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Anyone receive their income into a company?

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  1. #1

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    Anyone receive their income into a company?

    Wondering if anyone receives their income into a company and use related expenses to offset taxes and how does MPF work. Can your employer still handle your MPF or do you need to open your own under your company, or does it not matter?

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  2. #2

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    The Government closed that loophole years ago.


  3. #3

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    How are people doing it then? What if you are a representative for a few companies and they don't reimburse certain expenses. How can you benefit tax wise?


  4. #4

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    Oh, you're talking about something else. I was referring to the loophole of being an employee of a company and having one's salary paid into a self-proprietor entity. Back when I arrived in the 80s, it was very common and a way to claim a shit load of stuff to reduce taxes. The Government put a stop to that.


  5. #5
    A lot of people are still structuring their income / employment remuneration into their own business setup to reduce or "optimise' their ultimate tax liability, it still works and not just in Hong Kong!

    In such arrangement, the employer will not be able to handle your MPF because the income does not classify as employment benefit, therefore it will not subject to MPF. Otherwise the employer may contribute their 5% to your MPF, but then you will have to do the same, plus the income will not be able offset any tax.

    If you would like to receive the income into your own company and prefer to maintain an MPF at the same time, you can do so by setting up a personal account and make your own contribution or a norm account through your income receiving company. However, since many people are considering MPF is a rip-off (well to a certain extend I disagree with this view), if you can get away with MPF and optimise your tax liability at the same time, why not!

    Also worth to consider ....

    - Net Tax Payable (taken into account any tax deduction and allowance) vs. Company Annual Maintenance Cost? If you are married, with kids and even if they are not in Hong Kong, you may still be able to claim tax deduction and allowance on accessible income. Even for expats in some cases.

    - How does the employer record the remuneration payout entitled to you (as Employee Remuneration or as Consultancy Fee etc.)? If the employer record it as Employee Remuneration, they are obligated to report such employment related transaction to the IRD, thus you will not be able to structure it to your company.

    Hope it helps...

  6. #6

    Under the MPF ordinance, as long as you are getting paid through "employed" or "self-employed" which includes SP status, you are required to enrol into the scheme and make contribution accordingly. So, the way around it off the top of my head can be (a) if you are maintaining your own limited company, you can become a director but a non-salaried taken one. (b) if you are maintaining a SP, just keep your income below $7,100 a month and no MPF contribution is required.

    By the way, certain expats may be qualify to be exempt from MPF contribution for the first 13 months of employment, otherwise they should have other pension scheme aboard in order to be exempt.

    Well.. as much as I agree with historical performance of most MPF funds has been rather disappointing, you can still profit between 4% to 12% depends on funds you picked. About a dozen of MPF funds are performing okey in the past few years. People are losing their pensions in MPF because they picked the wrong fund at the wrong time? or perhaps when the US equity funds are doing great in the recent months couldn't be bothered to adjust fund allocation portfolio? Having said that, yes I do agree with the secondary market provides a lot more fund choice plus more serious fund managers out there managing outstanding portfolios. Indeed if i have a choice I would rather put my pension saving elsewhere than in MPF, and since I have to stuck with MPF the only thing I can do is to accept it and make necessary adjustment to my portfolio from time to time.


  7. #7

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    mine is 100% with the Hang Seng Index, so my money goes up and down and down and down and up and down and up and down LOL


  8. #8

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    Mate I have no clue, its one of my old MPF accounts thats just a lump sum with HSBC and once in a while I just look at the total and one week its up and then down and down in the next few weeks LOL