Salary Packaging a Phone and Laptop

Saitake12 on 15/04/2023 - 09:15
Last edited 15/04/2023 - 11:06

Apologies if this isn't the right forum.

I just found out about salary packing and that portable electronic devices are exempt from fringe benefits tax.
My marginal tax rate is 37 per cent so this seems like a good opportunity for some significant savings as I was planning on buying a new laptop and phone anyway.
I work from home often and use my home PC and personal phone for work purposes.

Does anyone know how this works in terms of do I have to pay full price for the products?
Or if say, different websites/stores were offering the products cheaper I could buy them there instead?

Financial

Comments

  • avoidfullprice on 15/04/2023 - 09:28
    +3

    With salary packaging you need to talk to your payroll on salsac options, whether the product can be sourced by you and what base cost is if you get one through discounts

  • deme on 15/04/2023 - 09:37

    I just found out about salary packing and that portable electronic devices are exempt from fringe benefits tax.

    You don't pay FBT your company does.

    • Keplaffintech on 15/04/2023 - 10:32

      It's exempt for the company in this case

      • deme on 15/04/2023 - 10:32
        -2

        Why does this matter to you?

        • Keplaffintech on 15/04/2023 - 10:33
          +4

          It leads to employers offering this when they otherwise wouldn't, hence the opportunity for OP.

        • seannami on 15/04/2023 - 13:43
          +2

          A lot of employer's Salary Sacrifice contracts on bigger eligible items, like ICE cars, state that the employer will recover the FBT in full from the staff member within the package deductions, so it can make a big difference. Doesn't matter in this case (being an exempt item), but can be part of the decision for others.

    • AngoraFish on 15/04/2023 - 12:49
      +1

      The employer passes on the FBT cost to the employee as a condition of allowing them to salary package. That's how salary packaging works.

    • ozbargainsam on 15/04/2023 - 13:01

      Can you imagine how big of a perk this would be. The company buys you a device of any value and they foot the 47% premium over whatever you bought.

      No. Salary sacrificing is a 'perk' where an employee can buy a device used primarily for work and the employer effectively buys it from you making it a business purchase.

      The agreement you sign at the time of applying for it says that you will use it primarily for work purposes and any FBT incurred by the business is passed to you.

      • deme on 15/04/2023 - 13:02

        This sounds like you are paying for a work laptop and phone when the employer should

        • ozbargainsam on 15/04/2023 - 13:12
          +1

          It can seem like that but

          a) this is optional
          b) you can take advantage of it even if you get a work-issued laptop
          c) you can buy whatever device of your choice from $500 to $6000+ laptops

  • fattymattyd on 15/04/2023 - 09:57
    +2

    Speak to your employer and make sure they'll allow it first - they should, particularly for phones/laptops/tablets etc.

    For me, I buy whatever it is, give the invoice to my employer, they'll then reimburse me the full amount I've paid, they then deduct the ex GST price from my gross pay.

    • Guybrush57 on 15/04/2023 - 10:20

      so all that is being saved is GST? Couldn't a normal phone sale work out cheaper?

      • fattymattyd on 15/04/2023 - 10:33
        +1

        You save the GST, then you also save some tax because it's taken out from your gross pay (pre-tax).

      • sunnymel on 15/04/2023 - 10:42
        +1

        No there is tax saving as well. The process is
        1) confirm with your manager if he/she will be okay to approve
        2) call up the company (lets call it ABC) who manages salary packaging for your employer who will open an account for you
        3) buy the phone/laptop
        4) send the form and invoice to ABC
        5) ABC will claim the invoice from your employer and pay you back in full
        6) your employer will deduct same amount minus GST from your pre-tax salary for e.g if you buy a phone worth $2000 then $1800 will be deducted from your pre-tax salary giving you a benefit of $200 straightaway. Then you save 37% on remaining $1800 amounting to $666 giving you a total saving of $866 dollars

        I'm not an expert but above is based on a very recent transaction.

        • Muzeeb on 15/04/2023 - 10:47

          I get you are just rounding the numbers for simplicity but…

          then $1800 will be deducted from your pre-tax salary

          Technically it will be $1818.19

          Then you save 37% on remaining $1800

          Not if deducting $1818.19 from your pay takes you down to the next tax bracket.

          I might be wrong but I just don't want op to get false hopes if I'm right.

          • Saitake12 on 15/04/2023 - 11:04

            @Muzeeb: In my case it won't move me down a tax bracket - but even if it did, the tax saving only drops from 37 to 32.5 per cent.

            • Muzeeb on 15/04/2023 - 11:20

              @Saitake12: Sounds like you're all over it. Enjoy your new tech.

  • ozbargainsam on 15/04/2023 - 12:55

    Don't forget
    - 2% Medicare levy you save
    - if they also deduct from your super guarantee the amount you sacrifice (mine doesn't, not sure if it's the normal)

  • littlepcat on 17/04/2023 - 02:47

    If OP purchases the phone/laptop with salary sacrifice (pre-tax) money, does that mean the cost of the item won't be tax deductable even though the item is for work purpose? No tax is ever involved with this item, hence it's not tax deductable.

    Am I correct ?

    Thank you.

    • DrRalph on 26/12/2023 - 15:23

      Correct.

      • littlepcat on 26/12/2023 - 15:39
        +1

        Wow…thank you. I totally forgot that I ever asked this question.

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