Property tax computation

Lump Sum Premium


Lease Premium is Assessable

The law specifically provides that lease premium is assessable to property tax in the same way as rent.


Assessable in the Year of Commencement of Tenancy

If you have received lease premium, the amount shall be included in the assessable value of the property in the year of commencement of the lease concerned.


Spreading Over to a Maximum of 36 Months

However, if the period of the lease is not contained within any one year of assessment, you should spread the lease premium into equal monthly instalments over the period of the lease or a period of 3 years, whichever is the shorter, and include the relevant amount as rental income for the years of assessment concerned.


Example

You let your property to a trader for 24 months, with effect from 1 June 2006. You received a lease premium in the sum of $60,000 on 1 May 2006.

You should spread the lease premium over the period of the lease on an equal monthly basis and include the relevant amount as rental income for the years of assessment concerned as follows:

Year of Assessment Assessable Value2006/07$60,000 x 10/24 = $25,0002007/08$60,000 x 12/24 = $30,0002008/09$60,000 x 2/24 = $ 5,000 $60,000
If the period of the lease is 48 months, the lease premium should be spread on an equal monthly basis over the first 36 months and the relevant amount should be included as rental income for the years of assessment concerned as follows:

Year of Assessment Assessable Value2006/07$60,000 x 10/36 = $16,6672007/08$60,000 x 12/36 = $20,0002008/09$60,000 x 12/36 = $20,0002009/10$60,000 x 2/36 = $ 3,333 $60,000


http://www.gov.hk/en/residents/taxes/property/propertyincome.htm

2010-07-14 15:05:41 補充：
There is no "Relating Back" in Property Tax in Hong Kong as the landlord only receives a lump sum of rental income for future years, instead of previous years.

For details of computation of property tax, you may refer to:

http://www.gov.hk/en/residents/taxes/property/propertycompute.htm

2010-07-14 15:06:41 補充：
"Relating Back" is found in Salaries Tax in Hong Kong.

http://www.gov.hk/en/residents/taxes/salaries/salariestax/chargeable/backpay.htm

2010-07-14 15:07:29 補充：
Back pay, contract gratuities, deferred pay and arrears of pay are generally assessable under salaries tax. Here you can learn more about reporting such payments on your tax return and how such lump sum payments can be related back.

2010-07-14 15:07:41 補充：
Assessment and Relating Back

Back pay, contract gratuities, deferred pay and arrears of pay resulting from an award of salary or wages are taxable, regardless of whether you receive them during the course of employment or upon or after cessation of employment.

2010-07-14 15:08:00 補充：
However, you can apply to have such lump sum payments related back to the service period for which they are made.

2010-07-14 15:08:11 補充：
Where that period exceeds 3 years, the amount will be related back at a constant rate over 36 months ending on the date of entitlement to the payment or the last date of employment, whichever is the earlier.

2010-07-14 15:08:15 補充：
Application to have a lump sum payment related back can be made when you file your tax return. The Inland Revenue Department will only relate back the lump sum if it will reduce your overall tax liability.