Guide for Employer’s Return in HK BIR56A and IR56B Forms

Guide for Employer’s Return in HK: BIR56A and IR56B Forms

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Taxation

The employer’s remuneration & pension return or simply known as the employer’s return is an annual form that lists all the salary and benefits received by your employees.

When handling a business in Hong Kong, you should go through the declaration of your employee’s pay with the Inland Revenue Department (IRD).

In this manner, managing the intricate tax aspects, such as remembering to address them every year, is an essential part of the business management. Errors in the way taxes are being handled may result in very expensive penalties from the IRD. If you want help to fill in your employer returns, you are undoubtedly at the right spot. Let’s begin.

What does the employer’s return form (IR56B) entail and include?

Every business owner in Hong Kong with salaried employees must complete this form. Below are the details required in IR56B:

  • Employee’s name and residential address
  • Type of employment (full-time or part-time)
  • Position or job title
  • Salary figure
  • Benefits provided
  • Duration of employment
  • Contributions to the Mandatory Provident Fund (MPF) by both employee and employer
  • Employment agreement

To ensure the accuracy of your employer’s returns, you must:

  1. Establish and maintain a payroll record for your employees, retaining these records for a minimum of 7 years.
  2. Report the earnings of your employees accurately.

If you need to update or modify your records, please notify the Hong Kong Inland Revenue Department. Additionally, you will need to submit the following forms:

  • BIR56A and IR56B: Employer’s Return
  • IR56E: Form completed for every new employee
  • IR56F: Form completed after termination of an employee or in the event of their death
  • IR56G: Form completed when an employee permanently leaves Hong Kong or departs for a significant period.

As the company director, you will also have to make sure you file a return for yourself.

Now, let’s take a deeper look into the different forms of poetry listed below.

Form BIR56A and Form IR56B

Employer Return Form BIR56A
Source: IRD
  • The IR56A form serves as the employer’s return of remuneration and pensions for the current fiscal year. It contains the following information:
  • Company name and address.
  • Name of the individual who prepared the return.
  • Total number of completed IR56 forms, with each employee requiring one form.
  • Details indicating whether the submitted forms were done so as hard copies, online submissions, or a combination of both.
Employer's return BIR56B
Source: IRD

IR56B is the document that covers payment and pensions for employees on an individual basis. It entails the details of an employee which include his/her personal information, position, salary, and benefits/compensation package.

The IR56B forms the cornerstone of employers’ contributions of remuneration and pensions for employees. It is a document that contains the employee’s personal details such as the name, designation, salary, package, and benefits.

A brief checklist of what to incorporate into Form IR56B:

In addition to the typical items such as bonuses, commissions, leave pay, and salary, you must include the following in your reporting:

  • Back pay.
  • Payment in lieu of notice.
  • Contract gratuities exceeding statutory entitlement as per the Hong Kong Employment Ordinance, such as lump sum termination payments.
  • Employer contributions to MPF/ORSO made voluntarily on termination of services by the employee.
  • Educational expenses or benefits provided by the company.
  • Gains from share options provided by the company.
  • Cash equivalents or convertible cash value of non-cash prerequisites, such as gifts.
  • Cash allowances in any form.
  • Company-paid medical insurance premiums.
  • Income or payments received by the employee from other parties during employment, such as tips.
  • Housing allowances.
  • Overseas income paid by the company.

What are the submission period and deadline for IR56B?

The submission period will be held from 1 April to 30 April.

In your notice, however, you must take into consideration that the deadline is one month after your company has received its BIR56A form. This is done on the first workday of April every year and the date on which it is printed is.

In such a case, if your first working day of the said month falls on the Friday of 2nd April, your deadline would be the following Tuesday of 3rd May.

If your company has no employees, has not ceased operations, or just started operation during the current assessment year, you need to fill out Form BIR56A and IR56B forms instead, and submit them on/before 30th April as well.

The IRD will release a BIR56A to companies, that are newly incorporated, within 3 to 6 months upon the submission of the initial audit.

How to request an extension for your deadline

For this reason, if on any chance, you are unsuccessful in submitting your employer’s Hong Kong return within the stipulated deadline, you can just write to the IRD requesting for an extension.

