WEDNESDAY, MAY 21, 1975
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ASSESSABLE RENTAL VALUE OF FREE
AND SUBSIDISED QUARTERS RAISED
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THE INLAND REVENUE (AMENDMENT) (NO. 3) BILL, WHICH RAISES THE ASSESSABLE RENTAL VALUE OF QUARTERS SUBSIDISED OR PROVIDED FREE BY AN EMPLOYER FROM 7-1/2 TO 10 PER CENT OF THE EMPLOYEE'S SALARY, WAS PASSED BY THE LEGISLATIVE COUNCIL TODAY.
THE BILL WILL COME INTO EFFECT ON A DATE TO BE APPOINTED BY THE GOVERNOR.
IN SUPPORTING THE BILL, THE HON. WILSON, WANG CALLED FOR FURTHER REVIEWS OF THE PERCENTAGE RATE AND URGED THE FINANCIAL SECRETARY +TO PLUG THIS HOLE IN THE SALARIES TAX BY AIMING AT BRINGING THE ASSESSABLE RENTAL VALUE TO THE FULL MARKET VALUE IN THREE YEARS.+
EVEN ON THE 10 PER CENT ASSESSMENT, MR. WANG SAID, A MARRIED MAN WITH TWO CHILDREN EARNING $7,500 A MONTH AND LIVING IN A $2,500 FLAT COULD PAY $6,725 LESS SALARIES TAX BY HAVING AN ARRANGEMENT WITH HIS EMPLOYER TO PAY FOR HIS FLAT AND REDUCE HIS SALARY BY THE AMOUNT OF THE RENT.
+BECAUSE OF THE PROGRESSIVE RATE OF SALARY TAX BY PERSONAL ASSESSMENT, THE HIGHER THE INCOME, THE BIGGER SAVING IN TAX CAN BE CAUSED BY SUCH AN ARRANGEMENT,+ MR. WANG SAID.
THERE IS NOTHING TO DISCOURAGE EMPLOYERS AND EMPLOYEES TO DO THIS, ESPECIALLY WHEN THE GAP BETWEEN MARKET VALUE AND THE ASSESSABLE PERCENTAGE OF THE SALARY IS FAR TOO LARGE, AND THE ARRANGEMENT IS ALSO UNFAIR WHEN COMPARED WITH OTHER CASES WHERE EMPLOYEES RECEIVE BENEFITS IN OTHER KINDS WHICH ARE ASSESSABLE AS TAXABLE INCOME, HE ADDED.
SUCH A PRACTICE IS ALSO IN DIRECT CONTRAVENTION WITH CLAUSE 9 (2B) OF THE PRINCIPAL ORDINANCE WHICH DEFINES INCOME AS INCLUDING THE RENTAL VALUE OF ANY PLACE OF RESIDENCE PROVIDED RENT FREE BY THE EMPLOYER, HE SAID.
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