[adZ]

Guys
This site is awesome! Thankyou for providing so much useful information. I am now in need of some advice/guidance regarding the financial aspect of living in HK.

I am about to enter into negotiations regarding my salary with my employer (going as a local) and am trying to forcast what will potentially be offered and what will be acceptable before going into the meeting with HR later this week.

My employer will pay for full relocation costs i.e shipping and provide a moderate lump sum on moving - this probably needs to be used to pay for furniture and apartment deposit. In addition they will provide HK medical cover.

Based on the various posts I have put together a bunch of numbers regarding expenses and I would really appreciate some feedback

I believe that in the worst case scenario paying for all my UK commitments and taking into account HK Salary Tax @ 17%, I will set aside the following:

HK Rental @ $16000 (inclusive)
HK Bills @ $3700

This means I will have approx $20000 left to spend on food,dining out, drinking etc....

Questions:

1. Do you think the amount I have set aside for rental will pay for a decent apartment in Mid-levels?
I have checked out http://www.gohome.com.hk and found several listings for around this price however it's difficult to gage the quality of these apartments. A building that stood out was "Bella Vista" the reviews seem upto date and the rating was good, however there were no pictures so I couldn't get a feel for what they were really like.


2. Is $3700 a realistic figure for bills taking into account Utilities, Telephone, Broadband and Gym membership? I used the previous post Cost of living in Hong Kong and took the max values to figure this out.

3. Bearing in mind I am single, will $20000 provide enough funds to sustain a good lifestyle perhaps eating out and drinking a couple of times a week and the odd weekend away?

I really appreciate the help that you guys have provided already and hope you can provide some guidance on this.

Regards
aDz

[KnowItAll]

>> taking into account HK Salary Tax @ 17%

Take into account that you will be billed in advance for the next years "provisional tax". Your first year's tax bill will be approximate 34% if you're budgetting for 17%.

[berryplucker]

KIA,

Come on - you know it's not like that. Why do you keep propagating this myth? You get billed early in the tax year but you don't have to actually pay until January (75%) and April (25%) so your cash flow is better than if you were on a Pay As You Earn scheme.

[shri]

Ok....

You have to pay 75% of 34% ( 25.5 percent of your past years total earnings ... ) in January and the rest in April.

Your cash flow is temporarily better .. only if you have budgetted your savings correctly.

[shri]

Berryplucker,

Lets talk specifics and deal with the myth.

If the tax rate was 17% and I made $100 during the year, how much would I have to pay in Jan and in April?

[dougp]

Don't mean to push in, but I just sat down and worked through this for myself earlier, so let's see if I got it right...

Let's take the worst case. You arrive and start earning on April 1 2005 (hurry - your flight's boarding!). The tax year is April - March.

In April 2006 you get your first tax bill. This covers tax not paid for 2005/6 and predicted tax for 2006/7 - 24 months of tax. But you don't pay anything at this point.

In January 2007 you must pay 75% of your bill - that's 75% of 24 months, or 18 months worth of tax. But you started working in April 2005 - 21 months ago. So your earnings are 3 months ahead of your liability.

In April 2007 you pay the remaining 25%, bringing your payments up to 100% of your 24 months bill. And surprise surprise, you've been working and earning for exactly 24 months.

Around the same time you get your next bill, which of course has nothing due until Jan 2008 (75% due and 75% of the way to April 2008).

So as long as you put your tax aside each month, you do not have to cope with double tax after your first year.

I hope.

Doug.

[shri]

dougp: Thanks!

Now, the problem is ... people expect that the first bill will be "17%" and they can pay that in two installments of 75 and 25%.

Second, the tax bills start to arrive in Sept/Oct/Nov and can be a bit of shock to first timers, with not as much time to figure it out.

[berryplucker]

What never ceases to amaze me is that there are people here who are earning enough money to be liable for tax (which puts them in the top 20% of earners roughly) but aren't bright enough to understand how the tax system works.

[shri]

>> What never ceases to amaze me is that there are people here who are earning enough money to be liable for tax (which puts them in the top 20% of earners roughly) but aren't bright enough to understand how the tax system works.

You would be surpised how many people have to rush to their banks.

Ever figured why HSBC and the likes spend millions of dollars marketing their loans?

[adZ]

This is great feedback on the taxation front.

So If I've read this properly dougp's response is valid and although I'd get my first Tax bill in around April 2006 - which would include the tax due for 2006/07 - I would not have to pay any of it until Jan & April 2007
So as long as I put aside 17% each month simulating my own PAYE type system, then I should be covered?

Any feedback on the other questions in my original post?

Thanks again for all the helps so far .....