Please ensure to include the following details:

  • Employer’s file number
  • Company name
  • Fiscal year of the assessment concerned
  • Amount of additional time required for your deadline extension
  • Reason for applying for the extension
  • Evidence supporting your claims

What is the penalty for failing to meet the deadline of the employer’s return?

The IRD is very stringent with error-laden or late-filing returns. As it was mentioned earlier, you will be punished in case you fail to submit on time or if there are mistakes you will be penalized.

If you don’t submit your yearly IR56B, you shall be fined HKD 10,000.

How do I submit my employer’s return?

Before you start filing employer’s return, you have to make sure that all your employee and the payroll information for the current financial year is up to date and ready to file accurately.

Form submission formats:

  • BIR56A and IR56B in the hardcopy. It is possible to either download the forms from the IRD’s website or get them from Fax-A-Form Service which is also available please. The duly filled forms in typescript or its traditional way will need a valid postal address of the company’s director, secretary, manager or liquidator.
  • BIR56A in hardcopy & IR56B in soft copy. The IR56B form may be given to the sender in a storage device through digital transmission.
  • E-filing service. We advocate adopting this approach as it offers less stress. You can proceed with the online or mixed mode of filling your return at the ER e-filing portals.

Complying with the regulations and meeting the deadlines with a business on your shoulders can be a handful. You can now let us free you from the burden of company secretarial requirements completely.

Submit returns physically

Check the box “YES” or “NO” to indicate if there is an individual who is covered in the Note 1(a) of Notes and Instructions for Form BIR 56A.

If you fill in the box with “YES”, you have to indicate the number of the enclosed IR56B Forms.

  • For item (1), it is the count of the number of these forms submitted.
  • In item (2), fill in the number of IR56b records which were submitted through the storage media.
  • In point (3), state about the quantity of IR56B records transmitted to the e-Filing Services of Employer’s Return.

The Employer’s Return (BIR56A) must be signed by one of the following authorized individuals:

  • Proprietor (for a sole proprietorship business)
  • Precedent Partner (for a partnership business)
  • Company Secretary, Manager, Director, or Investment Manager (for open-ended fund companies)
  • Provisional Liquidator or Liquidator (for a corporation)
  • Principal Officer (for a body of persons)
  • Agent (for a non-resident person)

Submit returns online

To file your return using the internet, you will be required to have an account with the IRD which is the online services of eTAX. At present only an Authorized Signer can make an account on eTAX and supply the properly signed returns.

These people are authorized to sign the return: These people are authorized to sign the return:

  • A sole proprietor in a business.
  • A historical example of a successful business does not necessarily guarantee that yours will become one.
  • Chairperson, managing director, investment manager (for open-ended funds), manager, company secretary or a liquidator.
  • The designated spokesperson for a group of people.

Prepare the data for submission in the following formats:

  • Direct Keying: This method encompasses all types of employer’s returns and notifications.
  • IR56 Forms Preparation Tool: Utilize this tool for preparing the IR56B and IR56F forms.
  • IRD IR56B Software: This software facilitates the completion of the IR56B annual form along with the employer’s return submission.
  • Pre-approved Self-developed Software: Use this option for preparing the IR56B and IR56F forms, provided the software has been pre-approved.

Submit returns online without an authorized signer’s account

The use of this strategy will allow you to file and sign your forms IR56B or IR56F online without the need for an Authorised Signer to use his personal eTAX account.

Any employee of the company selected by the employer can upload the IR56B/IR56F files through e-Filing Services, an e-service facility. The creation tool can help you with the process of automation, it can hold up to 800 records of the IR56 forms easily.

Here’s the breakdown:

  • Using the IR56 Forms Preparation Tool: This method involves preparing the IR56B and IR56F forms.
  • Using IRD IR56B Software: This option entails completing the IR56B annual form.

Using pre-approved self-developed Software: With this approach, you can prepare the IR56B and IR56F forms, provided the software has been pre-approved.

Additional factors to consider

To add to that, in case you are the owner of the firm, you might be wondering what the procedure would be for filing your tax returns. Maybe you have workers who live out of the country, they do part-time jobs or freelance, employees who are terminating their contracts or are going out of Hong Kong permanently.

Here’s how to respond in each of the different scenarios.

