RESTRUCTURING your employment package to make the most of incentives could slice thousands of dollars a year off your tax bill. There are a wide range of allowances that many people fail to use and they therefore end up paying too much of their annual salary to the Inland Revenue Office (IRO). Deductions can be made for rent; management fees and domestic rates; holidays and medical expenses. For those using Hong Kong as their regional base, there is the potential to lower your tax bill by only making payments for the period spent in the territory. But expert advice is often needed when sorting out what claims can be made and the most tax-efficient way to sort out your total tax package. The trick is to seek your company's assistance in minimising your personal tax liability without changing your remuneration package. Housing allowance: Barry Macdonald, a tax partner for Coopers and Lybrand, said: 'The taxable benefit to the employee is not the rent paid or reimbursed by the employer, but rather is an arbitrary 10 per cent of the employee's assessable income.' To use this allowance, an arrangement has to be established with the employer whereby the company either leases the flat to the employee or the company reimburses the employee for his rent paid. Mr Macdonald said: 'Furniture, utilities, food, salaries for the amah could be structured tax-free if the employee's company contracts for the expenses.' The rental benefit is reported each year on the employer's return, which is then filed by the company. If the company is reimbursing the employee for rent paid, then the employee needs to be able to provide a copy of the lease, or payment receipts, to the company to justify the payments. Mortgage payments cannot be claimed. Travel allowance: Inland Revenue allows holiday travel as a tax-free benefit. Typically, it will be paid to the employee as an allowance or as a reimbursement. The Inland Revenue imposes no limit on the amount that can be set aside, but companies will generally limit it to one month's salary if the employee is holidaying alone. The concession applies to the employee and his or her immediate family; that is, wife or husband and children. Food and drink consumed on the holiday cannot generally be claimed, but accommodation, travel, hiring of cars and miscellaneous costs such as sightseeing, can. Time apportionment claim: This is only available if the employee is employed by a foreign company, if the contract is negotiated and concluded outside Hong Kong and if the salary is paid outside the territory. Mr Macdonald said: 'Alternatively, consider a dual, or 'split' contract. One contract for Hong Kong services and a second contract for services performed outside Hong Kong. 'The salary should be reasonably split between the two contracts. In theory, not one day of service in the second contract [should] be performed in Hong Kong. 'The second contract is then not subject to Hong Kong tax. It is better if both contracts are not concluded with the same corporation.' There are a range of other tax-free benefits that can be provided to an employee. The general rule is that if the employer provides a benefit such as a cash allowance or a perk that is convertible into cash, it will be taxable. Housing and holidays are excepted. He said: 'Therefore, to structure a tax-free benefit, the company must make the benefit inconvertible to money; and, ensure the employee does not enter into any liability for the payment.'