The reporting levels
The IRD does not ask for every service payment. It sets guidelines because many small service providers earn below their allowances and some amounts are insignificant; its own example is a cleaning contractor paid HK$1,000 a month for office cleaning[2]. You must report when the total paid in a year passes these levels[1][3]:
| Service provider | Report if total payments in the year exceed |
|---|---|
| Consultants, agents, brokers, freelance artistes, sportsmen, writers and similar | HK$25,000 |
| Freelance guides and entertainers | HK$25,000 |
| Commissions and copyright or royalties to a local unincorporated entity | HK$25,000 |
| Sub-contractors (sub-contracting fees) | HK$200,000 |
For the form, sub-contracting fees mean payments to third parties to do part of the jobs for a large project[3]. The amount is the total paid or payable to the recipient in the year of assessment, 1 April to 31 March; if your accounts close on another date you recalculate the figure for that period[2][3].
Who is reported, and who is not
Report the payment if the service provider is an individual, a partnership, a sole proprietorship or an unincorporated body of persons[2]. No IR56M is filed for payments to limited companies or to non-residents; payments to non-resident professionals may be reported on Form IR623P instead[3][1].
A corporation is outside IR56M, but there is a trap. If you engage an individual's personal services through a company that person controls, section 9A of the Inland Revenue Ordinance may apply, and then you report the remuneration on IR56B as if they were an employee, even though you paid the company and hold its receipt[2][4].
How to file
- Prepare one IR56M for each service provider, covering the whole year's payments, in Hong Kong dollars if you paid in another currency[2].
- For a business, give its name, Business Registration number and address; for an individual, the name as on the identity card, Hong Kong Identity Card number, sex and address[2].
- Bundle the forms by year, in alphabetical order of recipient, numbered from 900001 in the Sheet No. field[3].
- Put the number of IR56Ms on Form IR6036B; each IR6036B covers one year's payments[2][3].
- Submit the IR6036B and IR56Ms with your IR56Bs under cover of the BIR56A. With no IR56B to file, tick No on the BIR56A and attach them[2].
- Give each service provider a copy of their IR56M[2].
The IR6036B and IR56Ms are signed by the proprietor, the precedent partner, a company secretary, manager or director, or the principal officer, as for the BIR56A[2]. They can also be filed through the IRD's Employer's Return e-filing services[2][3]. The forms are normally sent with the BIR56A in early April if you lodged them in earlier years[2].
Correcting one
To amend an IR56M, furnish a revised form marked Replacement, with the date of submission and sheet number of the original, or a form marked Additional covering only the extra sum, or a written notification of amendment. Photocopies, fax copies and scanned copies are not accepted[2].
What to keep through the year
Because the test is a yearly total per provider, keep a running record of each freelancer's and sub-contractor's name, identity or business registration details and payments from 1 April. Collecting those details at the first invoice is far easier than in April.
Rules, forms and figures can change, and the official pages listed below are the authority wherever this summary differs from them.