Your own company director

In the event that you are the director of the company yourself, to ensure you have your own information and details of your remuneration package. You can do it via: i) regular salary payment or ii) director’s fees.

Remuneration is granted at the end of the financial year in accordance with the reviews conducted. More over, they will be in salaries tax.

Overseas employee

The Annual Income Return which includes both local and overseas employees with a total annual income that is equal to or higher than HKD$132,000 per year must be provided by you.

You can add by hand any additional information or details that you need in the remarks column on the Form IR56B, item 14.

Freelancers or part-timers

Even for the part-time staff and freelancers the process of filing the tax returns differs significantly from the procedure of your full-timers.

Fill up IR56B form for part timers while IR56M for freelancers.

Terminated employee

Apart from terminated employees, you are also obliged to remit termination payment and the return forms for these individuals. For the IR56F form, just submit it one month prior to the termination date.

Departing Hong Kong for good

If one of your employees is leaving Hong Kong for good, you would need to take these steps:

  • Discover the possible date they are leaving.
  • File for two copies of the IR56G form or one month before the expected departure via electronic filing file for only one copy.
  • Give the employee a disbursement of all their earnings, however, not until they provide us with the letter of release that is released by IRD and shows that they have settled all their liabilities as a taxpayer in Hong Kong.

How FastLane Group can help?

Being the owner of a business in Hong Kong can be a very complicated task. Whether its managing the company’s corporate governance documents, filing them within the given deadlines or being in compliance with government regulations are all something that you might face. The implementation itself might be a lengthy and tough process.

With our company’s secretary service you will be absolved of the administrative work and hassle. Do not know how to prepare your paper for the company’s return? The consultation is free, speak to our team today.

Seek expert assistance for filing your employer’s return in Hong Kong

Whether you have questions or need support, don’t hesitate to reach out to us. Filing an employer’s return can be complex, but we’re here to help. In addition to filing, we also provide services such as business registration, mail forwarding, and accounting. Contact us for professional guidance and support.

Frequently Answered Questions

No, you cannot. The period considered for Salaries Tax runs from April 1st of the current year to March 31st of the following year. Therefore, form IR56Bs should be completed for the relevant year ending on March 31st.

If you’ve provided the new business address in form BIR56A, there’s no need for a separate notification to the Business Registration Office. However, any subsequent address changes should be reported to comply with the Business Registration Ordinance.

No, you shouldn’t. Each employer, as indicated in the employment contract, is responsible for filing their own employer’s returns (form IR56Bs). Therefore, you and your subsidiaries should file separate returns.

Dividends paid to shareholders of a limited company are not taxable and don’t need to be reported. However, salaries and directors’ fees received by directors are taxable and should be reported using form IR56B. For proprietors/partners of unincorporated businesses, form IR56B isn’t necessary. However, remunerations paid to them aren’t allowable deductions under the Inland Revenue Ordinance and should be adjusted when computing profits chargeable to Profits Tax.

No, you cannot. If you intend to submit a paper form IR56B, you must use the one provided by the Inland Revenue Department. It can be downloaded from their website or obtained through their ‘FAX-A-FORM’ Service.

Yes, even if your organization is exempt from registration under the Business Registration Ordinance and/or Profits Tax, you still have to report remuneration paid to all part-time assistants. You can obtain the necessary forms by contacting the Inland Revenue Department or using the Fax-A-Form Service.

To prevent duplicate tax files, you should provide the HK Identity Card number in Part 2 of form IR56E. However, if the employee doesn’t have an HK Identity Card yet, you can use their passport number and place of issue. Once the employee receives their HK Identity Card, inform the IRD to update their records accordingly.

In this scenario, you should file an IR56B for the year of assessment 2022/23 covering the period up to March 31, 2023, and an IR56F for the period from April 1, 2023, to April 30, 2023.

No. In addition to reporting the “rent refunded to employee,” you must also complete the column for “rent paid to landlord by employee.” Even if these amounts are the same, the column for “rent paid to landlord by employee” should not be left blank or marked with an “X.”

Yes, you should. Tips are considered part of the employees’ income and are subject to Salaries Tax. Therefore, the amounts distributed to them should be reported in item 11(k) of form IR56B.

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