In times of economic difficulties or when cash flow is not consistent, you may apply to the Hong Kong Inland Revenue Department for a deferral of tax payment to help you get through financial difficulties. For example, a large one-time bonus not expected to be receive in the next year. One option is the holding over of all or partial Hong Kong provisional tax.
Who can apply for Holding Over of Provisional Salaries Tax?
- Net Chargeable incomefor provisional year is likely less than 90% of that for previous year.
- Ceased to earn salary income during the provisional tax year of assessment (e.g., unemployment, retirement, or salary reduction).
- Lodging an objection to the salaries tax assessment of the previous year.
- Entitlement to eligible tax allowances that have not been calculated in the notice of payment for provisional tax. For example, child allowance for your new-born baby, or dependent parent allowance for your parent who has attained the qualifying age in the year of assessment for which provisional tax was charged.
What is the Deadline for Holdover Application?
Your application for holding over of provisional tax should be lodged not later than:
- 28 days before the due date for payment of the provisional tax, or
- 14 days after the date of issue of the notice for payment of the provisional tax,
whichever is later.
Objection to Tax Assessments
If you disagree with the tax assessment (e.g. incorrect income, deductions and allowances not granted), you can lodge an objection to the Hong Kong Inland Revenue Department. The objection must be made in writing within 1 month after the date of issue of the notice of assessment. Late objections will only be considered if the Commissioner of Inland Revenue is satisfied that owing to absence from Hong Kong, sickness or other reasonable cause, or you have been prevented from lodging the objection within the specified time.
Claiming Foreign Tax Credits on U.S. Tax Return
In order to maximize the foreign tax credit on your U.S. individual tax return, please manage your Hong Kong or other foreign country tax payment schedule to determine if you should pay or accrue your foreign income taxes before the end of the calendar year.
Please contact us today if you would need assistance with your Hong Kong tax or claiming foreign tax credits on your U.S. individual tax return.
Disclaimer: This information has been prepared for informational purposes only, and is not
intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors or consult us regarding your own personal tax situation as this article was intended to be general in nature.
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