Long Service Payment Accounting
The Legislative Council has passed the legislation to abolish using the accrued benefits of employers’ mandatory contributions under the Mandatory Provident Fund (MPF) System to offset severance payment (SP) and long service payment (LSP) in June 2022. The Government has announced that the abolition of offsetting arrangement will take effect on 1 May 2025.
Prior to 1 May 2025, employers are allowed to offset their obligation of LSP against the contribution they make under the MPF scheme. After the abolition of the MPF-LSP offsetting mechanism, employers in Hong Kong are required to bear and pay SP/LSP to their employees on top of the MPF they contributed.
The abolition of the MPF-LSP offsetting mechanism carries significant accounting implications that may appear intricate and challenging to comprehend. HKICPA has issued Alert 44 that discussed the accounting implications. The two recommended methodologies put forth by the Hong Kong Institute of Certified Public Accountants (HKICPA) for addressing the accounting treatment of relevant costs.
Full LSP Provision Service
LSP cost calculations involve more than just algorithms and formulas. The planning and auditing of the related entries in the books are also the pain points of the exercise for accountants. We have extensive experience with the complexities involved in LSP calculations, and even more so in dealing this matter with auditors. Therefore, we are now providing a full service to our clients for the accounting of LSP provisions and pre-transition MPF offsets.
LSP Genie Free is Online
Planning Your LSP Calculations
About Us
Welcome to HKAccount.ing, a boutique digital consultancy specializing in accounting, HR, sales, and operation process automation. Our aim is to help you improve your productivity by leveraging ready-to-use productivity SaaS and no-code AI automation.
We understand the office software, email and instant message like WhatsApp had helped a lot in our daily work. However, most of us only turn the data from analog to digital, from paper to screen, without transforming ourselves to get familiar with various automatic operation procedures, which are already come together in the tools we worked with everyday. We are ready to uncover all those magic in your working environment, guide your practice towards productivity improvement.
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