To Salary Sacrifice...or not to Salary Sacrifice...that is the question
Brendan Curran | July 09, 2018
Whether 'tis nobler in the mind to suffer the cost of paying for it yourself???
Apologies to all the Shakespeare buffs out there......
but really, should you salary sacrifice a car or not????
My position has ALWAYS been that the FBT consequences of any salary sacrifice arrangement are expensive....so that the employee contribution that the salary sacrifice companies always gloss over or ignore completely means that you are actually no better off after tax either way.
It's logical. FBT was designed to remove the benefit of providing a benefit to an employee. And it is really really efficient at achieving its goal.....especially now that there is only the base rate % to calculate the value of the car benefit.
so don't bother??? well..........maybe its worth another look...
Let's say you are a teacher, on $180k. you do a shitload of running around after work, before work, DURING work in your car. You don't get reimbursed for it and you keep a log book and ALLLL your receipts.
Can you claim this in your tax return?? YUP!! ABSOLUTELY!!
SHOULD you claim it in your tax return??? hmmmmm, given that the ATO has drawn a great big line in the sand and let the whole world know their opinion of people who want to claim big amounts in their tax returns......maybe the smart move is to win the war, not that particular battle...
So perhaps a salary sacrifice arrangement will work better for you......you won't be able to claim the costs of running your car because YOU are no longer paying them. But your tax bill will also be lower. AND the risk of receiving an ATO audit will be eliminated completely!!!!!
SO, in a perfect world where everyone plays fair, it should make no difference to your life whether you salary sacrifice or not. But the ATO doesn't play fair. If you claim something and they don't like it, you are going to get bruised. So don't play their silly game.....salary sacrifice the car, save a few dollars in tax and simplify your taxation affairs at the same time.
I never thought I would tell people that salary sacrificed cars are a good idea, but it's a funny world we live in......
yours in tax
BC
Nice one Brendan.
So if I'm not doing a whole lot of running around in my car for work (because I use public transport or uber/taxi and get that reimbursed by my employer) then not a whole lot of benefit in going down the lease route?
From crunching my own numbers, on my own situation it was marginal at best.
Spot on James!!!!!!
the only way that a salary sacrifice arrangement can really be of benefit to you is if there is a significant amount of work-related travel, AND you dont get reimbursed by your employer!!