Annual Salary in HK spread over 13.5 months?

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  1. #1

    Annual Salary in HK spread over 13.5 months?

    Hi all,

    My husband has been offered to work in HK. A few things that we are not sure about the usual practice on working in HK. I hope we can get some ideas from the forumers here..

    1. In his contract, it is stated that his annual salary is calculated based on 13.5 months. Is this the normal practice in HK? In our country, annual salary is always calculated based on 12 months.

    2. About tax in HK.
    Do we need to pay tax on the benefits that we get, i.e. housing allowance and school fees for our children? Or will it be paid by the company?

    Anyone has ideas on the above? Many thanks in advance..


  2. #2

    Join Date
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    1) 13 months is fairly typical. I havent heard 13.5 before. In my company, everyone gets 2 months salary in December. Its not a bonus (that comes separately in April).

    2) You have to pay tax on the school fees. The amount of school fees is added onto your income for tax purposes. But for housing allowance, you do not have to pay the tax if you choose to be taxed on 110% of your income. In most cases, choosing this option is better than being taxed on 100% + housing allowance.


  3. #3

    So, that means the salary is normaly calculated 13 months or 14 months, excluding the bonus?

    Thanks a lot Bdw... I will let my husband know about the tax too..


  4. #4

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    Every company is different. But yes, it is common practice to not split the salary evenly over 12 months here. In your case, my guess is that one month per year you will get 2.5 months salary. Or its also possible to get 2 months salary in one month, then another month 1.5 months, then 1 month for the other 10 months (so every 6 months you get something 'extra'). Usually this is not considered a bonus as it is automatically given regardless of performance. But you should clarify with the company.

    On the housing allowance issue, the 10% rule is a bit strange, but thats how it works. So if your allowance is more than 10% of your income, then you should choose to be taxed on Income without housing allowance + 10%. But if your allowance is less than 10% of income, then you should choose to be taxed on income + housing allowance.

    Last edited by bdw; 06-08-2010 at 12:05 PM.

  5. #5

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    One more thing. You should check if the salary payments are pro-rated should you leave the company half way through the year. In my case it is, so I can leave the company at any time and get paid out part of the extra months salary. But some companies do not do this, meaning their staff all wait until a certain time of the year to get paid extra before quitting.


  6. #6

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    Quote Originally Posted by bdw:
    Every company is different. But yes, it is common practice to not split the salary evenly over 12 months here. In your case, my guess is that one month per year you will get 2.5 months salary. Or its also possible to get 2 months salary in one month, then another month 1.5 months, then 1 month for the other 10 months (so every 6 months you get something 'extra'). Usually this is not considered a bonus as it is automatically given regardless of performance. But you should clarify with the company.

    On the housing allowance issue, the 10% rule is a bit strange, but thats how it works. So if your allowance is more than 10% of your income, then you should choose to be taxed on Income without housing allowance + 10%. But if your allowance is less than 10% of income, then you should choose to be taxed on income + housing allowance.
    Good grief. This bit of information has just made all those hours trawling around these forums pay off. Would I have been told this by my companies accountant? I sign my contract on Monday.
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