[cloverclover]

We are expats in the making ! I know I will need to contact our accountant but was hoping you could help while we are working out budget forecasts etc.

I believe there is no tax liability back in Australia while working in HK - Is that correct ? (we are relocating for 2-3 years more if we wish)

We would only derive an income in Australia from renting our home and the amount received won't cover our mortgage repayments so we won't be making a profit.

I have read tax is a max. rate of 16% on incomes over HK$ 1 million. But lower below this amount.

How does this breakdown ?

eg: Does the 16% only apply to the amount over the mill or the whole lot?

I believe it is 10% up to 1 million - is that correct ?

I have also read that housing allowances are tax free upon proof of lease payments

Basically if there is no known Australian liabilities what is the formula for ascertaining our HK tax obligations please ?

Feel free to include anything else we may need to know.

Many thanks in advance.

[PDLM]

Not exactly. There are two tax schemes and you pay whichever one is cheaper. There is a tiered system or a flat rate (which has just dropped to 15% for this financial year (April-March) onwards). Details here. There's a tax calculator here to do some back of an envelope calculations.

Housing allowance is more complex. Use the search function on these forums where it has been discussed dozens of time previously or read this. (Yes, it is unusual - the taxable value of a property provided is independent of the rental value of the property.) Your employer needs to manage some bureaucracy for you to benefit from the housing allowance scheme.

[cloverclover]

PDLM...............I was just discussing you

I was telling my husband how helpful and knowledgeable you are and was hoping you would respond.

While waiting for a response to my post I was tinkering with a HK tax computation thing I googled but being very lay in my knowledge of such things I go bamboozled trying to work out the whole housing allowance thing.

So it is not the amount of the allowance but the value of the property I rent ????

I am confused (very easy for me)

[PDLM]

Nope - nothing about the value of the property affects its taxable value.

Let's say you earn $1M and you are, in addition, given a housing allowance. Assuming that this allowance meets the requirements of the policy I linked above (essentially that it is all spent on rent and that the employer maintains control that this is so - copies of lease & rent receipts - and reports this appropriately to the Inland Revenue) then the taxable value of that housing allowance is HK$100K (10% of the rest of your package). This is regardless of whether the allowance is, say, $100K or $1M.

What this means, assuming you are on flat rate tax, is that the tax bill for your Housing Allowance is 1.5% (15% of 10%) of the total of the rest of your income, regardless of how big the allowance actually is.

Obviously if you plan to spend less than 10% of your total package on housing then there is no value in having Housing allowance.

[cloverclover]

Hey PDLM. I get there eventually.

My apologies - I understand now. You made it very simple for me many thanks.

Your explanantion made alot more sense to me than that of the inland revenues. Acccountacy is not my forte, I have a fairly rudimentary understanding of the lingo.

By the way if your employer is paying your school fees do you need to include that as income???

[PDLM]

Originally Posted by cloverclover

By the way if your employer is paying your school fees do you need to include that as income???

I don't have kids so I haven't studied this in detail, but I believe so. This page contains links to pretty much all the information and documents you might want on individual taxes in Hong Kong.

[dropdedfwed]

one other thing to remember is that if you are working in Oz for >180 days in the financial year, all your earnings for that year are taxable in Oz. If you are in Oz for less than 180 days in the financial year, onyl your Australian income is taxable.

So if you move before end of December, your income in HK is not taxed in Oz. Otherwise it is taxed as Oz income, and you get a rebate on the tax already paid in HK.

And When you move back, you have to move back after New year but before end June for the same reasons.. well, in theory... it all depends on how clean you are in your tax return