In Hong Kong, there are different types of tax return forms that are to be submitted to the Inland Revenue Department (IRD) by the employees. Likewise, when an employee is about to leave a company due to resignation, termination, retirement, or other reasons, certain tax reporting obligations have to be fulfilled by the employer. One such obligation is submission of IR56F Form. By the end of this guide, you will be clearly able to understand the purpose of IR56F, its filing deadline, and the step-by-step process employers need to follow to stay compliant with the tax regulations Hong Kong.
What is IR56F Form
IR56F is a tax form that is to be filed by the employer when an employee ceases employment (resignation, termination, retirement, and death included). In simple terms, it is called “Notification by an Employer of an Employee Who Is About to Cease to Be Employed.”
A IR56F form typically includes data such as:
- Employee’s personal details (HKID, passport number, etc.)
- Employment period
- Total income paid during the year of assessment
- Last payment date
- Nature of payments (salary, bonus, leave pay, etc.)
What is the Purpose of IR56F Form
While the primary purpose of IR56F form is to notify the Inland Revenue Department (IRD) of Hong Kong that an employee has ceased employment with the company, it further ensures that the income details of the employee are correctly reported for the Salaries Tax Assessment; specifically the total earnings up to the last day of employment and accurate tax calculation for the employee’s final tax liability.
Submitting this form on time can enable employers in demonstrating proper tax compliance and help in ensuring a smooth tax clearance process for the departing employees.
Deadline for Filing IR56F Form
In Hong Kong, employers must submit the IR56F form within 1 month from the date the employee ceases employment. This condition is applicable to all cases, including resignation, termination, retirement or passing away of an employee. Failing to comply with this may result in penalty or prosecution. To avoid this, it is advisable to prepare the IR56F form immediately once the employee’s last working day is confirmed.
Step 1
Confirm the employee’s cessation details and gather information
- Last day of employment
- Personal details (name, HKID, address)
- Employment Period
- Income details till employment (salary, bonus, leave pay)
Tip: If the employee is leaving Hong Kong soon, IR56G may apply (not IR56F).
Step 2
Choose the filing method: E-filing or paper filing
Use the IRD New Tax Portal to submit the IR56F form as a part of the employer notifications or, download the fillable IR56F PDF, complete it, and submit it to the IRD as instructed on the form.
Step 3
Fill the details in IR56F form accurately
Enter the employer and employee details, report income up to the period of employment. Finally, review carefully to avoid errors in HKID, dates, and totals.
Step 4
Submit and keep the proof safe
- E-filing – save the confirmation or acknowledgement page.
- Paper filing – keep a copy of the signed form and delivery proof for records.
Note: Submit within a month from the cessation date to avoid penalties.
Common Compliance Issues When Filing IR56F Form
It is important to carefully handle the process of filing IR56F form, without which following errors may result:
- Late Submission: Submission of IR56F form must be done within 1 month from the date of employee’s cessation, failing which, penalties or prosecution by the IRD may be possible.
- Filing the Wrong Form (IR56F & IR56G): If an employee is leaving Hong Kong permanently or for an extended period, employers should file IR56G. Submission of the wrong form may delay tax clearance.
- Incorrect Employee Details: Errors in details such as HKID, spelling of the name, employment date, or residential address may result in delays or queries from the IRD.
- Incomplete or Incorrect Income Reporting: Failing to include all payments up to the last day of employment may also lead to inaccurate tax assessment.
- Failure to Keep Proper Records: Poor documentation and not retaining the proof of submission of IR56F may create issues during audits.
- Delayed Preparation: Waiting until the last minute to fill out the form increases the risk of errors.
Read further about various IR56 Forms for employers in Hong Kong.
How Payroll Software Can Simplify IR56F Filing
While managing the process of IR56F filing manually can be time-consuming and prone to errors, a reliable payroll software such as Info-Tech’s can not only streamline the process but also reduce the compliance risks significantly. This ensures
- Automatic Income Calculation
- Centralized Employee Data
- IR56F-Ready Reports
- Error Reduction
- Timely Reminders
Integrating payroll software can boost accuracy, efficiency, and full compliance when handling IR56F filings. Planning to switch your calculations to make it easier with Automated Payroll Software? Reach out to our experts for better clarification. Talk to us today!
IR56F Frequently Asked Questions
What is the reason for the cessation of IR56F?
In the IR56F form, the “reason for cessation” refers to the reason why an employee’s employment has ended.
What is the difference between IR56G and IR56F?
Generally, IR56F form is filed when an employee ceases employment but remains in Hong Kong, while IR56G form is required when an employee is leaving Hong Kong permanently or for an extended period and involves tax clearance procedures.
When to submit IR56F?
IR56F form must be submitted within 1 month from the date the employee ceases employment.
What is the 60-day rule for Hong Kong tax?
The 60-day rule in Hong Kong tax refers to an exemption under Salaries Tax where an individual is not liable to Hong Kong Salaries Tax if they stay in Hong Kong for 60 days or less during a year of assessment. However, this rule typically applies to short-term visits and does not usually apply to Hong Kong employment contracts.
