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Old 22nd Sep 2012, 03:11
  #9 (permalink)  
404 Titan
Join Date: May 2002
Location: Asia
Age: 53
Posts: 2,583

Actually Underpants is correct in that the entire forgivable loan is taxed. The loan is for HK$1.2m, not just the cash portion. In the eyes of the IRD it is irrelevant how the loan is spent. Under HK taxation law if a loan is forgiven it becomes income and is taxed at the highest applicable marginal tax rate. You are correct though in saying it is taxed over the six years as the loan is written down progressively over that time. That may change though as it appears CX has changed the contract and it appears now that it is forgiven only at the completion of six years’ service which would mean that it would be taxed in the sixth year only.
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