When do u pay tax?

[tanbs]

I think I am liable to pay income tax from my salary this accessment year (which I understand is the last April to the next April). Am I correct to say that I will pay the tax for 2005 (cash outflow) sometime in June 2006? I probably will receive something from my employer about tax assessment return in May 2006 right?

This helps to plan my cashflow so that I can put the money in time deposit or something to earn better interest while waiting for the BOMB to drop. Advice and experience appreciated, thanks!

[PDLM]

Once you are "established" in HK the timing is roughly:

Tax returns received in April relating to the previous April 1 - March 31, which must be returned with a few weeks. Tax demand note received around September with 75% of the amount due the following January and 25% in April. The tax demand will be a correction amount relative to the provisional tax paid for the year in question, plus provisional tax for the year "ahead" (although by the time you pay it that year is more or less over).

Exactly how it works in your first year depends on when in the year you arrive, how promptly your employer starts declaring your income to IRD and a few other things. In the worst case then you could end up paying up to two years tax at around the end of your second year here.

But I have never seen a case where the cashflow was worse than a Pay As You Earn scheme, and it is often significantly better.

[tanbs]

Once you are "established" in HK the timing is roughly:

Tax returns received in April relating to the previous April 1 - March 31, which must be returned with a few weeks. Tax demand note received around September with 75% of the amount due the following January and 25% in April. The tax demand will be a correction amount relative to the provisional tax paid for the year in question, plus provisional tax for the year "ahead" (although by the time you pay it that year is more or less over).

Exactly how it works in your first year depends on when in the year you arrive, how promptly your employer starts declaring your income to IRD and a few other things. In the worst case then you could end up paying up to two years tax at around the end of your second year here.

But I have never seen a case where the cashflow was worse than a Pay As You Earn scheme, and it is often significantly better.

Many thanks! This means that I will keep my money in time deposit and watch for the tax bill. I will have about 8 months of early warning which means I can earn higher returns than my savings account in the interim.

[jaetee]

So if the employer started reporting in Summer of 2005, when do we receive first assessment and first demand notice - Summer of 2006?

[PDLM]

There isn't a hard fast rule, but I would expect you to receive your tax return in April 2006, for you to return it in May 2006, to receive a tax demand in September 2006 which included the tax due for the period Summer 2005-31/3/2006 plus provisional tax for the period 1/4/06-31/3/07. This tax demand would be payable 75% in January 2007 and 25% in April 2007.

[cb1118]

Jan (1st part) and April (2nd part)
**or you can pay all in Jan

[penguinsix]

Caveat to this, that may or may not be relevant:

If you have to leave HK, like job change or move away for some reason, your tax bill is due immediately, as I found out recently.

[rs2000]

incase someone is going to quit and move out of HK, what is the standard procedure for the tax payment?
would the Tax department know automatically (i.e. the employer will inform them) and will send the assessment.
or it is upto the person to inform IRS and ask for a tax demand notice etc?
can anyone share his/her experience.

thanks

[PDLM]

incase someone is going to quit and move out of HK, what is the standard procedure for the tax payment?
would the Tax department know automatically (i.e. the employer will inform them) and will send the assessment.
or it is upto the person to inform IRS and ask for a tax demand notice etc?

The employer is required by law to inform the Inland Revenue and to withhold your last salary payment until they have confirmation from Inland Revenue that you have paid your dues.

Details here: Taxpayer who is about to leave Hong Kong

[Claire ex-ax]

Got my eTax bill today, plus reassessments for 06/07 and 07/08. Not a particularly happy day.