income tax and costs os living in HK

Hi,


I`m a 30 years old interior designer and I have been offered a position at a local company with a salary of 32.000HKD per month.


I`m trying to calculate my net incomes but I`m not sure how I have to do that.


Looking at IRD.GOV.HK could somebody confirm if it would be either:


32.000HKD X 12 MONTHS = 384.000HKD - 120.000HKD (Personal allowance for single)= 264.000HKD


or


384.000HKD - 15%? = 326.400HKD


Will I have any additional deduction if I rent an apartment myself?


I would also appreciate if you would tell me if the salary is enough to rent an apartment around 11.000HKD pay utilities, food, phone, internet...and still have some money left for traveling occasionally and saving part of it.


Thank you very much

The tax works like this:

Annual income = HKD384,000

Less single person allowance:

HKD384,000 - HKD120,000 = HKD264,000

This your chargeable income on which you will pay tax. The progressive rate of tax used works out to HKD8,400 on the first HKD120,000 and then 17% on the rest:

Tax payable = (HKD264,000 - HKD120,000) x 0.17 + HKD8,400 = HKD32,880

(The calculation of 15% of the whole income is not applicable in this case as it would result in a higher tax liability).

However you need to know that as well as paying tax for the tax year just gone you also have to pay provisional tax for the coming tax year so it will be a double whammy for your first tax bill. However since you probably won't be starting work until the 2014-2015 tax year which starts on 1 April you won't get hit with a tax bill until next year.

Thank you very much.

So if I start after 1 April, by next year I will have to pay 32.880HKD on taxes and that`s all?

You will pay HKD32,880 tax on your 2014-5 income but you will also be billed at the same time for provisional tax for 2015-6. The Inland Revenue Department will assume the same income for both years so your first bill will be for HKD65,760.

After this, each year you will receive a tax bill which will consist of a true-up payment (or credit) for the year just ended plus a provisional payment for the year ahead. So it is only at the end of the first year that you need to budget for 2 years worth of tax.

You will generally receive a tax return to complete in May followed by a bill in August. You usually pay the tax in two installments in the following January and April or thereabouts.

In regards to living costs, depending on where you want to live 11K HK may be a bit optimistic, unless you are prepared to commute, or share other wise, sorry but if you are planning on coming to HK to work, a salary of 32K will be gone each month in no time!

mmbcn


i would not say 32K is a great salary, but weigh in against what you have currently . At 11K you can get a small studio (<300 sqft) even in central areas like sheung wan .. you will be getting close to 30K take home salary every month.. and usually there will be a 13th month salary as bonus to pay off your tax - check with your employer on the bonus structure.. if it is 2months+ you will get some for travel as well.. so you will have ~20K to spend and save.. probably spend10k and save 10K which is about 1.5K USD. So compare to your current option.. if its better come over.. if its for asia/hk experience then definitely come over.

Thank you all for your reply.

I received the letter of employment of the company and ultimately their offer is HKD30.000 instead of HKD32.000. So I have calculated the following:

gross anual salary 360.000HKD - 120.000 (single person allowance) = 240.000 (chargeable income) First 120.000HKD =8.400 and next 120.000x17% would be 28.800HKD in taxes (first year 57.600HKD)

360.000-28.800=331.200HKD (annual net income)

In addition I have to take off 5% of my salary for MPF. Company will contribute with extra 5% to this fund. Do I have to take this off from the gross salary?


So that my monthly budget could be something like this(Please tell me if I am being too optimistic):

27.600HKD

- 11.000 HKD (RENT SMALL STUDIO, i have seen some announced in sqarefoot.com for this price in the center, very small but I think I can make it)

- 270 HKD (UTILITIES)

- 216 HKD (LOCAL PHONE)

- 970 HKD (GYM)

- 162 HKD (CINEMA 2XMONTH)

- 512 HKD (MONTHLY TICKET TRANSPORTATION)

- 1,730 HKD (EATING OUT)

- 690 HKD (COCKTAILS)

- 1,078 HKD (SUPERMARKET)

- 1,500 HKD (MPF)

=9,472 HKD (for travel/leisure/emergencies,or whatever...)


Assuming I don't have any bonus...(they didn't mention that in the letter of employment so that must be a no..)


Don´t you think that is enough? The thing is I'm currently unemployed, situation in Spain is really bad and I think this is a great opportunity to have asian experience and after 1 year I could try to negotiate salary again with the company and if they don't want to I could try to get another job from there. In Spain young people rarely find a job in which they have around 850€ (9,472HKD)for leisure/savings...


My office will be in Sheung Wan (Connaught Road), is this also a good area to live?

The problem is I will be on probation for 4 months and I don't think that I will get any apartment without a one-year contract. Maybe I should book a serviced apartment for the initial months but I see prices starting from 12.500HKD for most of them in really small studios.

If you could give me some advice on this or you know any good company renting serviced apartments that I can afford with my salary I would appreciate it.


Thank you

You should be absolutely fine on that, if you are worried about the long term nature, you can always look at the flatshare offers on this site. your budget may vary considerably as your priorities change, but you should be able to have a decent standard of living and lots of fun. Good luck

Good luck.. Take the opportunity. Sheung wan is great to live.. Good mix of local/western life.. Regarding living, look for apartment sharing on asiaxpat.. Apple studios Hk seem to have options around 7k hkd /month.. Look for youth hostels..etc

It is highly recommended that you share an apartment with other expat(s) as it will significantly reduce your rental expense. Also, as you come to a new place, a companion (roommate) is definitely something good to have. 11k is absolutely fine if you want to share. Sheung Wan is very close to Central which is the CBD in HK.


MPF will be taken off from your monthly receipt, but that 5% is still yours. You will get it when you retire at 65 or leave HK permanently (for example when you finish your employment and going back to Spain).


Btw, you won't get any tax deduction for the rental expense, but you should talk to your employer to "convert" part of salary into housing allowance, as housing allowance will get taxed differently (effectively taxed at a lower tax rate). See this: http://www.ird.gov.hk/eng/pdf/pam44e.pdf


But you should talk to your employer to see if s/he will "help" you out with this. This is a legit way to reduce your tax liability.


The concept is that your employer will pay you a lesser amount but at the same time provide you with a place of residence "free" and the rent for that place of residence is the amount of your salary being reduced.

http://hongkong.asiaxpat.com/property/share-flats/

thank you all, you have been very helpful