SALARY TAX PROBLEM

separetion compensation should be included in tax return. in salary tax, any compensation deriving from job must be taxable.
however, in the case the separation compensation is like a consideration of the contract for waive the right to sue. it is difficult to judge the property of the compensation. so you should write it in the tax return.

The separation compensation will be a compensation to leave without any right of claims for the company. Such staff did not perform any services to obtain such compensation, and this will not be treated as remuneration. Thus, there will have the ground to argue with the IRD not subject to the salaries tax. Also, the company is not able to claim as tax deductible expense for such compensation as well.

As this "separation compensation" is not a "must-paid' amount in accordance with the Employment Ordinance or employment contract e.g. salary in lieu of notice but a gratuity. Tax return I.R. 56F / I.R. 56G has to be filed for this additional sum of money to the employee. This amount is taxable and it is the employer's obligation to report this to IRD.

Separation Compensation need to fill in the form to notify IRD together with the regular salary of this employee got in the recent year and notify IRD the resignation of this employee.

Taxable or not need to see how much this employee got in the recent Assessable Year, taxable or not need to see the total income of this employee got in the assessment year exceeds the 免稅額 or not.