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8. How is the benefit of the provision of a place of residence assessed with respect to an employee's Salaries Tax?

If the Assessor accepts that what the employer provides to the employee is a place of residence, only the “Rental Value” ( RV ) will be computed and charged to tax. If not so acceptable, the benefit provided by the employer must be assessed as a “ perquisite” at its cash value (which is fully chargeable to tax under section 9(1)(a) of the Inland Revenue Ordinance).


Examples of "perquisites" (employee is not provided with a place of residence) are :


  • rent allowance,
  • refunds of mortgage payments, and
  • subsidies on mortgage interest payments.

Employee is provided with a place of residence


Housing benefits arising from employment are part of the employee's income. If the employee is provided with a place of residence by the employer or by a corporation associated with the employer, the "Rental Value" ( RV ) of that place of residence must be included in the employee's Assessable Income. The RV is calculated at either 4%, 8% or 10% of the total net income after deducting outgoings and expenses, depending on the type of accommodation provided:


Type of Accommodation


A residential unit


2 rooms in a hotel, hostel or boarding house


1 room in a hotel, hostel or boarding house


Example 1


Mr. C earned $600,000 in a year and was provided with a flat as his place of residence. He claimed deductions for his annual subscription to the Institute of Engineers $2,000 (i.e. outgoing & expenses), contributions to MPF $17,500 and expenses of $27,500 for self-education in that year. Mr. C's Assessable Income would be computed as follows :






RV $(600,000 – 2,000) x 10%


Total income:


Less: Outgoings and expenses


MPF contributions


Expenses of self-education


Assessable Income


Example 2


Mr. L came to work in Hong Kong on 1 April 2014. He was remunerated at salaries of $50,000 per month, plus a place of residence. During his first month in Hong Kong , he occupied one room in a hotel. The monthly rental was $8,000. On 1 May 2014, his wife and children arrived and the family moved into a 2-bedroom suite in the hotel. The rent was $16,000 per month. On 1 July 2014, he and his family moved into a flat provided by the employer.


The RV should be computed as follows :




1/4/2014-30/4/2014 ($50,000 x 1 x 4%)


1/5/2014-30/6/2014 ($50,000 x 2 x 8%)


1/7/2014-31/3/2015 ($50,000 x 9 x 10%)