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Taxation of bonus received after leaving HK

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  1. #11

    Join Date
    Feb 2008
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    228

    If your bonus relates to the period in HK tax year 2024/25 then the additional IR56G will be for 2024/25.

    The timing of the bonus payment is not the primary factor that affects the year where it belongs to.

    shri likes this.

  2. #12

    Join Date
    Feb 2009
    Posts
    8,340

    If you do an IR56G (notification from employer of an employee about to depart HK) in October 2024, then the 24/25 tax year is your last. If you receive a bonus in 2025 related to your employment in 2024, it will adjust the 24/25 year. You cannot have the bonus credited to 25/26 year and try to do a new tax return in 25/26 with just this bonus as income and then claim all your usual deductions and then try to cheat in not paying any taxes on your bonus!

    Believe me, I tried to cheat the system too. But it doesnt work. Just pay your taxes on your bonus and move on. You are lucky your company is giving the bonus in HK where the max tax rate is only 15% and not in your new country where its likely to be more than this.


  3. #13

    Join Date
    Feb 2009
    Location
    Hong Kong
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    2,613
    Quote Originally Posted by snowjam:
    If your bonus relates to the period in HK tax year 2024/25 then the additional IR56G will be for 2024/25.

    The timing of the bonus payment is not the primary factor that affects the year where it belongs to.
    I've worked in HK for 15 years and I've always paid tax on my bonuses in the year of receipt. Would that be because it's a discretionary bonus rather than contractual, i.e.. my employer has complete discretion if and when they pay it - even though in practice it's considered a performance related bonus for the prior calendar year? Usually the work period it relates to covers two tax years.
    RobRoy likes this.

  4. #14

    Join Date
    Jun 2024
    Posts
    11
    Quote Originally Posted by Beanieskis:
    I've worked in HK for 15 years and I've always paid tax on my bonuses in the year of receipt. Would that be because it's a discretionary bonus rather than contractual, i.e.. my employer has complete discretion if and when they pay it - even though in practice it's considered a performance related bonus for the prior calendar year? Usually the work period it relates to covers two tax years.
    My bonus is also discretionary and completely depends on the financial performance of the company and board approval for bonus. I have been paying the tax on receipt basis so far and will already have paid taxes once on the bonus received in May 2024 for the period of 2024/25. If future bonus is also added in this year then it would result in double income being added for the same year.

  5. #15

    Join Date
    Jun 2024
    Posts
    11
    Quote Originally Posted by bdw:
    If you do an IR56G (notification from employer of an employee about to depart HK) in October 2024, then the 24/25 tax year is your last. If you receive a bonus in 2025 related to your employment in 2024, it will adjust the 24/25 year. You cannot have the bonus credited to 25/26 year and try to do a new tax return in 25/26 with just this bonus as income and then claim all your usual deductions and then try to cheat in not paying any taxes on your bonus!

    Believe me, I tried to cheat the system too. But it doesnt work. Just pay your taxes on your bonus and move on. You are lucky your company is giving the bonus in HK where the max tax rate is only 15% and not in your new country where its likely to be more than this.
    The bonus would have 0 tax if paid in my country, but that is besides the point. My only concern is I have paid taxes on receipt basis so far so it is only fair I continue to do that instead of being taxed for 2 year bonuses together

  6. #16

    Join Date
    Feb 2008
    Posts
    228
    Quote Originally Posted by bdw:
    If you do an IR56G (notification from employer of an employee about to depart HK) in October 2024, then the 24/25 tax year is your last. If you receive a bonus in 2025 related to your employment in 2024, it will adjust the 24/25 year. You cannot have the bonus credited to 25/26 year and try to do a new tax return in 25/26 with just this bonus as income and then claim all your usual deductions and then try to cheat in not paying any taxes on your bonus!

    Believe me, I tried to cheat the system too. But it doesnt work. Just pay your taxes on your bonus and move on. You are lucky your company is giving the bonus in HK where the max tax rate is only 15% and not in your new country where its likely to be more than this.
    The keyword here is "accrue".

    The bonus accrued to you while you were employed in 24/25 so it's taxed in 24/25. Subsequent bonus payments also accrue based on the employment, which ends in 24/25. That's why it's not 25/26 or later.

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