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Tax Relief Measure For for the Year of Assessment 2021/22: Am I Eligible to Apply?

By FastLane Team, June 28, 2022 (5 mins)

What is the scheme about?


The Financial Secretary proposed a one-off reduction of profits tax, salaries tax and tax under personal assessment for the year of assessment 2021/22 by 100%, subject to a ceiling of $10,000 per case.  The relevant legislation for the tax reduction was gazetted on 14 April 2022.

Taxpayers who are unable to settle their tax obligations on time, due to financial difficulties, may apply to the Inland Revenue Department (IRD) for payment of tax in installments before the due date of their tax demand notes.

 

What you will learn:

1. What is paying tax in installments?

2. Who is eligible to apply?

3. What documentation is needed?

4. How can you apply for the scheme?

5. How can FastLane help with audit and tax filing?

Paying tax in installments


The IRD can assist you with surcharges if you owe taxes. There is a maximum of 5% surcharge on the amount of tax outstanding after the due date, and a maximum of 10% surcharge on the amount remaining unpaid (including tax and 5%) after 6 months from the due date.

 

For installment plans for the settlement of salaries tax, profits tax, and personal assessment issued between April 2022 and May 2023 for the year of assessment 2021/22 provided that the installment plans are obeyed then no surcharge will be imposed for a maximum period of one year counting from the respective due dates. If the first installment of the tax has been paid on time or before the due date and the installment plan is only granted for settlement of the tax demanded under the second installment, it will be considered as having paid for the one-year period from the due date for that second stage payment.

 

The installment arrangement will be discontinued if payments are not made according to the approved installment plan. A surcharge of up to 5% on the amount still outstanding will be levied. The tax and 5% surcharge fee may also be subject to a further 10% surcharge six months after the imposition of the 5 percent penalty.

 

The above measure does not apply to individuals who must pay their taxes before leaving Hong Kong as well as those paying property tax.

Tax Relief Measure For 2021/22 | Audit and Tax Filing | FastLane

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Who is eligible to apply?


This only applies to salaries, profits, and personal assessment demand notes for the year of assessment 2021/22 issued between April 2022 and May 2023. Individuals and firms who are having trouble paying their tax bills on time can apply.

 

If the installment plans are settled then no surcharge will be imposed for one year from the due dates of the demand notes however if there is no application of installment payments or the installment application is rejected then the tax due must be paid before the stated deadlines on the tax demand notes.

 

Please note that if the taxpayer fails to pay the tax according to the installment plan granted then the installment plan and the waiver of surcharge will be canceled immediately. The IRD will add a 5% penalty on top of the amount still owing to the tax and will move swiftly to recover any outstanding funds. A further surcharge of 10% may also be imposed on the amount of tax and a 5% surcharge remaining unpaid 6 months after the date of imposition of a 5% surcharge.

Tax Relief Measure For 2021/22 | Audit and Tax Filing | FastLane

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What documentation is needed?


You must state reasons why it’s difficult for you to settle the demand note on time and provide evidence that you are eligible for the scheme in order for your application to be successful. It’s critical that applicants include their contact number in their applications so there is no delay in receiving additional information if required, for the application to be processed.

The following documentation will be necessary depending on the type of applicant you are:

1. Individuals/Sole Proprietorships will need:

  • The application form IR1360 
  • Concrete payment proposal
  • Copies of bank statements/ passbooks for the latest 3 months
  • Details of income and expenditure for the latest 3 months
  • Debts repayment details

2. Partnerships will require:

  • The application form IR1360A
  • Concrete payment proposal
  • Copies of bank statements/ passbooks for the latest 3 months
  • Details of income and expenditure for the latest 3 months
  • Debts repayment details
  • Management accounts (including the profit and loss account and balance sheet) for the latest 3 months

 

3. Corporations will require:

  • The application form IR1360B
  • Concrete payment proposal
  • Copies of bank statements/ passbooks for the latest 3 months
  • Debts repayment details
  • Management accounts (including the profit and loss account and balance sheet) for the latest 3 months
  • Cash Flow position and forecast

Tax Relief Measure For 2021/22 | Audit and Tax Filing | FastLane

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How can you apply for the scheme?


There are several methods to apply for the scheme, including via:

 

1. Completing the application form

    • If you are submitting as an individual or sole proprietorship, please complete the IR1360 form
    • If you are submitting as a corporation, please fill in the IR1360B form
    • If you are submitting as a partnership, please fill in the IR1360A form

 

2. Applying in person at the Enforcement Collection Section on the 6th (for individuals)  or 7th floors (for corporations and partnerships) of the Revenue Tower

 

3. In writing

How can FastLane help with audit and tax filing?


We hope you found this article useful, as it explains the exemption of charges for tax by installments and the requirements needed to submit an application. If you have any questions about our services, need assistance with your audit or tax filing, or simply want to discuss your options, please contact us. Our team of expert professionals can assist you throughout the process and help you with any issues or concerns that you may have.



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