Guide to Tax Return Individuals

(D)

How to Complete the Return

Part 4

Salaries Tax

You should report income (before deducting your mandatory contributions to recognized

retirement schemes) arising in or derived from Hong Kong which is received or

receivable during the year. Income includes income from an office, employment (on a

full-time, part-time or casual basis) or pension from a former employer.

If you claim full or partial tax exemption in respect of your salaries income, you should

complete a paper return.

Even if full or partial tax exemption is claimed or relating back of lump sum is applied, when

completing the paper return, the gross amount should be declared in box

. Fill in the

amount to be excluded in box

and complete Section(s) 2 and / or 4 of the Appendix.

(For more information on claim for tax exemption, please click here.)

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4.1

Income Accrued to Me During the Year

Income includes all income and perquisites from the employer or others. 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.

Please refer to 'Related Tax Rules' for types of income to be included, their

definitions and / or computation methods.

Example to show how the parts 'Employment Particulars' and 'Income Accrued'
(Part 4.1 of paper return) are to be completed

Details of income from Company A		Details of income from Company B
Salary	$75,000	Salary	$180,000
Commission	10,000	Commission	4,000
Share awards (Note 1)	5,000	Share option gain (Note 2)	30,000
Cash Allowance	3,000	Income from a non-Hong Kong company	120,000
Contract gratuity (Note 3)		Salaries tax paid by employer	8,000
(1/7/2021 - 30/6/2023)	150,000	Bonus	2,500
	----------		----------
	$243,000		$344,500
	=======		=======

(Note 1)	Share Awards
	Company A granted the employee 2,000 shares on 5/5/2023 as a part of the
	employee's remuneration. On this date, the market value was $2.5 per share.
	Calculation of taxable amount in year 2023/24: $2.5x2,000=$5,000
(Note 2)	Share Option Gain
	On 15/7/2023, Company B granted an option to the employee to purchase
	1,000 shares in Company B at an exercise price of $100 per share. The
	employee had 3 years to exercise the option. On 5/8/2023, the employee
	exercised his option to purchase 600 shares. The market price on this
	date was $150 per share. On 25/5/2024, he exercised his option again to
	purchase 400 shares. The market price on this date was $160 per share.
	Calculation of taxable amount in year 2023/24: $(150-100)x600=$30,000
	Calculation of taxable amount in year 2024/25: $(160-100)x400=$24,000
(Note 3)	Relating Back of Contract Gratuity
	The contract gratuity $150,000 was received for the contract period of 24
	months from 1/7/2021 to 30/6/2023.
	Calculation of taxable amount in year 2023/24: $150,000x3/24=$18,750
	Calculation of taxable amount to be related back to years:
	2021/22: $150,000x9/24=$56,250;
	2022/23: $150,000x12/24=$75,000

How to fill in 'Employment Particulars'

Employer 1:
Name of employer (Note 4)	Company A
Capacity employed	Manager
Employment period	From 01/04/2023 To 30/06/2023
Total amount (Note 5)	$243,000

Employer 2:
Name of employer (Note 4)	Company B
Capacity employed	Senior Manager
Employment period	From 01/07/2023 To 31/03/2024
Total amount (Note 5)	$344,500

(Note 4)	State all employers from which you derived income chargeable to tax during
	the year, including part-time jobs (Do not include any business(es) in which
	you or your spouse is the proprietor / partner).
(Note 5)	Enter your gross income before contributions to MPF scheme or ORSO
	scheme from each employer. Exclude non-taxable termination payments
	which the employer paid to you in accordance with the Employment Ordinance.

How to fill in 'Income Accrued'
Grand total of income (Note 6)		$587,500
The grand total of income has included
	Share option gain (Note 7)	$30,000
	Lump sum payments (Note 7) (Lump sum payments received on retirement / termination of employment contracts, deferred pay or arrears of pay.)	$150,000
	Commission income (Note 7)	$14,000
I received income from a non-Hong Kong company for my employment or services rendered in Hong Kong (Note 8)		Yes
Tax paid by employer(s) (Note 9)		Yes
Apply for relating back of the lump sum (Note 10)		Yes
I have places of residence provided by employer or associated corporation		Yes

(Note 6)	For paper return, box must be completed. For Internet filing, the
	amount will be calculated by system. No input is required.
(Note 7)	If you had received any of these items of income during the year, enter
	the amounts in the appropriate boxes. The amounts should also be included
	in the grand total of income (i.e. paper return box ). If you report share
	option gain, full particulars of the gain should be supplied on a separate
	sheet. For Internet Filing, please supply the particulars in the 'Supplementary
	Information on Tax Return' text box.
(Note 8)	If you had income from a non-Hong Kong company in connection with your
	employment / assignment in Hong Kong or services rendered in Hong Kong,
	choose 'Yes' (i.e. paper return box ). Otherwise, choose 'No'.
(Note 9)	Choose 'Yes' (i.e. paper return box ) if your employer paid Salaries Tax on
	your behalf during the year. Otherwise, choose 'No'.
(Note 10)	If you wish to claim relating back of a lump sum payment (i.e. income
	reported in paper return box ) to an earlier period, enter the amount
	in box of the paper return and also complete the additional details in
	Section 2 of the Appendix. For Internet filing, please choose 'Yes' on the
	screen and then fill in details in the following screen. If you do not claim
	relating back, choose 'No'.

How to fill in 'Apply for Relating Back of the Lump Sum'
Name of employer	Company A
Nature of payment	Contract gratuity
Amount received (Note 11)	$150,000
Period to which payment relates	From 01/07/2021 To 30/06/2023
Date received	30/06/2023
Amount to be related back to previous year(s) (Note 3)	$131,250

(Note 11)	This amount should have been included in the 'Grand total of income' and
	should be stated in 'Lump sum payments'.

