Part 4 Salaries Tax
You should report income (before deducting your mandatory contributions to recognized
retirement schemes) arising in or derived from Hong Kong which is received or
receivable during the year. Income includes income from an office, employment (on a
full-time, part-time or casual basis) or pension from a former employer.
Even if full or partial tax exemption is claimed or relating back of lump sum is applied, when
completing the paper return,
the gross amount should be declared in box [30]. Fill in the amount to be excluded in box [34],
and complete Section(s) 2 and / or 4 of the Appendix.
(For more information on claim for tax exemption, please click here.)
4.1 Income Accrued to Me During the Year
Income includes all income and perquisites from the employer or others. Award of
shares and share option gain are chargeable income. For share option gain, the
gain will be taxable when the option is exercised, assigned or released. Even if the
option is exercised after you have left the employment, the gain is still taxable.
Holiday journey benefits are taxable. The benefits are to be assessed by reference to
the amount paid by the employer for such benefits.
Please refer to 'Related
Tax Rules' for types of income to be included, their definitions and / or computation
methods.
Example to show how the parts 'Employment Particulars' and 'Income Accrued'(Part 4.1 of paper return) are to be completed
| Details of income from Company A | Details of income from Company B | |||
| Salary | $75,000 |
Salary | $180,000 |
|
| Commission | 10,000 |
Commission | 4,000 |
|
| Share awards (Note 1) | 5,000 |
Share option gain (Note 2) | 30,000 |
|
| Cash Allowance | 3,000 |
Income from a non-Hong Kong company | 120,000 |
|
| Contract gratuity (Note 3) | Salaries tax paid by employer | 8,000 |
||
| (1/7/2023 - 30/6/2025) | 150,000 |
Bonus | 2,500 |
|
---------- |
---------- |
|||
$243,000 |
$344,500 |
|||
======= |
======= |
|||
(Note 1)
Share Awards
Company A granted the employee 2,000 shares on 5/5/2025 as a part of the
employee's remuneration. On this date, the market value was $2.5 per share.
Calculation of taxable amount in year 2025/26: $2.5x2,000=$5,000
(Note 2)
Share Option Gain
On 15/7/2025, Company B granted an option to the employee to purchase
1,000 shares in Company B at an exercise price of $100 per share. The
employee had 3 years to exercise the option. On 5/8/2025, the employee
exercised his option to purchase 600 shares. The market price on this
date was $150 per share. On 25/5/2026, he exercised his option again to
purchase 400 shares. The market price on this date was $160 per share.
Calculation of taxable amount in year 2025/26: $(150-100)x600=$30,000
Calculation of taxable amount in year 2026/27: $(160-100)x400=$24,000
(Note 3)
Relating Back of Contract Gratuity
The contract gratuity $150,000 was received for the contract period of 24
months from 1/7/2023 to 30/6/2025.
Calculation of taxable amount in year 2025/26: $150,000x3/24=$18,750
Calculation of taxable amount to be related back to years:
2023/24: $150,000x9/24=$56,250;
2024/25: $150,000x12/24=$75,000
| How to fill in 'Employment Particulars' | |
| Employer 1: | |
| Name of employer (Note 4) | Company A |
| Capacity employed | Manager |
| Employment period | From 01/04/2025 To 30/06/2025 |
| Total amount (Note 5) | $243,000 |
| Employer 2: | |
| Name of employer (Note 4) | Company B |
| Capacity employed | Senior Manager |
| Employment period | From 01/07/2025 To 31/03/2026 |
| Total amount (Note 5) | $344,500 |
(Note 4)
State all employers from which you derived income chargeable to tax during
the year, including part-time jobs (Do not include any business(es) in which
you or your spouse is the proprietor / partner).
(Note 5)
Enter your gross income before contributions to MPF scheme or ORSO
scheme from each employer. Exclude non-taxable termination payments
which the employer paid to you in accordance with the Employment Ordinance.
| How to fill in 'Income Accrued' | ||
| Grand total of income (Note 6) | $587,500 | |
| The grand total of income has included | ||
| Share option gain (Note 7) | $30,000 | |
|
Lump sum payments(Note 7) (Lump sum payments received on retirement / termination of employment contracts, deferred pay or arrears of pay.) |
$150,000 | |
| Commission income (Note 7) | $14,000 | |
| I received income from a non-Hong Kong company for my employment or services rendered in Hong Kong (Note 8) | Yes | |
| Tax paid by employer(s) (Note 9) | Yes | |
| Apply for relating back of the lump sum (Note 10) | Yes | |
| I have places of residence provided by employer or associated corporation | Yes | |
(Note 6)
For paper return,
box [30] must be completed. For Internet filing, the amount will be calculated by system. No input
is required.
