Hi Bargainers,
My company pays 10% of my salary to my super fund, if I salary package a laptop ($3000), do I still get the $3000 * 10% super since my income will less $3000?
Example:
Without salary packaging $5000 salary plus $5000 * 10% super
With salary packaging $5000 - $3000=$2000 actual income (still $5000 in contract), do I get $5000 * 10% super or $2000 * 10% super?
Cheers
its a deduction so you get paid your full salary and its associated super, then it is deducted to pay for whatever sacrificing arrangements you may have. its not a contra/offset situation
Unless the rules have changed your company doesn't have to pay super on income that is sacrificed as it doesn't appear as salary, when I salary sacrificed a car I negotiated to ensure I still received super on my income including what I was sacrificing and got that in writing. This was a few years ago so, as I said, may have changed.
You'll probably find the answer on the government website.
Why not just buy outright and claim a tax deduction? No risk to super with that method.
Also means you're not restricted to certain suppliers (and paying "full freight") as can be the case with these arrangements
If I salary package the laptop I can claim two levels of tax deduction: deduction on the $3000 and another deduction for work-related expenses. If I buy the laptop outright I only get work-related deduction, I still need to pay tax for the $3000. Also I can buy the laptop from any supplier I like with salary packaging, I just need to send them the receipt and they will deduct the cost from my salary in the next pay cycle.
Are you able to clarify further about your deduction for work-related expenses and why you wouldn't be able to also claim those in your tax deductions also?
The main benefits I would see is if your company had a BYOD sort of arrangement in which case you can save yourself GST.
However my understanding is that all other deductions materially stay the same. Once you've made a salary sacrifice you don't get to deduct/depreciate it again from your tax return.
The other difference is that with salary sacrifice you're often paying for it in the one year and so the "benefit" is captured in one FY, whereas if you claim on your tax you need to calculate days/FY of ownership and as far as laptops go I believe their "useful life" was revised to 2 years recently so you'd be deducting it over at least two FYs
If I earn $5000, and I pay 20% tax, so my take-home salary is $4000, and then I spend $3000 to buy a laptop, leaving $1000 balance.
If I earn $5000 and have salary packaged $3000 laptop, my actual income will be $2000, and I pay 20% tax on the $2000 salary, my take-home salary will be $1600.
So $1000 without salary packaging and $1600 with salary packaging, $600 benefit. The higher you earn and higher tax rate you pay, the more benefits from salary packaging.
In addition to all above, if you use the laptop for work, you might be able to claim another level of tax deduction for work-related expenses, this has not been confirmed yet, but even if you cannot claim this level of deduction, you can still get $600 benefit for your personal laptop, which is my case that the laptop I will be purchasing is for my personal use (and may occasionally for work).
@AussieBogan: I suspect what you're describing is the FBT exemption for work-related portable electronic devices which are predominantly used for work… i.e., your employer would have to pay FBT on the laptop, which usually gets deducted from your total package (or you pay for this under the employee contribution method), but then if the device is "mainly" used for work, then this FBT may not be applicable… but that last hurdle can be quite high, and also might be a bit hard to prove if you already have a work computer provided (or don't need one) unless you are working in an eligible small business. Please do NOT take this as tax advice, but you may just want to rethink those numbers before you go for this since salary sacrificing/using pre-tax money and then having the FBT gross up applied usually eliminates most of the 'benefit' of these arrangements unless the device is for work (which you would've been able to claim a tax deduction for anyway).
@AussieBogan: one of the primary tests of whether or not you may salary sacrifice something is whether or not it is predominantly used for work purposes. If you aren't predominantly using it for work purposes then technically you are not eligible to claim and so your discussion points are moot
after tax deductions allow you to apportion as you can justifiably explain between work and personal use and the tax benefit is the same except split over two years
your main benefit is not having to pay GST
@peter05: To add to this, other benefits are
accelerated depreciation (you effectively take a full deduction in the year of purchase). Buying privately he would have to depreciate over 2 years.
the ability to claim a 100% deduction for something ‘primarily’ for work related use.
@pipboy: You may be replying to my second post. I covered what you mentioned in my first response.
Saying they only saved GST was in relation to the fact that they aren't using it primarily for work purposes as the other benefits "shouldn't" apply
@AussieBogan: Have you actually asked if your work does SS for laptop to begin with?
If you use your laptop 100% for work over the life of its depreciation (2-3 years based on ato website) you will get that “$600” back in tax deductions, plus whatever other expenses you claim.
And as above suggest, it will resolve your super question, which there is no harm checking with HR
@AussieBogan: In this case you can’t actually salary sacrifice as it isn’t primarily for work use. I’d double check with your employer instead of relying on the salary sacrifice outfit. Tread carefully with the other deductions and discuss with your accountant first.
I SS devices every year, plus a laptop every other. I even have a little calculator that takes into account GST, Medicare levy, etc when I see what it costs me after all is said and done. One of those items is the 'loss' of super paid.
So I went back to my payslips and it turns out, my work does not reduce the super guarantee amount - they always calculate it on my base salary. I'll need to update my calculator.
Your employer may differ. As it will benefit them to pay less super.
Good writeup here from ATO. Rules changed on 2020
https://www.ato.gov.au/general/fringe-benefits-tax-(fbt)/in-detail/employees/salary-sacrifice-arrangements-for-employees/
Your company should be paying 10.5% to your super fund.