This article will illustrate the tax responsibilities of employers:
Example 1
On 3rd of April 2021, Company X employed a bookkeeper, Ms Mary CHAN.
1. For this new employee, if she is likely to be chargeable to Salaries Tax, Company X has the following obligations:
(a) Filing of IR56E
Company X should file ONE COPY of a completed IR56E or via Electronic Filing of Employer's Return by 3 July 2021.
(b) F iling of IR56B
Subsequently, on receipt of the annual Employer's Return for the relevant year of assessment in early April 2022, Company X should complete an IR56B, if Mary is on its payroll on 31 March 2022.
If, however, Company X is a new company and does not receive any Employer's Return for that year of assessment by mid April 2022, the Manager of the company should submit form IR6163 and ask for the issue of an Employer's Return for that year of assessment.
2. Company X should provide Mary with a copy of IR56E and IR56B.
3. If Mary's annual income does not exceed the basic allowance but she is married, and the income position of her husband is unknown to Company X, Company X should file IR56E and IR56B in the manner described above.
4. If Mary is single but employed as a part-time staff and Company X does not know whether she has other part-time or principal employment, Company X should file IR56E and IR56B in similar manner.
Example 2
On 5th July 2022, Mr. George LAU terminated his employment with Company Y.
1. Company Y must ask George to ascertain if he would leave Hong Kong after termination of the employment,
(a) If no, Company Y should file ONE COPY of completed IR56F or via Electronic Filing of Employer's Return on or before 5 June 2022.
(b) If yes, Company Y should file TWO COPIES of completed IR56G or via Electronic Filing of Employer's Return and withhold all moneys due to George.See Example 3 for details
2. Company Y should provide George with a copy of IR56F.
3. Please bear in mind that after filing IR56F, Company Y should NOT file any IR56B for that year of assessment for George again. Filing two IR56s in respect of the same income may give rise to charging of tax twice on that income.
Example 3
On 5th July 2022, Mr. Peter WONG terminated his employment with Company Z. Subsequently he left Hong Kong on 8 July 2022 to study in Canada.
1. Company Z should file a completed IR56G or via Electronic Filing of Employer's Return in duplicate for Peter on or before 8 June 2022.
2. Apart from filing IR56G, Company Z is also required to withhold all amounts due to be paid to Peter (including salaries, commission etc, money or money's worth included) from the date of filing the IR56G.
3. Company Z should provide Peter with a copy of IR56G.
4. Company Z should advise Peter to approach the IRD to make tax clearance prior to leaving Hong Kong.
5. On settlement of his taxes, the IRD will issue a " letter of release". Upon receipt of the release letter, Company Z may release the amounts withheld to Peter.
6. If Peter wants the IRD to issue a " letter of release" immediately, he should pay tax by means of cash, EPS or cashier order at Post Office payment counters at 1/F of Revenue Tower. Then he should take the receipt to IRD's Collection Office on the 7/F of the Revenue Tower to request for a " letter of release". Please note that IRD staff will normally take 30 to 40 minutes to prepare the " letter of release".
7. If Peter pays tax by cheque or mixed payments (e.g. cash and EPS), the " letter of release" will normally be sent by post 10 days after the receipt of cheque or mixed payments.
8. Even if Peter is exempt from tax, the IRD will still issue a letter of release upon completion of the tax clearance procedures.
9. If Peter fails to pay up his taxes, the IRD will issue a garnishee notice (IR113) to Company Z requiring the company to settle Peter's taxes from the money withheld. Company Z's compliance with the IR113 will constitute a valid defence at court against any claim for non-payment of salaries to Peter.
10. Please bear in mind that after filing IR56G, Company Z should NOT file any IR56B for that year of assessment for Peter again. Filing two IR56s in respect of the same income may give rise to charging of tax twice on that income.