(Note 7)
If you had received any of these items of income during the year, enter
the amounts in the appropriate boxes. The amounts should also be included
in the grand total of income (i.e.paper return box [30] ). If you report share option gain, full particulars
of the gain should be supplied on a separate sheet. For Internet Filing, please supply the
particulars in the 'Supplementary Information on Tax Return' text box.
(Note 8)
If you had income from a non-Hong Kong company in connection with your
employment / assignment in Hong Kong or services rendered in Hong Kong,
choose 'Yes' (i.e. paper return box [35]). Otherwise, choose 'No'.
(Note 9)
Choose 'Yes' (i.e. paper return
box [36]) if your employer paid Salaries Tax on your behalf during the year. Otherwise, choose 'No'.
(Note 10)
If you wish to claim exemption of income and / or relating back of a lump sum payment (i.e. income reported in paper return box [32]) to an earlier period, enter the amount in box [34] of the paper return and also complete the additional details in Section 2 and / or 4 of the Appendix. For Internet filing, please choose 'Yes' on the screen and then fill in details.
| How to fill in 'Apply for Relating Back of the Lump Sum' | |
| Name of employer | Company A |
| Nature of payment | Contract gratuity |
| Amount received (Note 11) | $150,000 |
| Period to which payment relates | From 01/07/2023 To 30/06/2025 |
| Date received | 30/06/2025 |
| Amount to be related back to previous year(s) (Note 3) | $131,250 |
4.2 Place of Residence Provided by Each Employer or Associated Corporation During the Year
A place of residence provided to you by your employer or its associated corporation is chargeable to tax based on the 'rental value'. You have to fill in the value of ALL places of residence provided in box [37] of paper return and complete Section 5 of the Appendix.
Rental value is calculated as a percentage of the total income from your employer
and the associated corporation which provided the residence after deductions
of the outgoings and expenses. The percentage used depends on the nature
of the residence provided:
Nature of Residence |
Percentage |
| House or flat, including serviced apartment | 10 |
| Hotel, hostel or boarding house accommodation – no more than 2 rooms | 8 |
| Hotel, hostel or boarding house accommodation – no more than 1 room | 4 |
If the place of residence is a residential property, you may elect to substitute the rental
value at 10% with the rateable value.
| Examples to show calculation of value of place of residence provided by your employer for the full year: | ||
| Period provided: 1/4/2025 to 31/3/2026 | Scenario 1 |
Scenario 2 |
| Income for the year | $810,000 |
$3,010,000 |
| Rent paid by your employer to landlord | $240,000 |
- |
| Rent paid by you to the landlord | - |
$360,000 |
| Rent paid by you to your employer | $36,000 |
- |
| Rent refunded to you by your employer | - |
$300,000 |
| Deductible outgoings and expenses | $10,000 |
$10,000 |
| Rateable value per Demand for Rates | $166,000 |
$280,000 |
| Rateable value of place of residence provided | $130,000 |
$220,000 |
| (after deduction of rent paid or rent suffered, if any) | ====== |
====== |
| Value of place of residence provided | $44,000 |
$240,000 |
====== |
====== |
|
Scenario 1:
Value of place of residence provided
= $(810,000 - 10,000) X 10% - $36,000
= $44,000
=======
Scenario 2:
Value of place of residence provided
= $(3,010,000 - 10,000) x 10% - $(360,000 - 300,000)
= $240,000
=======
For Scenario 1, enter $44,000 in box [37] of paper return and complete Section 5 of the Appendix. For Internet filing,
the rental value of place of residence provided will be calculated by system. No input of rental value
is required.
| How to fill in 'Place of Residence Provided by Employer or Associated Corporation' for Scenario 1 | ||
| Residence 1: | ||
| Address of place of residence (Note 12) | A1 Richard Gardens, Big Road, Hong Kong | |
| Nature of place of residence (Note 12) | Flat | |
| Period provided (Note 12) | From 01/04/2025 To 31/03/2026 | |
| Name of employer or associated corporation providing residence (Note 12) | Chan & Co Ltd | |
| Rent paid by employer or associated corporation to landlord | $240,000 | |
| Rent paid by ME to landlord | - | |
| Rent refunded to ME by employer or associated corporation | - | |
| Rent paid by ME to employer or associated corporation | $36,000 | |
| Rateable value, if elected | - | |
(Note 12)
Enter the details for each of the places of residence provided to you by
your employer(s) or any associated corporation during the year.
For Scenario 2, enter $220,000 in box [37] of paper return and complete Section 5 of the Appendix, since it is more advantageous
to elect for rateable value.
If the place of residence is provided for part of the year, the amounts in the calculation
should be for the period provided. Adjust the rateable value proportionately if the place
of residence was not provided for the full year and you have elected for rateable value.
If the computed value of the places of residence provided by employers is in the negative, enter '0' in box [37] of paper return and complete Section 5 of the Appendix. For Internet filing, the rental value of place of residence provided will be calculated by system. No input of rental value is required.
