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Q:
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What is the tax treatment of a place of residence and housing benefits provided by my employer?
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A:
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If the Assessor of the Inland Revenue Department (“IRD”) accepts that your employer has provided you with a place of residence, only the RV will be computed and charged to tax. If not so accepted, it will be assessed as a perquisite at its cash value.
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Q:
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How the RV should be computed?
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A:
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The RV is calculated at 4%, 8% or 10% of taxpayer’s total net income after deducting outgoings and expenses (excluding expenses of self-education), depending on the type of accommodation provided:
Type of accommodation
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Percentage
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Residential unit/serviced apartment
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10%
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2 rooms in a hotel, hostel or boarding house
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8%
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1 room in a hotel, hostel or boarding house
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4%
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Q:
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My employer refunds all or part of the rent I paid to the landlord. What is the tax treatment of this refund?
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A:
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The Assessor will examine the reimbursement of either all or part of the rent you pay as tenant to the landlord as if the employer directly provides a place of residence to the employee if your employer has established clear guidelines for control has exercised proper supervision over the reimbursement. If the employer does not control how you spend the money or does not exercise proper control over the expenditure, then the Assessor will consider the reimbursements as a cash allowance and include the full amount in your assessable income.
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Q:
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Is there any situation that an Assessor of IRD will question that my employer has provided me with a place of residence?
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A:
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The Assessor will examine the following types of cases critically:
An employee lets his own property to himself or rents the property from his connected person and then claims rental reimbursement from his employer; or
An employee lets his own property or his connected person’s property to his employer and the employer provides that to him for use as a place of residence.
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Q:
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For special cases, what other factors will the Assessor consider before accepting/rejecting the above-mentioned arrangement?
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A:
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The Assessor will take into account the following factors before making his decision:
Whether the rent is above the market rent;
Whether the formalities for renting a property normally completed; and
Whether the ordinary rights and obligations of landlord and tenant have been observed.
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FAQ
