Car and Car-related Benefits

A.   New Car

The value of benefit derived from a new car is computed as follows:

Where:

• 3/7 refers to the use of car outside office hours for private matters which is estimated at three out of seven days in a week.
• Car cost refers to the acquisition cost of the car (inclusive of COE) paid or payable at the date of purchase.
• Residual value depends on when the car is registered.
  • Car registered on or after 1 Nov 1990 , residual value is 80% of the open-market value of the car. The open-market value at the time of purchase can be found on the vehicle registration card.
  • Car registered before 1 Nov 1990 , residual value is nil. 
• Private mileage refers to the mileage made for personal (i.e. not business) purposes. The employee should keep records of the mileage and inform the employer.
  
  

B.   Second-hand Car

The value of benefit derived from a second-hand car is computed as follows:

Where:

• If employer pays for the cost of petrol, use the rate of $0.55 per km instead of $0.45 per km.
• A = actual cost (inclusive of COE) of the car paid or payable by the employer at the date of purchase
• B = the remaining period from the date of purchase of the car to the date of expiry of the first COE (i.e. at the end of the 10th year)
• F = the remaining period from the date of purchase of the car to the date of expiry of the renewed COE
  
  

C.   Car with Renewed COE

The value of benefit derived from an existing car with renewed COE is computed as follows:

Where:

• If employer pays for the cost of petrol, use the rate of $0.55 per km instead of $0.45 per km.
• D = the amount payable on renewal of COE for the continued use of the car after the end of the 10th year.
• E = the remaining period from the date of renewal of COE to the date of expiry of the renewed COE (currently either five or 10 years)
• G = the amount of residual value which would have been allowable as set-off against the cost of the private car for purposes of computing the car benefit for the period prior to the expiry of the first COE
  
  

D.   Leased Car

The value of the car benefit where the employer bears the full cost of rental of the leased car and all other running and maintenance expenses are borne by the car hiring company is computed as follows:

You may use the Car Benefit Calculator (92KB) to check the taxable value of car benefits.

A.   New Car (i.e. Employer is the first owner of the car)

The value of benefit derived from a new car is computed as follows:

Where:

• 3/7 refers to the use of car outside office hours for private matters which is estimated at three out of seven days in a week.
• Car cost refers to the acquisition cost of the car (inclusive of COE) paid or payable at the date of purchase.
• PARF rebate refers to the Preferential Additional Registration Fee rebate to be granted when the car is de-registered at the age of above 9 but not exceeding 10 years.
• Actual running and maintenance costs incurred by the employer (including reimbursements made to the employee by the employer) refer to costs such as road tax, petrol, car park charge, ERP charge, car insurance, repairs and maintenance, if any.
• See Example 1 and Example 2
  
  

B.   Second-hand Car

The value of benefit derived from a second-hand car is computed as follows:

Where:

• Car cost refers to the actual cost of the car (inclusive of COE) paid or payable by the employer at the date of purchase.
• B refers to the remaining period from the date of purchase of the car to the date of expiry of the COE or the renewed COE (if the second-hand car is more than 10 years old at the time of purchase)
• Actual running and maintenance costs incurred by the employer (including reimbursements made to the employee by the employer) refer to costs such as road tax, petrol, car park charge, ERP charge, car insurance, repairs and maintenance, if any.
• See Example 3
  
  

C.   Car with Renewed COE

The value of benefit where the employer renews the COE for an existing car and continues to provide the employee with that car is computed as follows:

Where:

• C refers to the amount payable on renewal of COE for the continued use of the car after the end of the 10th year.
• D refers to the amount of PARF rebate which would have been granted on the first COE when the car is de-registered between 9 and 10 years old, if not for the renewal.
• E refers to the remaining period from the date of renewal of COE to the date of expiry of the renewed COE (currently either 5 or 10 years)
• Actual running and maintenance costs incurred by the employer (including reimbursements made to the employee by the employer) refers to costs such as road tax, petrol, car park charge, ERP charge, car insurance, repairs and maintenance, if any. 
• See Example 4
  
  

D.   Leased Car

The value of the car benefit where the employer leases a car for the employee's use is computed as follows:

Where:

• Actual running and maintenance costs incurred by the employer (including reimbursements made to the employee by the employer) refers to costs not borne by the car hiring company, such as petrol, car park charge, ERP charge, if any.
• See Example 5

You may use the Car Benefit Calculator from YA 2020 (107KB) to check the taxable value of car benefits.