Form IR1360A instalment application for partnerships

Understanding Form IR1360A Instalment Application for Partnerships

Form IR1360A lets partnerships pay tax by instalments. It differs from the corporate version, Form IR1360B, because partnership tax is assessed on the business but the liability falls on the individual partners. Use this form to propose a payment schedule when the partnership cannot settle the full tax liability by the due date.

Partnership Tax Instalment Hong Kong

Hong Kong partnerships pay profits tax on business income. The Inland Revenue Department issues a single assessment notice, yet each partner is jointly and severally liable for the tax. A partnership unable to pay in full by the due date may apply for a payment plan. The Inland Revenue Ordinance (Cap. 112) gives the Commissioner discretion to allow instalments where the partnership demonstrates genuine financial hardship.

Apply before the tax due date. Late applications are rarely accepted without proof of exceptional circumstances. The IRD reviews each application on its merits, considering the partnership's finances, the tax owed and the proposed repayment schedule.

IRD Form IR1360A

Form IR1360A is the official application document from the Inland Revenue Department. Download it from the IRD website's forms index. The form requires detailed information on the partnership's business, partners and financial circumstances. Complete all relevant sections accurately; incomplete applications are rejected without consideration.

The form is structured in parts. Part A requests partnership particulars: business name, business registration number and tax file number. Part B needs details of the tax liability, including the year of assessment and amount due. Part C is the financial assessment, where the partnership explains why it cannot pay in full and provides evidence of its financial position.

Hong Kong Partnership Tax Payment Plan

A successful application results in a Hong Kong partnership tax payment plan. The IRD considers the partnership's proposal and may offer a schedule of monthly or quarterly payments. The plan usually requires full payment within a reasonable period, not exceeding 12 months. The IRD may request more information or documentation before approving the plan.

The partnership must continue paying its current tax obligations while the instalment plan is active. Missing a payment can cause the IRD to revoke the plan and demand immediate payment of the outstanding balance. The IRD may also charge interest on overdue tax, even during an instalment plan.

Apply for Tax Instalments Partnership

To apply, complete Form IR1360A and submit it to the Inland Revenue Department with supporting documents. These documents should prove the partnership's financial position, such as recent financial statements, bank statements, cash flow projections and details of other liabilities. Include a letter explaining why payment is not possible and proposing a specific repayment schedule.

Send the application to the IRD's office. Keep a copy of the application and all correspondence for your records. The IRD will acknowledge receipt and may ask for more information. Respond promptly to any queries to avoid processing delays.

Partnership Provisional Tax Instalment

Partnership provisional tax instalment applications apply when a partnership faces a provisional tax assessment. Provisional tax is an advance payment based on the previous year's profits. If the partnership expects significantly lower profits, it may apply for a holdover of provisional tax using Form IR1121. If it cannot pay the assessed provisional tax, it may use Form IR1360A to request instalments.

Applying for instalments does not change the obligation to file the profits tax return on time. The partnership must still submit its return and pay any tax due according to the approved schedule. The IRD may review the partnership's compliance history when considering the application, so a record of timely filings is beneficial.

Information Required on the Form

Form IR1360A requires comprehensive information. The partnership particulars section needs the business name, business registration number, correspondence address and nature of the business. You must also provide the tax file number and the year of assessment for which instalments are sought.

The financial assessment section is the most detailed. State the total tax due, the amount payable immediately and the proposed instalment amounts and dates. Explain the reasons for financial difficulty, such as a business downturn, unexpected expenses or delayed customer receipts. You must also provide details of assets, liabilities, income and expenses.

Partner Details

The form requires details for every partner. Provide each partner's name, Hong Kong identity card number or passport number and correspondence address. Indicate whether each partner is an individual or a corporation. If a partner is a corporation, give its business registration number and place of incorporation.

The IRD uses this information to verify partner identities and assess their individual financial positions. Because partners are jointly and severally liable, the IRD may consider their personal finances when evaluating the application. Ensure all partner details are accurate and current.

Application Submission

Submit the completed Form IR1360A and supporting documents to the Inland Revenue Department. The form can be sent by post or delivered in person to the IRD office. Electronic submission through the eTAX system is not currently accepted. Allow several weeks for the IRD to review the application.

Submit the application as early as possible, ideally at least 14 days before the tax due date. The IRD may still consider a late application if you provide a good reason for the delay, but do not assume it will be accepted. The IRD may impose conditions, such as requiring a deposit or a partner's guarantee.

After Approval

After approval, the partnership must strictly follow the payment schedule. The IRD will issue a notice of approval with the plan's terms, including each instalment's amount and due date. Make each payment on time using an approved method, such as bank transfer, autopay or cheque.

If the partnership's finances improve, it can pay the outstanding balance early without penalty. If finances worsen, it may apply for a variation by submitting a new application. Contact the IRD immediately if you anticipate difficulty meeting the payment schedule.