Hong Kong tax rules are not very complicated. However, many people are confused when preparing their tax returns because there are not many guidelines around. In this series of articles, we will explain some key concepts and rules for Hong Kong taxes. In this part, we will focus on the salaries tax.
For Hong Kong salaries tax, you should report income arising in or derived from Hong Kong which is received and receivable during the year. Even if full or partial tax exemption is claimed or relating back of lump sum is applied, the gross amount should be declared in your tax return.
Income includes income from an office, employment (on a full-time, part-time or casual basis) or pension from a former employer. Award of shares and share option gain are chargeable income. For share option gain, the gain will be taxable when the option is exercised, assigned or released. Even if the option is exercised after you have left the employment, the gain is still taxable. Holiday journey benefits are taxable. The benefits are to be assessed by reference to the amount paid by the employer for such benefits.
A place of residence provided to you by your employer or its associated corporation is chargeable to tax based on the €rental value€. Rental value is calculated as a percentage of the total income from your employer and the associated corporation which provided the residence after deductions of the outgoings and expenses. If the place of residence is provided for part of the year, the amounts in the calculation should be for the period provided. You need to adjust the retable value proportionately if the place of residence was not provided for the full year and you have elected for ratable value.
For deductions, outgoings and expenses are limited to those wholly, exclusively and necessarily incurred in the production of your assessable income, not being expenses of a domestic or private nature and capital nature. Deductible education expenses include tuition and examination fees in connection with a prescribed course of education or fees of an examination set by specified education providers or trade, professional or business associations. Approved charitable donations must be in respect of those made to tax-exempt charities in Hong Kong or Government for charitable purposes and supported by receipts.
A married couple may elect to receive a joint assessment under Salaries Tax if they would pay less tax under a single assessment based on their combined income and allowances than under two separate assessments based on their respective individual incomes and allowances.
Above are some key concepts and rules related to Hong Kong's salaries tax. If you are still confused, you can consult Hong Kong Government's website, which has a lot of useful resources for tax. Also, you might want to consider hiring a professional to prepare your tax.
For Hong Kong salaries tax, you should report income arising in or derived from Hong Kong which is received and receivable during the year. Even if full or partial tax exemption is claimed or relating back of lump sum is applied, the gross amount should be declared in your tax return.
Income includes income from an office, employment (on a full-time, part-time or casual basis) or pension from a former employer. Award of shares and share option gain are chargeable income. For share option gain, the gain will be taxable when the option is exercised, assigned or released. Even if the option is exercised after you have left the employment, the gain is still taxable. Holiday journey benefits are taxable. The benefits are to be assessed by reference to the amount paid by the employer for such benefits.
A place of residence provided to you by your employer or its associated corporation is chargeable to tax based on the €rental value€. Rental value is calculated as a percentage of the total income from your employer and the associated corporation which provided the residence after deductions of the outgoings and expenses. If the place of residence is provided for part of the year, the amounts in the calculation should be for the period provided. You need to adjust the retable value proportionately if the place of residence was not provided for the full year and you have elected for ratable value.
For deductions, outgoings and expenses are limited to those wholly, exclusively and necessarily incurred in the production of your assessable income, not being expenses of a domestic or private nature and capital nature. Deductible education expenses include tuition and examination fees in connection with a prescribed course of education or fees of an examination set by specified education providers or trade, professional or business associations. Approved charitable donations must be in respect of those made to tax-exempt charities in Hong Kong or Government for charitable purposes and supported by receipts.
A married couple may elect to receive a joint assessment under Salaries Tax if they would pay less tax under a single assessment based on their combined income and allowances than under two separate assessments based on their respective individual incomes and allowances.
Above are some key concepts and rules related to Hong Kong's salaries tax. If you are still confused, you can consult Hong Kong Government's website, which has a lot of useful resources for tax. Also, you might want to consider hiring a professional to prepare your tax.
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