I've salary sacrificed a computer to use at work. Does the ATO have any rules on how soon I'm allowed to sell the device?
I imagine it'd be tax fraud to salary sacrifice an expensive computer then immediately sell it and pocket the tax savings. But is it acceptable to sell it in the following tax year and upgrade?
The salary packaging provider say you can sacrifice 1 phone, 1 tablet and 1 laptop every year but I don't want to run into any trouble with the ATO.
No it does not need to be coupled with a lease arrangement.
Salary sacrifice is an arrangement between employer and employee to reduce salary (and thus income tax) in exchange for a fringe benefit. It depends on the employer's policy, one can salary sacrifice a laptop, mobile device, gift card, meal expenses etc etc.
How much do you think you can make each year?
Not generally coupled with a lease. How can anyone be so misinformed..
I don't believe there are any rules on how soon you can sell it but there are rules that only 1 device can be given to an employee per financial year (https://www.ato.gov.au/general/fringe-benefits-tax-(fbt)/in-detail/getting-started/fbt-for-small-business/?page=22). If you give more than 1 device, it would be subject to Fringe Benefit Tax (FBT) at 47%. Cost of FBT is usually passed on to the employee outweighing any benefit of tax reduction from the salary sacrifice.
You have legally bought it via a way to maximise new technology used by yourself to make a living that is legal and above board. Technology moves quickly and as it's not your fault that the tax department allow you to get a new PC via salary sacrifice every year.
At the end of the financial year or FBT year assuming the laptop has been fully paid for then it is yours to do with as you want. Be aware that you may only break even as second hand devices do not sell at the RRP, which you would have paid pre tax. As such if you sell it for more than say 63% of the RRP then you effectively got a tax break, but if you sell it for less than say 63% of RRP then you effectively paid more tax. This assumes your highest tax rate is 37%.
Your instincts are correct. FBT exemption applies only if the devices are "primarily for work" so if you salary sacrifice a laptop and return it to the store/sell it immediately on gumtree you'd have an ATO problem because you didn't use it for work - if they spotted it. Obviously like jaywalking it's going to come down to 'and if you get caught'.
It's (somewhat, sometimes) common practice to churn a new device every year - given you can really only use a single device at a time, there's a common sense argument selling the old laptop 'should' be fine.
If the ATO doesn't like you they can start poking holes in the 'was it really intended for work', 'did you actually need a brand new phone with basically identical specs to last years' one' line of thought. If that happens the boss will have a FBT problem [and likely you will be paying for it].
I don't think selling a device after a year is particularly aggressive taxwise so you 'should' be fine. But obviously there's a ton of 'what mood are they in, do you get caught, what if it's Tuesday' variables floating around.
@CrowReally above is correct.
To add to this, it comes down to what are you doing and how can you substantiate it.
You salary sacrifice a laptop today and sell it tomorrow … the very high probability is that's the end of it.
You do that every year … is there a pattern going on here that an ATO algorithm could pick up?
Are you also claiming deductions for other PCs or similar?
Are you doing something that might stand out from what would be considered normal behaviour and find yourself on the receiving end of an audit?
As a general rule, if you're not doing something completely egregious, you can get away with just about anything once. It's when patterns and/or abnormal behaviour emerge that you can find yourself in a jam.
The only other tech-related deductions would be for work-related accessories, software, etc. Unlikely to be more than $400 in any year. No other devices/PCs etc.
Regarding an audit, do you think they would have a problem with me simply wanting to have the latest gadgets?
Regarding an audit, do you think they would have a problem with me simply wanting to have the latest gadgets?
If you phrase it like that, then yes. Simply wanting the latest gadgets does not demonstrate the purchase is genuinely related to your income earning. You would need to demonstrate that your previous purchases are no longer fit for purpose/have gone beyond their reasonable useful life.
In this example the ATO suggests the effective life of a laptop is two years. If you follow that logic, the ATO wouldn't want to see you putting through a laptop more than once every two years. Similar rules would apply for other assets.
*This is not advice and you should speak to your accountant.
Faster GPU and CPU comes out every 6 months. Running 6 months old workstations and/or laptops directly affects how much money I can make.
Thanks. I might make it a two-yearly thing then and see what my accountant thinks.
Thanks for the responses everyone. By the sounds of things, what I'm planning should all be above board.
Given I'm allowed to salary sacrifice 1 of each device type per year, I'm also going to interpret that to mean the expectation is that those devices are used for work for at least a year as well.
I don't believe the ATO would have any reason to dislike me so I doubt they would go poking around looking for anything. Part of me feels like they shouldn't/wouldn't ask questions about a new phone every year if that's something that is allowed/lawful. The phone could be damaged/stolen/upgraded, etc…. but I don't know how they operate.
@weezlebub The salary packaging provider allow me to purchase the devices myself, then I choose how many pay cycles to sacrifice the pay from. Provided the device costs less than my monthly pay, I can just sacrifice the full amount over the pay cycle immediately after the purchase. My work pays the cost of the device to the salary packaging provider (saving me from being taxed on that income), who then deposit it into my account the next day. No leasing involved, just a $77 fee per fringe benefit year.
Absolutely do it - i would set the payoff period to be inside 12 months if you want to keep doing it
So long as you don't pull a CSW you should be fine.
Not sure what that is. Could you elaborate?
Clinical Social Worker (male)
the supposed inventor of Bitcoin
think he means this guy
https://en.wikipedia.org/wiki/Craig_Steven_Wright
tl;dr - said he invented bitcoin - many said just so he could bask in the fame of it all - then promptly got himself into all kinds of legal/taxation strife and has since kept a pretty low profile. (I know that last part is debatable since he also seems to have gone on a "Reverse Lance Armstrong" and sued or threatened people who call him out as a fraud)
I actually do this every year.
Usually with a MacBook because it's easy to offload. The intention was to use it for work but, after I bought it, I realised it's 'not suitable' because my company only supports Windows notebooks.
Salary sacrifice was designed as a tool to avoid taxes. People that can salary sacrifices and choose not to use it can have fun paying more taxes.
Salary sacrifice to avoid taxes is a 🏆.
Selling the asset and using the money for something else is another 🏆.
salary sacrifice is generally coupled with a lease arrangement … if you cancel the contract, you're expected to pay the payout figure for the device (which is usually a lot more than retail) over a 3 year period …
get a laptop, sell the laptop, have the money come out of your account for the next 3 years …
you can lease multiples of the same, but the sacrifice has a certain $ limit per year