Club Membership - tax?

[NM]

My company actually put out a memo today advising that salary sacrifice claims were not to be approved for purchases after 7:30pm on Tuesday until information has been received from the Tax Department regarding the way forward. ie At this point they have nothing to work with.

Exactly the same thing from my employer today.

 

[beardoc]

I fortunately bought my QC Life Membership last year, and I'm hoping that it will still be able to be packaged. Ditto for the laptop that I purchased last year.

 

[simongr]

If it was packaged previously you got the deduction from taxable pay last year so from a salary sacrifice there is nothing happening at the moment.

If you are "depreciating" the FBT exempt asset that you received from your employer (i.e. the QP membership over 10 years and the laptop in line with the ATO guidelines) then this is not affected.

The way it works is that if your employer gives you a non-cash benefit in kind (such a case of grange, diamonds, gold bullion) you as an individual are not taxed on the asset but instead your employer pays the fringe benefit tax on it. All that has changed is that the government has now said that a number of items which did not attract FBT now do so.

If anything the historic term of "salary sacrifice" in itself indicated that the scheme was not quite operating as the ATO would have wanted. I think the idea is that if you are given something that will help you do your job then you and your employer should not pay tax on that. However the way the schemes have been run is as a way to get more cash into people's pockets - and in the main not through the provision of assets that help you do your job.

We used to have lots of schemes like this to avoid national insurance contributions in UK - people even paid in poison (???) to a GBP value equivalent to their salary that we then bought off them and traded. Those schemes got dropped when the govt got wise...

 

[straitman]

If it was packaged previously you got the deduction from taxable pay last year so from a salary sacrifice there is nothing happening at the moment.

If you are "depreciating" the FBT exempt asset that you received from your employer (i.e. the QP membership over 10 years and the laptop in line with the ATO guidelines) then this is not affected.

The way it works is that if your employer gives you a non-cash benefit in kind (such a case of grange, diamonds, gold bullion) you as an individual are not taxed on the asset but instead your employer pays the fringe benefit tax on it. All that has changed is that the government has now said that a number of items which did not attract FBT now do so.

If anything the historic term of "salary sacrifice" in itself indicated that the scheme was not quite operating as the ATO would have wanted. I think the idea is that if you are given something that will help you do your job then you and your employer should not pay tax on that. However the way the schemes have been run is as a way to get more cash into people's pockets - and in the main not through the provision of assets that help you do your job.

We used to have lots of schemes like this to avoid national insurance contributions in UK - people even paid in poison (???) to a GBP value equivalent to their salary that we then bought off them and traded. Those schemes got dropped when the govt got wise...

What people are saying though is that the Tax Dept has not yet provided Companies any details of these measures.

Do you know something else :?:

 

[simongr]

I think it is clear that certain items that were FBT exempt are now not thus salary sacrifice schemes are pretty much dead.

 

[NM]

I think it is clear that certain items that were FBT exempt are now not thus salary sacrifice schemes are pretty much dead.

Apart from "Personal computing devices", what else has changed as far as FBT exemption is concerned?

The two biggest things for salary sacrifice would still remain superannuation and motor vehicles.

 

[Evan]

Employee meals are now out.

O/T: Motor vehicles have become less attractive now with the changes in the tax brackets, still worth it for some just saying less than before when every second person seemed to be in the top tax bracket which is now no longer the case.

E

 

[Flashback]

Likewise for us....

 

[ejb]

Employee meals are now out.


E

Bad news for the mutlitude of "employee meal" suppliers.

Heard one phone talk back radio yesterday and complain that the changes were going to kill his business.

 

[beardoc]

If you work for benevolent institutions or as an employee of a health service, you get a $17,000 (grossed up) salary packaging opportunity that is free of FBT. As far as I can work out, this still exists - and you can package virtually anything. I package my credit card spend as it's easy to substantiate (all my statements!).

Most of the other things like "meal entertainment", however, which was helping to pay for my trips to restaurants, is gone now. I'm not sorry about this - it was good whilst it lasted, but I couldn't see that it was equitable at all.

 

[beardoc]

The other thing I was wondering is whether novated leases have to have some work component to them to qualify now.

I can see a number of those salary packaging companies (the ones that sprung up to arrange the packages) going to the wall now. What was a growth industry is now pretty much dead.

 

[rwatts]

The other thing I was wondering is whether novated leases have to have some work component to them to qualify now.

Hopefully novated car leases are different in since they are not FBT-exempt unlike laptops etc. Instead they have concessional rates depending on distance travelled in the FBT year.

Richard.

 

[bambbbam2]

Hopefully novated car leases are different in since they are not FBT-exempt unlike laptops etc. Instead they have concessional rates depending on distance travelled in the FBT year.

Richard.

I always thought this a stupid system.. I know one guy that had to drive from SYD-ASP and return in 10 days, just to get the kms over the magic 25,000. How good for the environment is that??

 

[oz_mark]

I always thought this a stupid system.. I know one guy that had to drive from SYD-ASP and return in 10 days, just to get the kms over the magic 25,000. How good for the environment is that??

I always used to wonder why my uni lecturers would head off to some country town to mark papers. One day I learned it was all about making sure that got the right number of kilometres on their cars!

 

[rwatts]

I always thought this a stupid system.. I know one guy that had to drive from SYD-ASP and return in 10 days, just to get the kms over the magic 25,000. How good for the environment is that??

Well of course he didnt have to - but chose to because of the considerable $ savings. The 15000-25000km bracket is fairly wide and I tend to come in consistently around 20,500km each year, so it would take some very long trips to make the next bracket.

I guess now I wont be able to sacrifice for my home shredder either now

Richard.

 

[simongr]

My understanding though would be that you could claim a tax deduction for your shredder for the proportion that was business use.

For example if I bought one I would allocate some element for my work, some for mrssimongr and some for personal. As long as the item was less than $300 you would need to depreciate it.

The key thing for computer assets was that you could get the immediate tax deduction and then depreciate the asset you received - effectively getting a double deduction - just a tad dodgy.

Basically the way the Oz system is quite good I find - compared to the UK. In the UK things have to be wholly, exclusively and necessarily for your business and an individual can not claim in relation to their employment just in relation to a business that they were running...

 

[tuapekastar]

I always thought this a stupid system.. I know one guy that had to drive from SYD-ASP and return in 10 days, just to get the kms over the magic 25,000. How good for the environment is that??

In a previous job, myself and a colleague swapped cars for a few months...he was getting too many kms up (exceeding the number allowed in the lease) and I wasn't getting enough kms up to be in my nominated range for tax! Worked ok for us, and he had a better car than me!

 

[rwatts]

My understanding though would be that you could claim a tax deduction for your shredder for the proportion that was business use.

Unfortunately the type of shredder that is suitable for work-related purposes is orders of magnitude greater in cost.

I suppose that brings up a question on work-related usage in respect of salary sacrificing - I've assumed the work-related usage (of a laptop, etc) had to be in respect of the employer through which the sacrifice was being made. I wonder if it could be used for other employment/taxable-income-earning activity.

Certainly a tax deduction for the (<$300) shredder for income earning related purposes (not related to my employment) is doable.

Richard.