Hong Kong salaries tax for Australians

Hong Kong's tax rates are the easy part. The hard part is that nobody takes tax out of your pay, and Australia might still be watching.

The short version

Salaries tax is the lower of two calculations: progressive rates from 2% to 17% on income after allowances, or a standard rate of 15% (16% on net income above HK$5 million) [1].
There is no PAYG. You get one tax return a year and one bill, which also includes provisional tax for the following year.
For 2025/26 the basic allowance is HK$132,000, and a tax reduction of up to HK$3,000 applies [1].
Australia has no comprehensive tax treaty with Hong Kong [8]. If you stay an Australian tax resident, your Hong Kong salary goes on your Australian return too [6].
Leaving Hong Kong for good means tax clearance: your employer must tell the Inland Revenue Department (IRD) and hold back your final pay for up to a month [3].

How the two calculations work

Hong Kong taxes employment income with a source that is in Hong Kong. The tax year (the "year of assessment") runs from 1 April to 31 March, which never lines up with the Australian year ending 30 June.

The IRD works out your tax two ways and charges whichever is lower [1].

Progressive rates apply to your net chargeable income, which is your income minus deductions minus personal allowances:

Net chargeable income band	Rate	Tax at top of band
First HK$50,000	2%	HK$1,000
Next HK$50,000	6%	HK$4,000
Next HK$50,000	10%	HK$9,000
Next HK$50,000	14%	HK$16,000
Remainder	17%

Standard rate applies to your net income (after deductions, but before allowances): 15% on the first HK$5 million and 16% on the rest, from 2024/25 onwards [1].

In practice, the standard rate only bites for high earners, because allowances stop mattering once your income is large. Everyone else pays progressive rates.

Allowances and deductions worth knowing

These are the IRD figures for 2024/25 and 2025/26, with the published figures for 2026/27 onwards alongside [1].

Item	2024/25 and 2025/26	2026/27 onwards
Basic allowance	HK$132,000	HK$145,000
Married person's allowance	HK$264,000	HK$290,000
Child allowance (each child)	HK$130,000	HK$140,000
MPF mandatory contributions (deduction cap)	HK$18,000	HK$18,000
Tax deductible voluntary MPF and annuity premiums (cap)	HK$60,000	HK$60,000
Domestic rents deduction (basic cap)	HK$100,000	HK$100,000
VHIS health insurance premiums (per insured person)	HK$8,000	HK$8,000

The MPF deduction covers your own 5% mandatory contribution [1]. The domestic rents deduction is for rent you pay on your own home, and it has conditions, so read the IRD notes before you claim it. On top of all that, the government has been giving a one-off tax reduction each year: up to HK$1,500 for 2024/25 and up to HK$3,000 for 2025/26 [1].

What it costs: two worked examples

These are simplified 2025/26 examples for a single person with no children, using only the basic allowance, the MPF deduction and the tax reduction [1].

	HK$900,000 salary	HK$3,000,000 salary
Less MPF deduction	HK$18,000	HK$18,000
Net income	HK$882,000	HK$2,982,000
Less basic allowance	HK$132,000	HK$132,000
Net chargeable income	HK$750,000	HK$2,850,000
Progressive calculation	HK$109,500	HK$466,500
Standard rate calculation (15%)	HK$132,300	HK$447,300
You pay the lower, less reduction	HK$106,500	HK$444,300
Effective rate on salary	about 11.8%	about 14.8%

Compare that with what a similar salary costs in Sydney or Melbourne once you add the Medicare levy, and you can see why packages here look so generous. The catch comes next.

Provisional tax: the double bill in year two

Hong Kong does not withhold tax from your monthly pay. Instead, your employer reports your income to the IRD, you file a return, and you pay a lump sum.

Here is the trap. Along with the final tax for the year just gone, the IRD charges provisional tax for the current year, usually estimated from last year's income. Provisional tax already paid is then credited when the final assessment comes through. The same mechanism applies to businesses [9].

