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Housing benefits: Employers pay rent for employees

In the taxation regulations, the income of assessable salaries also includes housing benefits. These benefits are calculated based on 10% of the rental value of the residence and included in the taxable income to calculate the tax. Employers can require employees to pay rent or not pay rent (equivalent to the employer refunding the rent paid by employees in full). If the employer requires the employee to pay rent, the rent paid by the employee will be subtracted from the rent, or if the employer only refunds part of the rent to the employee, the rent can also be deducted from the employer’s failure to refund the rent paid by the employee.

Whether housing benefits are calculated as the rental value depends on whether the employment contract specifies how to arrange the benefits and the rent refund limit. In addition, employers must also check the lease and lease receipts regularly to ensure that the rent refund is really used for the purpose of renting a residence, otherwise the refund can only be regarded as a housing allowance, and the entire housing allowance will be included in the total income assessment.

Example one

Employer A hires employee B as the executive general manager, and A and B enter into an employment contract to pay B’s salary of $60,000 per month. B reports the total assessable income in the relevant year as $60,000 X 12 = $720,000. B thinks that taxation based on a monthly salary of $60,000 is quite high. Therefore, propose to A that he is willing to lower his monthly salary, and the difference of the reduction can be paid in the form of housing benefits. A accepts B’s plan to change the employment treaty and decides to rent a unit with a monthly rent of $20,000 to landlord C to provide B with free living, and the monthly salary is reduced to $40,000, and B’s total assessable income will become:

$40,000 X 12 = $480,000 (annual salary)

+ $480,000 x 10% = 48,000 (rental value of housing welfare housing provided by A to B)

= $528,000

Obviously, the total assessable income of $528,000 is reduced by $192,000 from the original plan of $720,000.

Example 2

The above employee B has two children after working for the employer A company for several years. B then proposes to A that he needs a larger residence. A agrees to change the employment agreement and decides to terminate the lease with landlord C, and rent a larger unit with a monthly rent of $25,000 from landlord D to provide B to live in, but B needs to pay A monthly rent of $25000-$20,000 = $5,000 in extra, That is, the annual rent is $5,000x 12 = $60,000. The rent paid by B of $60,000 can be deducted from the rental value of the residence for tax calculation:

That is, $48,000-$60,000 = 0 (it has been completely offset and cannot be a negative number)

Therefore, B’s final total assessable income is only a net annual salary of $480,000.

The above information is for reference only. If in doubt, we welcome your tax inquiries

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