Income tax on housing allowance
Mon, 2004-06-14 22:27 — adventure
Hello,
am probably moving to Hong Kong and currently reviewing my salary package. Would you know if housing allowance and home leave etc is subject to income tax??
Thanks a lot for your help.
Adventure :?: :?
income tax
My understanding (from my own situation; consult a tax expert if you want something definitive!) is that allowances that are earmarked by your employer for 'housing', AND that are spent on RENT, are tax-deductible, within certain limits per year (which I don't know). If you buy a flat and have a mortgage, and therefore don't pay rent, any such allowance is taxable as straight-up cash income.
Keep in mind, though, that the flat salaries (i.e. income) tax rate is just 16% here, and that mortgage interest is also deductible.
Be careful
Mr Tall is right - if your employer refunds your actual rent then you won't pay tax, but if they pay you even a few cents more then (in theory at least) you will be liable to tax. Your employer must keep records and you will need to provide the rental receipts.
Mortgage interest is deductible, but only the first HK$100k per annum, and this is supposed to be a short-term concession (I think it was originally limited to 7 years but it was extended in the last budget).