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4.2

Place of Residence Provided by Each Employer or Associated Corporation
During the Year

A place of residence provided to you by your employer or its associated corporation

is chargeable to tax based on the 'rental value'. You have to fill in the value of ALL

places of residence provided in box

of paper return and complete Section 5 of the

Appendix.

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. The percentage used depends on the nature

of the residence provided:

Nature of Residence	Percentage
House or flat, including serviced apartment	10
Hotel, hostel or boarding house accommodation – no more than 2 rooms	8
Hotel, hostel or boarding house accommodation – no more than 1 room	4

If the place of residence is a residential property, you may elect to substitute the rental

value at 10% with the rateable value.

Examples to show calculation of value of place of residence provided by your employer for the full year:

Period provided: 1/4/2023 to 31/3/2024

Scenario 1

Scenario 2

Income for the year

$810,000

$3,010,000

Rent paid by your employer to landlord

$240,000

Rent paid by you to the landlord

$360,000

Rent paid by you to your employer

$36,000

Rent refunded to you by your employer

$300,000

Deductible outgoings and expenses

$10,000

Rateable value per Demand for Rates

$166,000

$280,000

Rateable value of place of residence provided

$130,000

$220,000

(after deduction of rent paid or rent suffered, if any)

======

Value of place of residence provided

$44,000

$240,000

======

	Scenario 1:
	Value of place of residence provided
	= $(810,000 - 10,000) X 10% - $36,000
	= $44,000
	=======

	Scenario 2:
	Value of place of residence provided
	= $(3,010,000 - 10,000) x 10% - $(360,000 - 300,000)
	= $240,000
	=======

For Scenario 1, enter $44,000 in box

of paper return and complete Section 5

of the Appendix. For Internet filing, the rental value of place of residence provided

will be calculated by system. No input of rental value is required.

How to fill in 'Place of Residence Provided by Employer or Associated Corporation' for Scenario 1
Residence 1:
Address of place of residence (Note 12)		A1 Richard Gardens, Big Road, Hong Kong
Nature of place of residence (Note 12)		Flat
Period provided (Note 12)		From 01/04/2023 To 31/03/2024
Name of employer or associated corporation providing residence (Note 12)		Chan & Co Ltd
Rent paid by employer or associated corporation to landlord		$240,000
Rent paid by ME to landlord		-
Rent refunded to ME by employer or associated corporation		-
Rent paid by ME to employer or associated corporation		$36,000
Rateable value, if elected		-

(Note 12)

Enter the details for each of the places of residence provided to you by

your employer(s) or any associated corporation during the year.

For Scenario 2, enter $220,000 in box

of paper return and complete Section 5 of

the Appendix, since it is more advantageous to elect for rateable value.

If the place of residence is provided for part of the year, the amounts in the calculation

should be for the period provided. Adjust the rateable value proportionately if the place

of residence was not provided for the full year and you have elected for rateable value.

If the computed value of the places of residence provided by employers is in the negative,

enter '0' in box

of paper return and complete Section 5 of the Appendix. For Internet

filing, the rental value of place of residence provided will be calculated by system. No

input of rental value is required.

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4.3

Deductions

(1)

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 expenditure.

(2)

Expenses of self-education (box

of paper return)

	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. The course or
	the examination must be for gaining or maintaining qualifications for use in any
	employment.
	A 'prescribed course of education' is one undertaken at a specified education
	provider (list of providers is available at www.gov.hk/en/residents/taxes/salaries/
	allowances/deductions/selfeducation.htm), such as university, college, school, technical
	institution, training centre, institution specifically approved by the Commissioner of Inland
	Revenue or a training or development course provided by a trade, professional or
	business association or one accredited or recognized by specified professional bodies
	or institutions.
	Deduction is only allowed if the expenses have not been or will not be reimbursed by
	the employer or any other person, unless the reimbursed or reimbursable amount
	has been or will be included in the assessable income. If the amount was reimbursed
	to you after it has been claimed or allowed for deduction, you should inform this
	Department immediately.
	The deductible amount shall not exceed the amount prescribed in the Inland Revenue
	Ordinance.

(3)

Approved charitable donations (box

of paper return)

	Donations must be in respect of those made to tax-exempt charities in Hong Kong or
	Government for charitable purposes and supported by receipts. List of tax-exempt
	charities is available at www.ird.gov.hk/eng/pdf/s88list_emb.pdf.
	The aggregate deduction of approved charitable donations must not be less than
	$100 and shall not exceed 35% of your income after allowable expenses and
	depreciation allowances.
	Enter the NET AMOUNT of approved charitable donations made by you or your spouse
	(not living apart) during the year after excluding the donations already claimed in your spouse's return.

(4)

Mandatory contributions to recognized retirement schemes in capacity of an employee
(box

of paper return)

	Enter the actual amount of contributions made to occupational retirement scheme
	(ORSO Scheme) or the amount of mandatory contributions paid by you as an employee
	to a Mandatory Provident Fund Scheme (MPF Scheme). The deductible amount shall
	not exceed the amount prescribed in the Inland Revenue Ordinance.

Attention:

You must read Section B on documentary evidence in support of your deduction claims

made under this Part.

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4.4

Election for Joint Assessment

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.

There is no need for joint assessment election if your spouse did not have assessable income

under Salaries Tax. If your spouse also did not make election for personal assessment

separately from you, you should complete the part 'Married Person's Allowance and Personal

Disability Allowance' and Married Person's Allowance will be given to you automatically.

Refer to Part 11.1 for further details.

A married couple electing for joint assessment are still required to complete their

returns which they received. You and your spouse must sign on both returns

to indicate that you both agree to elect for joint assessment.

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