Tax calculation question: moving to Hong Kong with family

Hi there! I'm not a tax advisor, and you may want to get an accountant who is familiar with the HK tax system, at least for your first year in HK. HK's income taxes are quite simple, so there probably wouldn't be additional taxes, but there may be other savings or deductions that I don't know about. I found the one deduction, but there may be more.

I'm working on the assumption that the rental expense works like a rental allowance and not as provided housing.

As far as I understand the HK tax system, this is what I think you can expect to pay:

Income

If your husband's employer provides a rental allowance of HKD 300,000 per annum, then the full amount should be added to the assessable income IF his employer doesn't control how he spends it. If they provide the housing or have strict controls about how he's spending the rental allowance, this page describes different scenarios where he pays something like 10% of the calculated rental value: GovHK: How the Provision of a Place of Residence to an Employee is Taxed.

If rental expenses work like a cash allowance, total income (including rental allowance): HKD 936,000 (Basic Salary) + HKD 300,000 (Rental Allowance) = HKD 1,236,000

If housing is provided by the employer or they strictly control how he rents accommodation, the calculation will be very different.

Allowances + Deductions

• Basic allowance for 2 adults: 2 x HKD 132,000 = HKD 264,000
• Child allowance for 2 children: 2 x HKD 120,000 = HKD 240,000

Total allowances: HKD 264,000 + HKD 240,000 = HKD 504,000

Deduction for domestic rent: As per the new legislation, individual taxpayers can claim a tax deduction for domestic rent for 2022/23 onwards, with a ceiling of HKD 100,000 for each year. This means that if you're paying rent in Hong Kong, you can deduct up to HKD 100,000 from the assessable income.

Deduction for rent: HKD 100,000

Net chargeable income

Total Income - Total Allowances - Deduction for Domestic Rents
= HKD 1,236,000 - HKD 504,000 - HKD 100,000
= HKD 632,000

Tax based on the progressive rates

1. On the first HKD 50,000: 2% of HKD 50,000 = HKD 1,000
2. On the next HKD 50,000: 6% of HKD 50,000 = HKD 3,000
3. On the next HKD 50,000: 10% of HKD 50,000 = HKD 5,000
4. On the next HKD 50,000: 14% of HKD 50,000 = HKD 7,000
5. On the remaining HKD 432,000: 17% of HKD 432,000 = HKD 73,440

HKD 1,000 + HKD 3,000 + HKD 5,000 + HKD 7,000 + HKD 73,440 = HKD 89,440

I want to stress again that I'm not a tax expert! This should give you a ballpark figure, but when it comes time to calculate your taxes, please do consider seeing a tax advisor. If the employer is providing housing, you'll have a lot less income to pay rent on (and less tax on the 17% tier), so it's important to clarify how the rental expenses work.

I hope this helps! All the best with your move!
Daniel