How to prepare IR56M

Hong Kong companies are required to submit Form IR56B to report employees’ remuneration. For payments made to non-employees for their services, the company must submit Form IR56M.

For non-employee remuneration, this typically includes payments to:

Subcontractors
Consultants
Agents
Brokers
Contributing artists, entertainers, athletes, and writers

As these individuals are not classified as employees, their remuneration should be reported via Form IR56M.

Overview of IR56M: Notification of Remuneration Paid to Persons Other Than Employees

Define Tax Information: Input your Tax File Number, Name, and Designation in the Taxation Module Setup.
Specify Income Limit Preference: Decide whether to ignore the $25,000 income limit in the Taxation Module Setup.
Set Up Pay Types: Define the pay type(s), particularly for IR56M, in the Payroll Module Setup - Pay Type Tab. The IRD Category (NE) is to select which category the pay item belongs to in the IR forms for Non-employee (IR56M).
Configure IRD Category (NE): If the Pay Type Table is turned on, in the Pay Type Table, select the appropriate category for non-employee payments in the IR56M forms.

5. Define the Non-Employee for IR56M: Enable the "Non-Employee for IR56M" in Employee Master, Inland Revenue tab.

4. Generate IR56M Batch (make sure the April to March batches that contain the Incomes for the Non-Employees are all protected)

6. Generate IR56M Batch: Create the IR56M Batch and ensure the income data for non-employees (covering April to March) is secured.

7. Print IR56M Checklist: Produce the checklist for review and verification.

8. Distribute Taxable Income Report: Print and distribute the Taxable Income Report (by IRD Category or Pay Type) to non-employees.

9. Modify IR56M Batch (if applicable): Export, edit, and re-import batch data if needed.

10. Perform IR56M Amendments (if required): Make necessary adjustments to the IR56M records.

11. Generate Data File and Control List: Produce the IR56M Data File and Control List, then submit the disk along with the control list to the Inland Revenue Department.

12. Print and Distribute IR56M Forms: Print IR56M forms from the amendment section and distribute them to non-employees. Refer to the IR56M Sample Output if needed.

13. Repeat for Multiple Employers: If the database includes multiple employers, repeat the batch generation process for each.

14. Finalize Taxation Year: Once all tasks are complete, click the Protect button on the IR56M Amendment toolbar to close the taxation year.