So in your first year you pay nothing. In your second year you pay a full year's tax plus a full year's provisional tax, usually split into two instalments. Australians used to PAYG get caught by this all the time.

How to stay ahead of it

Set aside tax every month. A separate savings account or a regular transfer of about your expected effective rate works well.
Watch for your return. The IRD issues the individual tax return (BIR60) each year. You normally have one month from the issue date to file, and e-filers got an automatic one-month extension for 2025/26 [2].
Report everything. Include bonuses, share awards and the value of any housing your employer gives you.
Ask for a holdover if your income drops. If you expect lower income this year, for example because you are leaving or changing jobs, you can apply to hold over some or all of your provisional tax. Check the IRD's grounds and deadlines on your notice.
Pay on time. Late payment brings surcharges, and an unpaid bill makes tax clearance harder when you leave.

Housing, bonuses and other package quirks

Many expat packages include housing. If your employer provides your flat, or reimburses rent under a proper arrangement, you are generally taxed on a rental value worked out as a percentage of your income rather than on the actual rent. On Hong Kong rents that can save real money, which is why employers like to structure packages this way. Get the paperwork right, because a cash housing allowance paid into your account is usually taxed in full.

Bonuses are taxed in the year they accrue under your contract, not necessarily when they hit your account. Share awards that vest after you leave can still be taxable in Hong Kong, and your employer has to report them [3].

The Australian side: no treaty, no tie-breaker

This is where Australians in Hong Kong need to pay attention.

Australian residents are taxed on worldwide income. If you are still an Australian tax resident, you must declare your Hong Kong salary on your Australian return [6]. Whether you stay resident depends on the ATO's tests: the resides test, the domicile test, the 183-day test and the Commonwealth super test [5]. A house you kept, a partner who stayed in Perth or a plan to be back in two years can all point to Australian residency.

There's no comprehensive tax treaty. Hong Kong is not on Treasury's list of jurisdictions with an Australian income tax treaty [8]. With countries such as the UK, a treaty supplies tie-breaker rules for people who are resident in both places. Here there is no tie-breaker, so the ATO's domestic tests decide on their own.

You may get a credit for Hong Kong tax. If you've paid tax in Hong Kong on income Hong Kong has the right to tax, you may claim a foreign income tax offset in Australia, but the offset may not equal what you paid, and claims over A$1,000 need a limit calculation [6]. Because Australian rates are mostly higher, an Australian resident earning a Hong Kong salary often ends up topping up the difference.

The foreign employment exemption probably won't save you. Section 23AG only exempts foreign earnings for specific kinds of work, such as delivering Australian aid, working for approved charities or deployments with the ADF or police [7]. A banker in Central or a teacher in Kowloon Tong doesn't qualify.

The practical lesson: decide your residency position before you go, document it and get professional advice if your ties are mixed. Our guide to Australian tax residency after you move walks through the tests.

Leaving Hong Kong: tax clearance

When you leave for good, or for a long stretch, Hong Kong wants its tax first.

Your employer must file form IR56G at least one month before your expected departure and give you a copy [3].
From that notice, your employer has to withhold all money due to you for one month, or until the IRD issues a letter of release, whichever is sooner [3].
Every departing taxpayer must clear tax, even if the employer has agreed to pay it [10].
If a bonus or share award arrives after clearance, your employer files a revised IR56G and the withholding starts again [3].

Give HR notice early and keep money aside for the last bill. The Australian Consulate-General in Wan Chai can't help with tax disputes, and Smartraveller is clear that the Australian Government can't intervene in Hong Kong's judicial process [4].

Want to compare notes on payslips and packages? Join Cooee Hong Kong, our Facebook group for Australians in Hong Kong, and ask people who have done a few tax seasons here.

Salaries tax in Hong Kong: low rates, provisional tax and no treaty