Paul is considering acquiring a property in Hong Kong for residential purposes and has been given two options by his employer:

(1) His employer will pay the maximum amount of housing entitlement to Paul as a housing allowance, regardless of the property's usage. Paul will use all or part of the allowance to repay the mortgage loan on the property.

(2) His employer will provide a low-interest mortgage loan to Paul to acquire a residential unit for his own use. The interest rate will be fixed at 2%, regardless of the market rate.
The property will be registered in Paul's name, and the loan will be made between Paul and his employer.

Required:

Advise Paul of the different treatments of the two options for salaries tax purposes. (