[Andi]

Needed to understand how salary's are structured..Got an offer but have a problem understanding the structuring..

Relocation is being taken care of. BUT the salary breakup is as such..

Base monthly salary: HKD 22,296
Housing monthly allowance: HKD 27,190

What i do not understand is why housing allowance is 54% of the package..I have told them that I can manage in much cheaper places ( 15-20K) and to transfer the rest to the base....as they shall not return the deficit from actual to me...they are cribbing about the tax implication and how difficult it is to get a good accommodation cheaply

I am looking at taikoo, quarry bay area for a two bedroom furnished/semifurnished acco and expect it not to be more that 18-20K.

Anyway, any suggestions on how to go about the restructuring the package would be helpful as I need to revert back in couple of days with my suggestion..

[KnowItAll]

Really not sure what the tax implications to the employer would be. Something like 90% of the rental allowance is tax free to you ... (not sure what the rules are anymore.. been a while).

I'd say, talk to a senior manager, someone in HR is messing with you because they cant be bothered redoing a contract.

[Andi]

Thanks. Any more info would be really helpful..
cheers

[PDLM]

It doesn't make any difference to you as an employee - any excess housing allowance above what you actually spend on housing is treated for tax purposes as normal taxable income anyway. The only issue would be if you were eligible for a bonus as a percentage of your base salary - in that case obviously moving excess housing allowance into base salary would make a difference.

[Andi]

Thanks..It is true, the bonus is a % of the base salary..But when the HR says that if u take a house for 20K instead of the 27K allowance..u will not get the 7K..it is a loss on the disposable income, isnt it?
So if i move this to the base...even after the tax deduction, I would have some remaining than to nothing in the previous case...well, the increase in the bonus would be a onus.

Please let me know if my understanding on how this works is correct..thanks in advance

[z754103]

Any future salary discussions will also be focused on base increases. And what if you get moved to a local contract at some stage in the future? Housing is good to have but do your calculaions carefullly in determining the split. I'm assuming you don't have pension arrangements that are driven by base salary?

[HKFella]

If they don't agree to trading your unneeded allowance for base salary (which is most to your advantage), you could try to persuade them to agree to pay you the whole housing allowance in cash instead of losing the excess over what your actual lease rental. Worst case, you have the option to max your rental lease to full amt of the allowance - only 10% of your base salary will be added to your taxable income, regardless of lease rental size.

[HKFella]

By the way, Andi - you from India by any chance (I'm trying to test a 'theory' of mine!)?

[PDLM]

Oh OK - that isn't what I would call a housing allowance - that's a housing quota - it implies that they will take out the lease as well I guess. In that case obviously aim to use up all of the quota if you can't persuade them to move any of it to base salary.

As HK Fella says, regardless of how big your housing allowance is, if you spend it all on housing it will be taxed as if it were an extra 10% of base salary. So in your starting example if you get an apartment at 27K per month and a base salary of 20K then for tax purposes your income would be deemed to be 22K.

[Andi]

Yup, I am from India and hence ended up using the tax methods in India for the understanding purpose....

As for the question for pension scheme...It says as per company standards. Same for medical & hospitilization benefits..

thanks