Salaries tax is chargeable on most but not all of the income from employment, offices and pension arising in or derived from Hong Kong. Here you can learn more about the types of income that are chargeable and those that are non-chargeable.
1. Chargeable Income
You need to report the following income on your Tax Return – Individuals (BIR60).
Salaries, Wages and Director's fees
Any salary, wages or director’s fees you earn are chargeable to salaries tax, and the gross amounts before the deduction of your contributions to a recognised occupational retirement scheme or mandatory provident fund scheme should be reported.
2. Commissions, Bonuses, Leave Pay, End of Contract Gratuities and Payments In Lieu of Notice accrued on or after 1 April 2012.
As a general guide, most forms of income that your employer pays to you are taxable, regardless of when the payments are made (before, during or after a period of employment) and whether the amount was paid according to the terms of employment or in excess of them. Examples of assessable income include commission and rebates, bonuses, leave pay, end of contract gratuities and payments in lieu of notice accrued on or after 1 April 2012. Only a few types of payments are exempt. These include, but are not limited to, compensation for injuries and payments specifically exempted under the Inland Revenue Ordinance.
3. Allowances, Perquisites and Fringe Benefits
Any income that you have received from your employer as an allowance, perquisite or fringe benefit should be reported on your tax return. These forms of income include cash allowances, liability of employees discharged by employers, convertible benefits, education benefits and holiday journey benefits.
Holiday journey benefits are taxable. The benefits are to be assessed by reference to the amount paid by the employer for such benefits. More information is available through the following links.
4. Tips from Any Person
If you have received tips from any person because of your employment, you should report them on your tax return. Examples of tips include those paid by customers to waiters in restaurants and those paid by customers to tour guides.
5. Salaries Tax Paid by Your Employer
The amount, if any, paid by your employer to cover your tax obligations should be reported as assessable income.
6. Value of a Place of Residence
If your employer provides you with a place of residence, you must report it. The rental value of the residence will normally be calculated at 10% of your income from the employer after the deduction of outgoings and expenses (but not self-education expenses). More information is available through the following link.
7.Stock Awards and Share Options
You should report all stock awards granted to you and the gains realised by the exercise of, or assignment or release of share options obtained from holding an office or employment . More information on what you are required to report is available through the following links.
8.Back Pay, Gratuities, Deferred Pay and Pay in Arrears
Any income that you have received from your employer as back pay, gratuities, deferred pay and arrears of pay during the course of employment or upon or after cessation of employment are assessable and should be reported on your tax return.
9.Termination Payments and Retirement Benefits
Termination payments (e.g. salary for the last month of service, and payments in lieu of notice accrued on or after 1 April 2012 and payment in lieu of leave) as well as retirement benefits, including accrued benefits received from recognised occupational retirement schemes or receipt or deemed receipt from mandatory provident fund schemes, should be reported. More information on termination payments is available through the following links.
All pensions should be reported as assessable income.
11. More Information
12. Non-chargeable Income
You are not required to report the following income on your tax return.
Severance Payments and Long Service Payments
Severance payments and long service payments that are required to be paid under the Employment Ordinance are not assessable to salaries tax. However, any amount in excess of an employee’s entitlement under the Employment Ordinance is assessable to salaries tax and should be reported by you and your employer in your and the employer’s returns.
You need not report any fees that you receive from sitting on a jury in a Hong Kong court of law.