[larac]

Thanks for all the detailed advice. I still have some qs and hope you can help.

I understand the housing allowance thing and the first $100k tax free but can you please confirm that when I do get the bill I will have to effectively pay tax for the year gone and the year coming so therefore need to be saving 32% to be safe.

I just got the income summary from HR and was told the bill from the IRD would come in the post - 1 month on and no bill so I check with HR and am told that b/c I am new it will probably be another 3mths to get the bill so need to be sure all my money doesn't disappear into the abyss that is shopping, travel and fun.

Also this link explains the housing quite well. http://www.horwath.com.hk/-HW.asp?-n...lications2.asp

[dragonese]

good to know

[PDLM]

Originally Posted by larac

can you please confirm that when I do get the bill I will have to effectively pay tax for the year gone and the year coming so therefore need to be saving 32% to be safe.

No - 16% is fine. If you look at the timings of the payments, the bill that you will get in the coming weeks will not be due for payment until January and April next year. So you are at the end of the second year before you pay anything. If you have been putting aside 16% through that period then you will be fine. There are very few scenarios in which the cash flow under the HK scheme is worse than a Pay As You Earn Scheme.

[larac]

Thanks PDLM - I've asked around but noone really knew for sure, great to get a straight answer.

[kayakkingoz]

Originally Posted by newbee

Hi PLD, Thank you so much for the help!

So, just for final clarification.

If my salary is 50k base and 25 housing. But i only use 15 for housing.

My deemed income for tax purposes is (50+(25-15)*1.10=66k

Thank you once again!!

PDLM, you indicated before that the 10% calclation was only if at least 20k per month was actually spent on housing.

And also that the company had to sight records of the tenancy agreement, etc...

Cathay offers 24k per month as a fixed cash housing allowance, for which no records are sighted, etc...

Also I am looking at Tung Chung as its so close to Cathay City....

So I would only be using about half of the allowance, and from the above, it appears that the conditions you mentioned earlier wouldn't be met - ie: not spending at least 20k on rent

So am I correct to assume that the whole thing adds to the salary and is taxed at about 17%?

Not that I am complaining mind - still much better than the taxation in Australia!!

Cheers mate

[PDLM]

It's not the absolute amount that's important (the $20,000 was just a number I picked for illustration), it's whether your employer has a system of "control" to verify how much you do actually spend on housing. In your cash if they simply give you cash then with no control of anything then it is taxable income. If your total taxable income is over about HK$1M / year then you'll pay a flat rate of 16% on all of it. IF less then there is a sliding scale: http://www.ird.gov.hk/eng/pdf/pam61e.pdf

Details of the taxation of housing allowance (if "controlled") here: http://www.ird.gov.hk/eng/pdf/pam44e.pdf

[discobay]

Your employer will also need to declare to the IRD how much was income and how much was housing.

[PDLM]

Originally Posted by PDLM

In your cash if they simply give you cash

Sorry - "In your case,..." obviously.

[TaLL|dUdE]

Originally Posted by flyingchair

Not long after you pay the second installment you get your second tax forms and then another bill in October. The January payment will now be the confirmed 07/08 amount- minus what you have already paid plus 3/4 of your provisional tax for 08/09 based on what you earned in 07/08. And so it goes on. This means your second bill iniitial payment can be nasty of you started working in the middle of a financial year.

Once you get over any nasty adjustments and if your salary stays the same then you will always pay a provision by the end of the year you are paying it in which will total one years tax. If your salary goes up - you get the hit a year later.

i'm in this very predicament now.... and boy did i learn to compute taxes very quickly due to the shock of what i got... hahhahaha!

[kayakkingoz]

thanks for that guys - i think other's have already mentioned the concept of somewhat confusing!

I don't suppose there's a decent reason why HK doesn't go for the PAYE system?