My income crashed this year β can I get my provisional tax held over?
Yes, if you can show your income for the provisional year will likely be less than 90% of the amount the provisional tax was based on. That's the main statutory ground under section 63J of the Inland Revenue Ordinance. But "cash is tight" alone won't do it β you need evidence, and you need to apply before the payment deadline.
The grounds that actually work
| Ground | What it means |
|---|---|
| Income drop | Net chargeable income for the provisional year likely < 90% of the prior-year figure |
| Business ceased/dormant | Profits will likely fall because the business closed or went dormant |
| Missed allowances | Capital allowances or deductions apply this year but weren't in the base assessment |
| Objection pending | You have an unsettled objection against the prior year's assessment |
| Personal assessment election | Electing personal assessment would reduce the provisional charge |
For salaries tax, the equivalent ground is ceasing to derive chargeable income, or income falling below 90% of the previous year (application form IR1121).
The evidence bar
The IRD expects properly signed draft accounts covering at least 8 months, plus supporting documents for the drop (terminated contracts, pay cuts, closure notices). Vague claims without numbers are rejected. Apply as early as you can see the shortfall coming β waiting until after the due date weakens your position and interest may already be running.
If the application is rejected
You must pay the provisional tax as demanded. Late payment attracts a 5% surcharge, with a further 10% if still unpaid after six months. If your income genuinely collapsed, consider also filing an objection to the assessment itself β but get advice first, because an unsuccessful objection doesn't pause the payment clock unless holdover is granted.
Worked example
Last year's salaries tax: HK$200,000. This year's income collapsed and you expect net chargeable income of HK$150,000 β roughly 40% of last year's base, well under the 90% threshold. You apply for holdover with 8+ months of draft accounts and the termination letter. If granted, the provisional charge is recalculated on the lower figure instead of last year's. If your income instead fell only 5%, don't bother applying β you won't clear 90% and the paperwork costs more than it's worth.
Frequently asked questions
Can I apply after I've already paid?
You can still apply, but the practical benefit shrinks β any successful holdover would then be refunded or offset rather than reducing an upcoming payment.
Does the 90% test use gross income or net chargeable income?
Net chargeable income (after allowances and deductions) for salaries tax; assessable profits for profits tax. Use the same basis the IRD used.
How long does the IRD take to decide?
It varies; the department is known to be slow but generally reasonable. File early and keep copies of everything.
Sources
- https://www.gov.hk/sc/residents/taxes/taxfiling/object/provisional.htm
- IRD, "Objections and Holdovers" (ird.gov.hk) β holdover grounds including the 90% test and 8-month draft accounts requirement; Inland Revenue Ordinance s.63J
- https://hongkong.acclime.com/guides/provisional-profit-tax/