Hk Share Award Tax Dipn38

Hong Kong Share Award Tax — DIPN 38 Partial Exemption

When a Hong Kong taxpayer transfers from a non-HK employer to a HK employer mid-vesting, share awards granted under the non-HK employment are only partially taxable in HK. This skill produces:

1. An IR56B vs Assessment cross-check — detect which tax years have unclaimed exemptions
2. A DIPN 38 computation PDF in the IRD-accepted "APPENDIX-EQUITY" format
3. An HTML audit report for personal review (CC Pages)
4. The eTAX BIR60 Appendix Section 4 filing guidance
5. An IR831 / Section 70A retrospective claim package (for years where exemption was missed)

When to trigger

Strong triggers:

• User mentions HK salaries tax + share awards / GSU / RSU / stock options
• User mentions "DIPN 38" / "partial exemption" / "section 8(1A)(a)"
• User mentions transfer between non-HK and HK entities (Google Shanghai → Google HK, etc.)
• User uploads a stock statement / IR56B / IRD assessment and asks about HK tax
• Chinese: "报税分析", "股票减税", "GSU 豁免", "地域来源", "从内地转来香港", "70A", "股票报税"

Do NOT use for:

• Non-HK tax jurisdictions
• Pure HK employment with no cross-border element
• Carried Interest (BIRSP4 — different form)

Core algorithm

Legal basis: DIPN No. 38 ¶43–46 + section 8(1A)(a) IRO.

                                    Days in HK during vesting period
Net Assessable HKD = Net Amount × ─────────────────────────────────────
                                    Total days in vesting period

Where:

• Total days = vest_date − grant_date (Python .days)
• Outside-HK days = hk_employment_start − grant_date (when grant < hk_start)
• HK days = total − outside

Decision rules:

Critical data rules (verified against IRD-accepted filings):

• Use Total Income of GSUs at Vest, NOT Prorated Income (Prorated is employer-internal)
• Use HK jurisdiction row's FX rate (7.7), NOT China row's PBOC rate (7.1)
• Use floor() (truncate) for final integer, not round() — IRD convention
• Google IR56B reports GSU at full amount (no geographic split) — taxpayer must self-claim

Workflow

Phase 1: Gather inputs

Collect via dialogue; auto-fetch where possible:

Auto-fetch via Chrome MCP (if user has logged in):

• Morgan Stanley: Activity → Reports → "Your Alphabet Stock Statement" → All history / USD / CSV → Run Report → fetch download link
• IRD: itp.etax.ird.gov.hk → 税務狀況 → 評税 → 檢視 → presign URL → fetch PDF

Phase 2: Extract vest data from stock statement

For Alphabet/Google statements, see references/extracting_alphabet_statement.md.

Key rules:

• Take Hong Kong jurisdiction rows only (skip China rows — different FX rate)
• Extract: grant_date, vest_date, shares (GSUs Vested), fmv_usd (Fair Market Value), fx_rate
• Filter to the target year of assessment (vest_date ∈ [YA_start, YA_end])
• Output CSV for scripts/compute.py

Phase 3: Cross-check IR56B vs Assessment (detect unclaimed exemptions)

This is the diagnostic step — determines whether to file a new claim or a retrospective 70A correction.

For each assessed tax year:

IF IR56B Total = Assessment income → ❌ No exemption claimed (problem year)
IF IR56B Total > Assessment income → ✅ Exemption was claimed (OK year)
   Verify: difference ≈ independently computed CN-source amount (within 2%)

Phase 4: Verify algorithm against prior year (optional but recommended)

If user provided a previous year's return with APPENDIX-EQUITY:

1. Re-run compute.py on last year's data
2. Compare each row's assessable_hkd to the filed figure
3. Must match within HK$ 0.01 — if not, stop and investigate

Phase 5: Run computation

Build config YAML + vests CSV, then:

python3 scripts/compute.py --config config.yaml --vests vests.csv --output result.json

Validates all vests fall within YA window, computes per-vest apportionment, aggregates totals, runs sanity checks.

Phase 6: Generate outputs

APPENDIX-EQUITY PDF (for eTAX submission):

python3 scripts/gen_pdf.py --result result.json --output appendix_equity.pdf

Multi-page PDF: main table → DIPN 38 detail blocks → Itinerary appendix.

HTML audit report (for personal review):

python3 scripts/gen_tax_report.py \
  --analysis analysis.json \
  --ir56b '{"2024/25":{"gsu":604498,"total":3305748}}' \
  --assessment '{"2024/25":3305748}' \
  --taxpayer "NAME" --file-no "FILE_NO" \
  --output report.html

Publish via publish-cc-page.sh.

Phase 7: Action guidance

Situation A — Current year filing (not yet filed):

• Guide eTAX BIR60 filing per references/etax_filing.md
• Enable "Apply for partial exemption" in Step 2 → Box 30 = IR56B total → Box 34 = excluded amount → Section 4 attach PDF

Situation B — Past year where exemption was missed (70A retrospective):

• Guide IR831 + Section 70A letter per references/ir831-guide.md
• IR831 Item 2 + Item 25, attach APPENDIX-EQUITY PDF + IR56B + employment contract
• Deadline: 6 years after end of tax year

Situation C — All years correctly claimed:

• Confirm no action needed; remind to continue claiming until all pre-transfer grants vest

Reference files

• references/dipn38.md — DIPN 38 ¶43–46 verbatim + interpretation
• references/etax_filing.md — Full eTAX BIR60 filing walkthrough (Box-by-Box)
• references/ir831-guide.md — IR831 filling guide + 70A letter template
• references/extracting_alphabet_statement.md — Morgan Stanley statement parsing
• references/workflow-checklist.md — Material checklist + decision tree

Scripts

• scripts/compute.py — Core DIPN 38 calculation engine (YAML+CSV → JSON)
• scripts/gen_pdf.py — APPENDIX-EQUITY PDF generator (reportlab)
• scripts/gen_tax_report.py — HTML audit report generator (Material Design)
• scripts/parse_ms_statement.py — Morgan Stanley CSV auto-parser (bulk extraction)
• scripts/example/ — Working example with anonymized data

Common pitfalls