4.3 Deductions
(1)
Outgoings and expenses are limited to those wholly, exclusively and necessarily incurred
in the production of your assessable income, not being expenses of a domestic or private
nature and capital expenditure.
(2)
Expenses of self-education (box [39] of paper return )
Deductible education expenses include tuition and examination fees in connection
with a prescribed course of education or fees of an examination set by specified
education providers or trade, professional or business associations. The course or
the examination must be for gaining or maintaining qualifications for use in any
employment.
A 'prescribed course of education' is one undertaken at a specified education
provider (list of providers is available at www.gov.hk/en/residents/taxes/salaries/allowances/deductions/selfeducation.htm), such as
university, college, school,
technical institution, training centre, institution specifically approved by the Commissioner of Inland
Revenue or a training or development course provided by a trade, professional or business association or one
accredited or recognized
by specified professional bodies or institutions.
Deduction is only allowed if the expenses have not been or will not be reimbursed by
the employer or any other person, unless the reimbursed or reimbursable amount
has been or will be included in the assessable income. If the amount was reimbursed
to you after it has been claimed or allowed for deduction, you should inform this
Department immediately.
The deductible amount shall not exceed the amount prescribed in the Inland Revenue
Ordinance.
Deductible education expenses include tuition and examination fees in connection
with a prescribed course of education or fees of an examination set by specified
education providers or trade, professional or business associations. The course or
the examination must be for gaining or maintaining qualifications for use in any
employment.
A 'prescribed course of education' is one undertaken at a specified education
provider (list of providers is available at www.gov.hk/en/residents/taxes/salaries/allowances/deductions/selfeducation.htm), such as
university, college, school,
technical institution, training centre, institution specifically approved by the Commissioner of Inland
Revenue or a training or development course provided by a trade, professional or business association or one
accredited or recognized
by specified professional bodies or institutions.
Deduction is only allowed if the expenses have not been or will not be reimbursed by
the employer or any other person, unless the reimbursed or reimbursable amount
has been or will be included in the assessable income. If the amount was reimbursed
to you after it has been claimed or allowed for deduction, you should inform this
Department immediately.
The deductible amount shall not exceed the amount prescribed in the Inland Revenue
Ordinance.
(3)
Approved charitable donations (box [40] of paper return)
Donations must be in respect of those made to tax-exempt charities in Hong Kong or
Government for charitable purposes and supported by receipts. List of tax-exempt
charities is available at www.ird.gov.hk/eng/pdf/s88list_emb.pdf.
The aggregate deduction of approved charitable donations must not be less than
$100 and shall not exceed 35% of your income after allowable expenses and
depreciation allowances.
Enter the NET AMOUNT of approved charitable donations made by you or your spouse (not living apart) during the year
after excluding the donations already claimed in your spouse’s return.
Donations must be in respect of those made to tax-exempt charities in Hong Kong or
Government for charitable purposes and supported by receipts. List of tax-exempt
charities is available at www.ird.gov.hk/eng/pdf/s88list_emb.pdf.
The aggregate deduction of approved charitable donations must not be less than
$100 and shall not exceed 35% of your income after allowable expenses and
depreciation allowances.
Enter the NET AMOUNT of approved charitable donations made by you or your spouse (not living apart) during the year
after excluding the donations already claimed in your spouse’s return.
(4)
Mandatory contributions to recognized retirement schemes in capacity of an employee
(box [41] of paper return)
Enter the actual amount of contributions made to occupational retirement scheme
(ORSO Scheme) or the amount of mandatory contributions paid by you as an employee
to a Mandatory Provident Fund Scheme (MPF Scheme). The deductible amount shall
not exceed the amount prescribed in the Inland Revenue Ordinance.
Enter the actual amount of contributions made to occupational retirement scheme
(ORSO Scheme) or the amount of mandatory contributions paid by you as an employee
to a Mandatory Provident Fund Scheme (MPF Scheme). The deductible amount shall
not exceed the amount prescribed in the Inland Revenue Ordinance.
Attention:
You must read Section B on documentary
evidence in support of your deduction claims made under this Part.
4.4 Election for Joint Assessment
A married couple may elect to receive a joint assessment under Salaries Tax if they
would pay less tax under a single assessment based on their combined income and
allowances than under two separate assessments based on their respective individual
incomes and allowances.
There is no need for joint assessment election if your spouse did not have assessable income
under Salaries Tax. If your spouse also did not make election for personal assessment
separately from you, you should complete the part 'Married Person's Allowance and Personal
Disability Allowance' and Married Person's Allowance will be given to you automatically.
Refer to Part 12.1 for further details.
A married couple electing for joint assessment are still required to complete their
returns which they received. You and your spouse must sign on both returns
to indicate that you both agree to elect for joint assessment.
(May 2026)