The form known as the IR56M is one of the most important papers that the employers in Hong Kong should complete. They guarantee observance of the Inland Revenue Department (IRD) and do not conceal information about employees’ wages. But the processes that are part of IR56M submission can be rather complicated for the majority of employers. The following is a detailed guide to assist you file through the IR56M application without much struggle.
Understanding IR56M Form
What Is IR56M?
IR56M form is an employers’ return form that is filed by employers located in Hong Kong. Employer needs to file IR56M to notify payments made to non-employees which include Consultants, agents, brokers, freelance artistes, entertainers, sportsmen, writers, freelance, guides, etc. This form is mandatory. And, it allows the institution to keep accurate records of non-employee related compensation as well as compliance with taxation laws.
Who Needs to Submit IR56M?
Employer who makes payments non-employees have to fill the IR56M form. This encompasses all forms of businesses and industries. It ensures that every distribution of cash/cheque to the non-employee is recorded to the IRD.
Key Components of IR56M
It is divided into several sections, each requiring specific information:
Employer Details: Name address, and tax file number.
Employee Details: Identification code of the recipient, payment recipient’s name, and recipient’s address.
Payment Details: Cash paid and non-cash amount, the type of Deferred tax, period of the amount covered by the deferred tax.
Declaration: Reaffirmation that the information given is correct.
IR56M Form Requirement
Gathering Required Information
Before completing the IR56M form, the first step is to gather the following documents and information:
- Tax identification number of the employer and registration of the enterprise.
- Personal identification number as well as address belonging to the recipient.
- Records of all payments given with the date and the amount given.
- The type of record that support the nature of the payment for instance; invoices or contracts.
Common Mistakes to Avoid
Avoid the following common errors to prevent delays or penalties:
- Failure to fill some of the correct recipient details.
- Lack of records of payment or documents supporting the cash payment.
- Imprecise calculation of the sum of payment.
- Fail to sign and date the declaration section.
Procedure on How to Fill IR56M
Employer Information
Employer should properly complete his name, address, and tax file number. Recheck so as to ensure no typing error that may cause delay in process.
Employee Information
Employer has to provide the details of the recipient starting with his/her name and identification number, address correctly. Ensure to keep a record of the payments that is clear and understandable. Besides, it must contain details in regard to the amount paid, type of payment, and period it applies to.
Declaration and Submission
After filling in the form completely, read the contents of the form to check for the accuracy of the entered information. We suggest that the declaration section be completed and signed and include the date by an authorized person. The whole set of completed Forms IR56M should be returned to the Inland Revenue Department with an IR6036B. You can also file via eTAX.
Accuracy of Work and Compliance
Legal Consequences of Incorrect filing
Furnishing of wrong or partial information on the IR56M form is unlawful and attracts penalties such as fines. Failure to observe the provided IRD requirements may also cause audits of your business and additional probe on its records.
Benefits of Timely Submission
Thus, timely filing of the IR56M form helps to meet the legal requirements of taxation for your business. Submissions on time reduces on penalties and promotes a good working relationship with the IRD thus improving operations and finance.
Fastlane HR’s Tips for IR56M Form Application
- Document all the correspondences and records of all payments made to employee or for employee’s behalf.
- Use Payroll or accounting software can help and one can try it out.
- Make sure you are aware of any changes in either tax regulations or the method of submission.
Where to Seek Help
By following the guidelines in this blog, you can surely able to process the application. However, if you need assistance with filing the IR56M form, Fastlane HR can help you to streamline the whole process with accuracy and confidence. Since timely submission and accuracy matters for this form, it is better to be assisted by professionals for smoother operation. Book the consultation with Fastlane HR today.