IRO). She was sentenced to six months' imprisonment, suspended for two years, and fined $60,000 ($5,000 for each charge). The Secretary for Justice subsequently made an application for a review of the sentence.

      The Inland Revenue Department (IRD) welcomes the verdict and reminds taxpayers that tax evasion is a criminal offence under the IRO. Upon conviction, the maximum penalty for each charge is three years' imprisonment and a fine of $50,000 plus a further fine of three times the amount of tax evaded.

      The court heard that the defendant claimed in her tax returns deduction of expenses of self-education at $40,000 for each of the years of assessment 2005-06 and 2006-07, and $60,000 for each of the years of assessment 2007-08 to 2010-11. The defendant's total deduction claim for expenses of self-education for the six years of assessment was $320,000. The defendant also claimed deduction of approved charitable donations totalling $58,000 for the years of assessment 2006-07 to 2011-12. The total of the two deduction claims amounted to $378,000.

      An investigation by the IRD revealed that the defendant failed to produce sufficient details or evidence in support of her deduction claims for expenses of self-education and approved charitable donations. The IRD subsequently found that the defendant had only made a donation of $200 to a charity during the year of assessment 2009-10. The total amount of the false deduction claims for the seven years was $377,800 and the total tax evaded was $66,426.

      The IRO provides that expenses of self-education paid for prescribed courses or examination fees paid to specified education providers or associations and a donation of money to any charitable institution or trust of a public character which is exempt from tax under section 88 of the IRO or to the Government for charitable purposes are tax deductible. Documentary evidence in support of deduction claims should be retained for seven years (i.e. six years after the expiration of the relevant year of assessment). The IRD will conduct random checks on deduction claims. Taxpayers will be asked to produce supporting documents when their cases are selected for audit.