Can I take part in my company's rental scheme?

[Gin0720]

So I'm new to HK and I found out that my company offers 40% of my salary to be my rental allowance. The problem is I'm not renting, my husband owns the flat we live in. Is there anyway around this?

I am wondering if I can legally become his tenant? ie draft a formal contract and he give me rental receipts every month. He would be claiming this as income for him on his tax returns. Is this even legal?

We got married in HK so the government would definitely know that we are married.

Thanks

[HKSAR]

Hong Kong, The Concrete Pile of Greed.

[civil_servant]

As an owner, you can deduct interest payments on your mortgage. Say thank you.

[MandM!]

You could but then your husband would pay 15% tax on rent whereas you would only save 5%. Thus leaving you with a 10% loss.

Rental allowance may just be a classification of how you are paid. You pay 10% on rental allowance vs normal salary is something like 15-17%.

Unless your company pays additional allowance on top of your salary. I would renegotiate your benefits, no reason why you can't use this towards your own mortgage.

[jimbo]

So I'm new to HK and I found out that my company offers 40% of my salary to be my rental allowance. The problem is I'm not renting, my husband owns the flat we live in. Is there anyway around this?

I am wondering if I can legally become his tenant? ie draft a formal contract and he give me rental receipts every month. He would be claiming this as income for him on his tax returns. Is this even legal?

We got married in HK so the government would definitely know that we are married.

Thanks

Nope that would be fraud

[Fiona in HKG]

It will depend a lot on the policy under which your company pays a rental reimbursement. For example, ours states:

"The rental reimbursement does not include rental paid to any family members and connected persons, which is defined as spouse, child(ren), parent(s) and parent(s) in law."

And we sign against this clause:

"I declare the above property is not owned by myself, my spouse or any connected person, whether directly, indirectly or jointly, at any time during the abovementioned period."

[shri]

(Keep in mind that there might also be a problem with your bank, most mortages are for personal use and not for renting your property out ...)

There is some govt guidance on this:

Special Cases

The Assessor will examine the following types of cases critically before accepting or rejecting that a place of residence has been provided by an employer:


an employee lets his own property to himself or rents the property from a connected person (such as spouse) and then claims rental reimbursements from his employer; or

an employee lets his own property or a connected person’s property to his employer and the employer provides that property to him for use as a place of residence.


In such cases, the Assessor will ask the employee and/or the employer to provide evidence showing a genuine landlord and tenant relationship exists between the contracting parties. The Assessor will take the following factors into account before making a decision:


whether the rent is above the market rent;

whether the normal letting formalities (such as the stamping of the tenancy agreement and periodic issuance of rental receipts) have been executed; and

whether the ordinary rights and obligations of landlord and tenant have been observed.

GovHK: How the Provision of a Place of Residence to an Employee is Taxed

[Gin0720]

I told my company what I wanted to do and they were fine with it but weren't sure if it would pass HK IRD.

So basiscally I can do this but without guarantee of it passing? It's not illegal?

also for my husband, if his rental income for the year is less than 400,000 then he pays very minimal tax like couple hundred. So it wouldn't make a difference to him.

[Claire ex-ax]

Aren't there a few civil servants serving time for this?

[chuckster007]

Aren't there a few civil servants serving time for this?

Last case I remember, the Govt lost the case as the court found them NOT GUILTY for renting each others houses and claiming allowances even though they both owned the property. they crossed rented each others property. The Court said they followed the rules and noting wrong was done.

edit

Two former officials cleared in rent allowance fraud case