Hi all, i'm planning on buying a new laptop but cannot figure out whether do it as a salary sacrifice through my employer or to claim it on my ABN in my tax return.
I'm not registered for GST on my ABN, just under the threshold.
Any advice would be appreciated.
Laptop cost around $2300 inc GST
Thanks in advance oz bargainers
Definitely salary sacrifice to get da full tax benefit upfront. i.e. you can claim the full amount in one go.
If you claim it via tax rebate, you will have to break it into 3 claims across 3 years to get the full amount rebate back to you.
i think op is classed as a small business so can write it off in the first year.
I'm not a tax accountant.
Didn't Julia Gillard stop salary sacrificing like this?
Do you work for a not for profit?
Might still be possible through your personal registered business though.
My employer can definitely do it, it might be because laptops are an essential requirement for our job
Got a comprehensive answer from my accountant,
Do salary sacrifice for the laptop its means your employer will use some of your pre-tax money to remove and cover its cost as a Fringe Benefit. So it is not a tax deduction. But technically you get the benefit of the laptop and a tax saving during the year as because they reduced your Gross to cover the laptop cost it means the taxing which is based on the Gross also falls a little. Be careful as Fringe Benefits which do reduce your Taxable Income are added back on top for calculations of HECS repayment, Medicare Levy Surcharge and Centrelink purposes amongst others as the ATO argue you still had the benefit of the fringe benefit
Claim as expense
a. put against the ABN in the 2018 Tax Return you will reduce your income by $2,300 as you can write-off anything under $20,000 until the end of 30 June 2018. So depending on your bracket could save ~$700 tax as you never get $1:$1. That’s doesn’t mean you literally get $700 though. As if your ABN made more profit this year it means your tax debt was reduced by that figure. E.g. Last year instead of owing $1k you would have owed $300.
b. put against your employment but as its over >$300 it would have to be depreciated over several years. The complication with this is its also further proportioned by how many days did you own it in the tax year. So if you bought on 1 July 2017 might save you $500, but if you bought on 30 June 2018 might save you $2.
you can't salary sacrifice it and claim depreciation that's the old double dip Rudd removed.
Seems like you will get same outcome via outright deduction using ABN as you would via salary sacrifice.. only advantage might be that your employer may only deduct GST ex price from your salary (since they get the input credit) so you might save GST if you salary sacrifice (and its better for your cashflow)
You need a new accountant. A laptop is exempt from fringe benefits so the employer does not need to report it as a fringe benefit. The employer does not have to pay any fringe benefit tax and also the expense is not mentioned on your group certificate meaning it does not affect HECS/Medicare etc.
You can't claim a deduction if you salary sacrifice as Blackadda mentioned.
Salary sacrifice it. Your employer will refund the GST, whereas if you choose to claim it as expense, you can't claim back a GST credit since you are not registered for it through your ABN.
Can you only get back as much GST as you pay? What would happen if you set up a business and did $75,000 turnover one year so were able to register, and then hardly did anything after that not making much profit if anything, and bought stuff and claimed the GST back on it?
You only get back as much GST as you pay…the GST component has to be stated on the invoice.
You don't NEED to earn $75,000 in one year to register for GST, you can choose to register for it even if you turnover less than that, it just becomes compulsory to register for it over $75,000. Obviously as soon as you register you need to charge GST and pay that to the ATO for all products and services that you provide through your ABN…unless the products/services are GST exempt
Ah that makes more sense. I was thinking, that sounds like a very easy loophole to never pay GST again lol
He wasn't suggesting doing both, he was just laying out the options
Salary Sacrifice.
You Save:
1) GST
2) Deduction of the payment (Net of GST) is from Gross Pay, therefore, dollar saved has a higher value.
I do this yearly before each March (FBT Year) for mobile phone / laptop or other personal devices used for "Work".
I would salary sacrifice it; you enjoy the tax benefits on the full purchase price.
My understanding is that if you purchase it post-tax, you would only be able to claim it in your tax return if solely business-related, or as a proportion of the value excluding personal use.
But, if you have an ABN do you also have an accountant? They should be able to provide the best advice.