Understanding Hong Kong’s IR56F Form

Understanding Hong Kong’s IR56F Form

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Taxation

Businesses with an employee in Hong Kong are obliged to comply with reporting requirements and standards. One of the major tasks is to present document Hong Kong Employer Returns. Though the IR56F form is less known for most of us, the form is as important as IR56B form.

The purpose of the IR56F form is to ensure that an individual who has finished working in Hong Kong, files an income tax return with the company.

This article is meant to enlighten this association, offering the insights sought by the employers.

What is the IR56F Form?

IR56F, also known as the “Notice of Cessation of Employment of Employee by Employer,” is an instrument that the worker must fill out when he/she leaves his/her job.

Cessation of employment may be the result of resignation, dismissal, retirement, or even death.

Hong Kong employers must submit this form to the Inland Revenue Department (IRD) to be received thirteen months before the final date of the termination of employment.

If there is an employee who is to leave Hong Kong, the employee should complete the IR56G Form, instead of IR56F Form.

Besides employees, this IR56F Form is also for a director who stopped his/her job/directorship with the company.

Information Needed on the IR56F Form

The IR56F form necessitates specific details to be filled in:

  • Basic personal information.
  • The date and rationale behind departing from the job.
  • A comprehensive income report from April 1st of the current tax year to the last working day, with exceptions like severance and long service pay as per the Hong Kong Employment Ordinance.

In item (f) of the form, key income details pertain to:

  • Lump sums payouts or gratuities at retirement or at leaving service.
  • Employment contracts or the Employment Ordinance prescribe that the employer should pay the notice in lieu of the employer.
  • Arrears of pay or deferred pay arising out of a salaried wages or award.

Include, however severance payments, long service payments or any other payments made as Employment Ordinance requires.

Item (g), “Certain Payments from Retirement Schemes,” refers to employer contributions through the following:

  • Occupational Retirement Schemes are sponsored by the company but unrecognised under the Hong Kong government.
  • The Occupational Retirement Schemes by the Hong Kong government, other than termination of service and death, incapacity, terminal illness, or retirement, are acknowledged and provided if an employee has 10 years or more of service.
  • Mandatory Provident Fund (MPF) scheme for any reasons other than voluntary departure from Hong Kong, death, incapacity, terminal illness, and retirement (employer’s mandatory contributions).
  • Employer’s Voluntary Contribute to MPF for termination of service with less than 10 years service.
  • MPF Scheme for any other cause other than retirement, death, disability, terminal illness, or termination of services after 10 years of service (employer’s voluntary contributions).
  • Proportionate Benefit Rule.

Fill out the “Place of residence provided (if any)” field only if the company provides you with the place of residence either rent-free or rent-subsidised (could be through rental reimbursement).

Important Factors for Submitting the IR56F Form

In case IR56F has been filed for an employee there is no need to submit a IR56B form for the same income period.

If there is any additional remuneration post-employment, an “additional” IR56F form should be submitted to declare this income.

Is Hiring a Professional Service Provider Advisable?

Handling HR and payroll administration can be complicated and time-consuming. These tasks, even though they divert resources from the main activity, are vital for the smooth running and compliance.

FastLane Group is your reliable partner in these complex areas. We can help you complete your IR56F forms and other Employer’s Return Forms and we can execute payroll and other HR services.

Contact us via the form below or enquiry@fastlane-global.com if you need more information.