Like Tree4Likes

Departing Before Final Paycheck

Closed Thread
Page 1 of 2 1 2 LastLast
  1. #1

    Join Date
    Jan 2021
    Posts
    3

    Departing Before Final Paycheck

    Apologies if this has been covered elsewhere.

    I'm a teacher, so I don't have any duties during the summer. I plan on departing permanently from HK once the term ends.

    My contract ends in the middle of the summer, though, meaning I'll still get paid for 2 months after I leave.

    First question: am I legally allowed to have permanently departed HK and still finish out my contract? In other words, do I have to stay in Hong Kong until the very end of my contract (assuming I have no duties and there's nothing in the contract itself that specifies so)?

    Second: assuming I'll have settled with IRD when I leave, will I have to coordinate with them (and my employer) again to pay taxes on these final months?

    Thanks


  2. #2

    Join Date
    Feb 2009
    Posts
    8,280

    On the second part, your employer is required by law to submit to IRD department form IR56G (Notification by an employer of an employee who is about to depart from Hong Kong). This form IR56G is almost identical to the normal IR56B that you get at the end of every tax year to do your yearly taxes, the only difference is that its done when you are leaving HK rather than in March every year.

    Then your employer is also required by law to withhold your final month salary payment. Then you need to get your arse down to Wan Chai IRD office and go to 3 or 4 different levels to inform them you are leaving HK, do an on the spot tax return for the Period from April to the day you are leaving, pay your taxes on this amount, then IRD will issue you a "Letter of release" which you can give to employer.

    You then give letter of release to employer and they can give you final months salary.

    shri likes this.

  3. #3

    Join Date
    Jan 2021
    Posts
    3

    Thanks, I follow all that. Issue is -- I'll continue to get paid after I've departed. It doesn't seem I'll be taxed on this income before I leave ("April to the day you are leaving"), so I'm wondering how I should deal w that income.


  4. #4

    Join Date
    May 2012
    Posts
    1,186
    Original Post Deleted
    Well, it is accurate to say that the company should withhold your last salary until you settle your taxes

  5. #5

    Join Date
    May 2012
    Posts
    1,186
    Original Post Deleted
    IRD website says "should" https://www.ird.gov.hk/eng/tax/ere_obl.htm#a08
    shri likes this.

  6. #6

    Join Date
    Feb 2009
    Posts
    8,280
    Original Post Deleted
    I know we have discussed this before and yeah there appears to be some companies that do it one way and some that do it another and doesnt appear to be enforced so strictly. But the law is in the PDF below. There is a clause in bold about those who travel frequently that can be open to interpretation. But more or less when anyone leaves a company, if the employee is leaving HK then employer should file IR56G and withold salary 1 month before termination date. If employee is NOT leaving HK then employer should file IR56F and no need to withold anything.

    My company followed this, was all very rigid and when I rocked up to Wan Chai they knew what to do and sent me to 3 different places to lodge the interim tax return, pay the taxes, obtain release letter. Then go back to office to give release letter to HR, only then would they give my last months salary. So its all a well known and structured process.

    I agree with you its a shit process that is not very logical. I could have just not told my company I was leaving HK (but in my case I was transferring from HK branch to Aus branch of same company so they knew anyway and I couldnt hide it ). If you were able to get away without doing all this is great, your company must have trusted that you would pay the tax in the future. My company obviously doesnt trust me or just want to cover their arses more.

    For me was more infuriating because I've had to file 2 adjustments to my tax return after this which I wouldnt have had to if I could just do everything at once at year end like normal. One adjustment was to get $20k back because government announced the normal $20k reduction after I left HK. The other adjustment was because I own property in HK and collecting rental income (I still am today) so need to do all the usual stuff to declare for property tax.

    Intersting I have received the $20k back for first adjustment. But never heard anything from IRD about the property tax yet. I guess they will hit me with a demand one day.

    https://www.ird.gov.hk/eng/pdf/pam46e.pdf

  7. #7

    Join Date
    Dec 2002
    Location
    θ–„ζ‰Άζž—
    Posts
    47,965
    Original Post Deleted
    It's been this way for a while. Taxes payable till the date you leave on known income (salary) has to be settled. Unknown / discretionary income is settled as and when paid by the taxpayer... Else IRD will issue notices to your employer to withhold further payments if you don't settle those annually.

  8. #8

    Join Date
    Feb 2014
    Posts
    6
    leaving prematurely sounds complicated besides It will be easier to settle business with ird if you’re physically in hk.
    Any income is taxable whatever is declared in ird by your employer. if deliquent you will still be ‘chased’ even in your home country otherwise you may be blacklisted in hk.
    Usually if a contract finish or employer let you go it will be their burden to coordinate with ird about your cessation. The only thing you want to ask from employer is dismissal letter and the lump sum of your remaining pay out. the time you go to ird is to declare your departure, in turn they will give you assessment on how much tax you will pay then you will be cleared.

    but then if you want to leave prematurely i dont see the point of employer of not letting you go when you are in idle. maybe you can discuss with him

  9. #9

    Join Date
    Aug 2017
    Location
    Beautiful Britain
    Posts
    2,089
    Quote Originally Posted by redfox5:
    Thanks, I follow all that. Issue is -- I'll continue to get paid after I've departed. It doesn't seem I'll be taxed on this income before I leave ("April to the day you are leaving"), so I'm wondering how I should deal w that income.
    Me and my wife - both teachers - left in June even though the contract finished in middle of August so we have direct recent experience.

    School should issue you a tax form outlining what you will be paid this financial year. Go to IRD and produce this and they will work out what you owe. You pay your tax (likely to be very little as you will have prepaid some last year and leaving part way through this year will mean you won't have much balance to pay. I did all this early in June so it was sorted before my June pay date.

    The IRD will give you a release letter which you take to the school. the school will then continue to pay you either as normal (as in June, July, August) as my wife was ) OR (in my case cause I was in a nice school) they pay everything in one go at end of June.

    Don't forget you need to do your 'leaving Hong Kong permanently' declaration and then claim back your MPF. Sadly that will take longer to come through. Ours came in August and September from HSBC and Manulife.

    Just keep your Bank account open. We got an additional Tax refund just last month and the wife may get one next year too due to additional tax refunds actioned by HK government in next years budget.

    You need to leave the IRD a contact address in Hong Kong as any additional refunds and possibly MPF will come in the form of a cheque so someone in HK will need to pay it into your bank account for you. We gave the IRD our school address asked the school to do it for us but if you have a trusted friend that might work.
    Last edited by Pauljoecoe; 16-01-2021 at 06:39 PM.
    Seesaw67 likes this.

  10. #10

    Join Date
    Aug 2017
    Location
    Beautiful Britain
    Posts
    2,089

    P.S. Any decent school will be familiar with the process and be able to advise you. They have people doing this every year. Also, I've never known a school require you to do anything in the period after the last day of term. This is your entitled holiday so most teachers are off the next day!


Closed Thread
Page 1 of 2 1 2 LastLast