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Rental reimbursement scheme

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  1. #11

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    I don't think such a high ratio of rent reimbursement to income would pass unnoticed by Inland Revenue.

    Your employer has to exercise proper control over the reimbursement, and part of that control is how the level of reimbursement applies to ranks / position - ie your 34,000 would have to be standard for all employees earning 50k per month, and those in higher positions should be receiving higher rates. I don't think the IR would find such a high level as proper control by the Employer.

    Also, there is an article that says:

    Points to note:

    Where the taxpayer is a high income earner, then applying 10%, 8%, 4% would have a reverse effect as there would then be an excessively high amount calculated as accommodation provided/reimbursed by the employer (evidenced by comparing rental value with actual rent paid on the property). In this case, a notional/rateable value is instead obtained and added as the rental value of the accommodation. This notional/rateable value is found by looking at the assessable value of the property where the employee is residing (the rates notice).
    Also important to note that if your income is set that low, then your bonuses, salary increases will be based on that. So if you get an extra month as bonus, you would receive 29k instead of 50k etc.

    All in, I don't think your plan will pass muster with IR, or indeed your employer.

    Tax Series Part 4 - Hong Kong Housing Benefit | Star Anise
    shri likes this.

  2. #12

    Join Date
    Dec 2013
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    Hong Kong
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    Quote Originally Posted by kimwy66:
    I don't think such a high ratio of rent reimbursement to income would pass unnoticed by Inland Revenue.

    Your employer has to exercise proper control over the reimbursement, and part of that control is how the level of reimbursement applies to ranks / position - ie your 34,000 would have to be standard for all employees earning 50k per month, and those in higher positions should be receiving higher rates. I don't think the IR would find such a high level as proper control by the Employer.

    Also, there is an article that says:



    Also important to note that if your income is set that low, then your bonuses, salary increases will be based on that. So if you get an extra month as bonus, you would receive 29k instead of 50k etc.

    All in, I don't think your plan will pass muster with IR, or indeed your employer.

    Tax Series Part 4 - Hong Kong Housing Benefit | Star Anise
    I don't think that is true. Our rental reimbursement scheme allows any employee to specify the amount they would like for housing allowance and certainly does not penalise bonuses based on it. One month is one month, period. We have never been questioned. The OP needs to see what their own scheme's rules say.
    SalseroHK likes this.

  3. #13

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    Quote Originally Posted by HK_Katherine:
    I don't think that is true. Our rental reimbursement scheme allows any employee to specify the amount they would like for housing allowance and certainly does not penalise bonuses based on it. One month is one month, period. We have never been questioned. The OP needs to see what their own scheme's rules say.
    But that is not how most companies operate.

    I have certainly claimed 50% or so of my base salary as rental allowance, as I was on a very high commission and bonus structure in a previous life, in a regional sales position. Was not debated or questioned by anyone, I was paying fair tax on the commission / bonuses and overall the rental contribution was around 15-20% of the total compensation package - which is what bonuses / raises etc were judged on, not base pay. However, important to keep the base pay realistic.

    If your total cash package is worth 50K a month, then you have other problems in life if you think $34K in rent is justifiable.
    SalseroHK likes this.

  4. #14

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    Besides if they can evidence their rent is 34k then it's fine and if they can't then they are taxable on the difference anyway.

    shri and SalseroHK like this.

  5. #15

    Join Date
    Aug 2017
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    1

    Hi all,

    can I ask say my salary is 50k and I seek a rental allowance of 20k. But eventually I manage to find a place and rent for 15k (instead of 20k).

    Therefore my taxable income is (50k x 12 - 20k x 12)* 110% = 396k or (50k x 12 - 15k x 12)* 110% = 462k ?

    Thank you for your advice in advance.


  6. #16

    Join Date
    Oct 2010
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    Second one.


  7. #17

    Join Date
    Aug 2017
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    262

    Yes, second one, assuming you mean that the total amount of money you receive from your employer each month is $50K.

    If you meant 50K salary PLUS 20K housing allowance, of which you actually spent (in a documented way) 15K on rent then it would be (70K*12-15K*12)*110% = $726K


  8. #18

    Join Date
    Mar 2008
    Posts
    883

    Colleague was asking if the following scenario is legit.

    Husband owns property in personal name. Husband grants wife a lease of the property held in his name. They both live in the property as their residence. Wife then uses the lease to claim rental allowance from her employer. Husband also pays property tax on the rent gained. Seems a bit fishy to me?


  9. #19

    Join Date
    Oct 2010
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    My employer specifically forbade that scenario.


  10. #20

    Join Date
    Oct 2010
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    Yep, that would be the reason.


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