How to Complete IR56B: The Employer's Return Explained
Reviewed by AIcountant Corporate Services Limited · TCSP Licence No. TC010997
Early April, a letter from the Inland Revenue Department arrives at the office. The owner opens it, sees the words “employer’s return”, and puts it aside — the staff file their own tax returns, so what has it got to do with me?
A month later, the deadline has passed.
In short: the employer’s return (BIR56A), together with an IR56B for each employee, has to be filed within one month of the date of issue. This is the employer’s own separate obligation and has nothing to do with whether the employees file their own returns.
At a glance
| Form | When it is used | Deadline |
|---|---|---|
| BIR56A | The main annual employer’s return | Within 1 month of issue |
| IR56B | Annual income report for each serving employee | Filed together with the BIR56A |
| IR56E | A new employee starting | Within the statutory period after they start |
| IR56F | An employee leaving | 1 month before employment ends |
| IR56G | An employee leaving Hong Kong | Within the statutory period before departure, with payments withheld |
| Year reported | 1 April to 31 March |
|---|---|
| No employees | The BIR56A is still filed, marked “nil” |
Form numbers and deadlines are as most recently published by the IRD.
What income is reportable?
More than people expect. Beyond basic salary, it also covers:
- Bonuses, commission, allowances (transport, meals, housing allowance)
- Overtime and the thirteenth month
- Personal expenses paid by the employer
- Benefits from share awards or share options
- Accommodation provided by the employer (which has its own section to complete)
Not reportable: severance payments and long service payments made under the Employment Ordinance (only any amount above the statutory entitlement is reported).
Not deductible: the employee’s own MPF contributions cannot be deducted from the income reported — report the gross figure.
The five most common mistakes
One: leaving out non-cash benefits. Phone bills, rent and medical check-ups the company pays for an employee are all income. Plenty of owners enter only the figure that went through the bank.
Two: deducting the employee’s MPF contributions. As above — report gross, do not deduct.
Three: not using the right section for accommodation. Employer-provided accommodation has its own reporting method and cannot be reported as an ordinary allowance.
Four: reporting the same amount on both IR56B and IR56F. Where an employee leaves mid-year and you filed an IR56F reporting their income for the year, do not report it again on the IR56B — it will result in the employee being taxed twice.
Five: assuming no employees means nothing to file. Even where a company has not hired anyone, a BIR56A received still has to be filed, marked “no employees”.
IR56F and IR56G: two easy traps
IR56F (an employee leaving) is filed one month before employment ends. It is advance notice, not something filed afterwards. Employee resigned suddenly and a month is not possible? File it anyway, noting the actual circumstances.
IR56G (an employee leaving Hong Kong) also requires payments to be held. This is the one that catches out the most owners: after filing an IR56G, no payment may be made to that employee until the IRD notifies you that the money may be released.
Pay the salary as usual, settle the accrued leave as usual — and the tax may end up falling on the employer. That one is worth remembering on its own.
What if you filled it in wrong?
If you find a mistake, correcting it yourself is better than waiting for the IRD to find it.
The usual approach is to submit a notification of amendment to the IRD, setting out what was originally reported and the correct figure. Where the error means an employee was over- or under-taxed, the sooner it is corrected the better for both sides.
If instead the IRD writes to you first, that is a different matter — see how to respond to an IRD enquiry letter.
How to stop April being a scramble
The reason April is a scramble is usually not that you cannot complete the form; it is that the payroll records for the whole year are incomplete.
In practice:
- Record it each month as you pay — basic salary, allowances, bonus, contributions withheld, itemised
- Record non-cash benefits (phone bills, rent, check-ups) at the same time, rather than sorting them out at the year end
- File an IR56E as soon as someone starts and an IR56F as soon as someone leaves; do not let them pile up until April
Do those three and the April form is a matter of transferring records you already have, with no receipts to dig through.
And the same records serve MPF contributions and the Labour Department’s requirements — done once, used three times.
Hand it over and stop tracking it
Payroll, contributions and the April filing repeat every month and every year — exactly the kind of work worth handing over.
Want to stop having to remember what April needs? Talk to us, or get started.
This is general information and does not constitute tax advice. Form numbers, deadlines and reporting requirements are as most recently published by the IRD.
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