In the last FY I bought a phone for a stack of points, mainly since I didn't really think that travel was on the cards.
When it comes to Tax time, and assuming that phone has been mainly used for work - do I claim:
a) The market value of the phone at the time I got it
b) The commonly accepted market value of the points for cash equivalent (ie 0.5c/pt for qantas)
c) $0 - given that points are magic pixie dust currency that the ATO doesn't care for
Keen to hear what people think about this.
c)
otherwise, you should also pay income tax on points your earn…
you can't have it both ways…
Disagree. I can use my FF points to buy gift cards, then buy the device with those gift cards while still claiming the item as a tax deduction without paying income tax on the points or gift cards. So I don't see why it's "having it both ways" if OP were to be allowed to claim the RRP value of the device they bought with points… It's the same thing just less steps to the process.
if OP were to be allowed to claim the RRP value of the device they bought with points…
They would need to be able to show the receipt of payment.
The ATO is pretty clear on this. If you didn't spend actual cash then the expense is not claimable. Points are treated as a freebie, and therefore anything purchased with points is also a freebie.
See also the related discussion on gift cards here https://www.ozbargain.com.au/node/718685 From which the take-away is also that the claimable amount is how much cash you spent, not what value is shown on your receipt. (eg if you bought something for $500 with a $500 gift card you bought through a 10% off deal then the claimable amount is $450.)
Having said this, the odds that an ATO audit will dig further than an actual receipt are pretty low, so your tolerance for such things may vary. Still, if you can't provide some sort of paper trail to substantiate the value you're claiming other than something's recommended retail price then you can probably guess yourself how well that is going to fly.
if you bought something for $500 with a $500 gift card you bought through a 10% off deal then the claimable amount is $450
Opens an even bigger can of worms if you get a $500 gift card as a present, do you claim $0 or $450 or $500?
If you received the card as a genuine gift you should be able to treat it the same as if someone just gave you cash. You're only responsible for your own accounting, not other people's.
Having said that, the key phrase is genuine gift. An OzBargain discount gift card swapping conga line would just be a tax-avoidance scheme.
An OzBargain discount gift card swapping conga line would just be a tax-avoidance scheme
Is that how google does it?
There is an ATO decision on this very issue:
https://www.ato.gov.au/law/view/document?docid=AID/AID200484…
In the above decision number ATO ID 2004/847, the ATO said that a "taxpayer is not entitled to the value of an airline ticket as a work related deduction under section 8-1 of the ITAA 1997, where the taxpayer acquires the airline ticket by redeeming privately accrued consumer loyalty points".
Case closed your honour!
Interesting!
I wonder if it's the same if I used AMEX travel credit.
c) $0 - given that points are magic pixie dust currency that the ATO doesn't care for
Points 'income' is not taxable in the eyes of the ATO, hence 'rewards' are also not claimable for tax savings as they have no 'value'.
So this could be another loophole then. Rich people giving points to themselves and each other, enjoying the benefits which are all tax free.
Not sure how you think they can 'give' points to themselves. Its not like you can ring up Qantas and say hey, I want 1m points thanks! You have to earn them via spending money that was taxed or you can 'buy' them again using money that was taxed. Hence why the ATO has little interest in it.
Could be wrong, but pretty sure is the value your paid in the Tax Invoice.
If it was me, use real money for tax deductible items, and points for things you can't tax deduct.