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Old 29th Mar 2017, 02:08
  #9 (permalink)  
Numero Crunchero
 
Join Date: Oct 2006
Location: Hong Kong
Posts: 651
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Double taxation?

There seems to be this ongoing myth that you have to pay two years tax AND it is in advance.

Not true.

What happens (in Oz at least) is the employer estimates your annual tax bill, based on earnings that week/fortnight/month and takes it from your weekly/fortnightly/monthly pay.

In Hong Kong you pay tax in arrears. So if you joined say April 1st 2017, around May 2018 you will have to fill out a form saying how much you earned for the previous tax year (1 April 2017-31 March 2018). They work out how much tax you owe, then they simply assume you will earn the same amount in April 2018-March 2019 tax year. So they charge you 'provisional' tax - but the point is, by the time you pay it, you have earned the income.

In this example, in Jan 2019, you will have to pay 100% of the tax you owe for the 2017-2018 tax year, and 75% of the tax you 'might' owe in the 2018-2019 tax year. It is paid in January which, coincidentally, is 9 months (or75%) through the tax year. You will have to pay 25% of the estimated 2018-19 tax in early April 2019 - just after you have had three more months pay!

So if say you earned 100K per month, tax is roughly 16.5% - so if you put away 16.5K per month away from DOJ, you will have all the money in hand to pay your tax in Jan 2019.

Clear as mud?
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