Form IR1360 Instalment Application Individuals Hong Kong

Understanding Form IR1360 Instalment Application Individuals Hong Kong

Form IR1360 allows individuals and sole proprietors in Hong Kong to apply to pay their tax in instalments. The Inland Revenue Department issues it for taxpayers who cannot settle their full assessed tax by the due date. The IRD considers each application on the taxpayer's circumstances, the tax amount, and the reason for non-payment. The Inland Revenue Ordinance (Cap. 112) governs the application, giving the Commissioner discretion to grant instalments where hardship or reasonable grounds are shown.

Eligibility for an Instalment Arrangement

The IRD primarily assesses applications on the applicant's financial situation. No statutory minimum or maximum tax amount qualifies, though the department expects the liability to be substantial enough to justify a structured plan. Common grounds for approval include temporary financial difficulty, such as job loss, reduced income, or unexpected medical bills. A sharp increase in tax liability from a provisional tax assessment can also create a cash flow problem. Approval is possible if the taxpayer holds assets but cannot liquidate them quickly without a disproportionate loss. A good compliance record, with tax paid on time in previous years, also supports an application.

The IRD does not grant instalments to provide an interest-free loan. It charges interest on overdue tax and may impose a surcharge for late payment. An approved instalment plan spreads the payment period; it does not cancel these charges. The taxpayer must follow the agreed schedule strictly. Default cancels the arrangement, and the full outstanding balance plus penalties become immediately payable.

IR1360 Form and Filing Instructions

Form IR1360 is the standard application for an individual to request an instalment plan. It requires detailed personal and financial information. This includes the taxpayer's Hong Kong Identity Card number and tax file number, the relevant year of assessment and the amount of tax assessed, and a statement of the taxpayer's income, assets, and liabilities. The applicant must explain why the full tax cannot be paid by the due date. The form also needs the proposed number of instalments and the amount of each, supported by documents like bank statements, payroll records, or medical certificates to prove financial hardship.

The form must be signed and submitted to the IRD before the original tax due date. Late applications are considered only in exceptional circumstances. The IRD typically responds within two to four weeks. If approved, the IRD issues a letter specifying the instalment schedule and the applicable interest charges.

Individuals Eligible to Apply

This form is for individuals assessed for salaries tax, property tax, or profits tax as a sole proprietor. Corporations use a different form (IR1361). Employees and directors assessed for salaries tax under personal assessment or directly under salaries tax may use IR1360. Sole proprietors and partners in a partnership assessed for profits tax, and individuals owning rental property assessed for property tax, are also eligible. Taxpayers who receive a provisional tax assessment and cannot pay the combined tax for the current year and the provisional tax for the next year can apply.

The IRD treats each assessment separately. A taxpayer with multiple tax liabilities, for example salaries tax and property tax, may need to submit separate applications or specify the allocation on the form.

Typical Number of Instalments Granted by the IRD

The IRD does not publish a fixed policy on the number of instalments. In practice, the most common arrangement is three to six monthly instalments. For very large tax amounts, the IRD may allow up to 12 instalments, but this is exceptional. Instalments are usually monthly, with the first payment due shortly after approval. The total instalment plan period is generally limited to no more than 12 months from the original due date.

The IRD calculates each instalment amount to clear the total tax due, plus interest charges, within the agreed period. The interest rate is set by reference to the judgment rate under section 49(1) of the High Court Ordinance (Cap. 4), which is updated periodically. The taxpayer must pay the exact amount stated in the approval letter. Partial or early payments do not automatically adjust the schedule.

Application via E-Tax and Post-Filing Steps

Taxpayers can submit Form IR1360 electronically through the IRD's e-Tax system. The portal allows online filing, document uploads, and electronic receipt of approval or rejection notices. Access requires a Hong Kong Identity Card number and a password. For paper filing, the form can be printed, completed, and mailed to the Taxpayer Services Division of the IRD.

After submission, keep a copy of the form and all supporting documents. If the application is approved, adhere strictly to the instalment schedule. The IRD may require the taxpayer to purchase a Tax Reserve Certificate as security for the instalment plan, though this is not mandatory for all cases. The certificate is held by the IRD and applied against the final instalment.

If the application is rejected, the taxpayer may appeal in writing to the Commissioner or pay the full amount immediately to avoid further interest and penalties. A second instalment plan can be applied for in a subsequent year, provided the current plan is completed and the taxpayer's compliance record is good.