Reduce housing rental value and arrange housing benefits

The employer’s provision of housing for employees is actually a housing benefit, which is part of the assessable salaries income. In general, the rental value of a house is calculated at 10% of the total salary. But if the residence is a hotel, hostel, or apartment, and there are two independent rooms, the rental value will be reduced to 8%. If there is only one independent room, the rental value will be reduced to 4%. On the other hand, if the employee thinks that the calculated rental value is higher than the rateable value of the house, the employee can choose to calculate the rental value by using the rateable value instead of 10%.

In many cases, the Inland Revenue Department will question whether the employer’s intention to provide benefits to employees is in the nature of housing benefits. If it is not, the benefit will be paid salaries tax in full, and the rental value cannot be calculated based on only 10% of the total salary. For example: the employer provides housing benefits to the relatives of the employees. In this case, the tax bureau will review whether the relationship between the landlord and the tenant on the lease has indeed been established. Regarding the existence of this relationship, the Inland Revenue Department will consider the following points:

1. Is the rent set too high? Is it reasonable?

2. Has the tenancy agreement been completed? Has the tenancy agreement been submitted to the Inland Revenue Department for assessment and payment of stamp duty?

3. How does the tenant pay the rent, the payment method, and whether the landlord has issued a receipt to the tenant

4. Whether the rights and responsibilities of all parties are really fulfilled

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

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