Salary sacrifice of work-related items
Who is eligible?
Continuing and fixed term contract staff members appointed for a period greater than one year under a University of South Australia industrial instrument are eligible to salary sacrifice. Casual staff members are ineligible to salary sacrifice; please refer to the Salary Sacrifice Guidelines & Conditions for further information.
What are the costs?
A UniSA $10 set up fee and $5 per fortnight administration fee apply for all items/expenses with the exception of car parking fees where a single annual fee of $10 applies.
What conditions apply?
Conditions apply depending on what section of the Fringe Benefits Act (FBT) the item relates to:
Exempt items
Items claimed must be primarily for use in the staff member’s employment.
Otherwise deductible items
Items would normally be claimable via the staff member's income tax
return if not salary sacrificed.
Primarily work-related
Items purchased on or after the 14th May 2008 must be primarily for use in
the staff member's employment to be exempt from Fringe Benefits Tax. The ATO
describe that an item is primarily for use in the staff member's employment
when purchased principally to enable the staff member to do their job.
The salary sacrifice form HRIS 044 includes a declaration by the staff
member and supervisor to this effect.
In addition if either the Australian Taxation Office or Auditor General contests the validity of your claim in the future, additional Income and/or Fringe Benefit Tax and additional charges that may apply will be the staff member’s responsibility.
Only one item with substantially identical functions can be claimed in a FBT year unless it is a replacement item. The FBT year runs from 1st April to 31st March.
How does it work?
- The staff member purchases/pays for the item.
- The GST is refunded to the staff member in full.
- The cost of the item is deducted from pre-tax earnings reducing the taxation liability over the minimum number of pays.
Example
A staff member with an annual salary of $77,424 seeks to salary sacrifice a laptop costing $1,870 (GST inclusive).
| Salary Component | Before Packaging Per Annum$ | After Packaging Per Annum$ |
|---|---|---|
| Gross Salary | $77,424 | $77,424 |
| Less pre-tax laptop computer | $ 1,700* | |
| Less pre-tax UniSA administration fee | $ 15** | |
| Taxable Gross Salary | $77,424 | $75,709 |
| Less Taxation | $18,519 | $17,997 |
| Plus reimbursement of laptop | $ 1,870 | |
| Paid by UniSA | $58,905 | $59,582 |
| Less post-tax laptop computer | $ 1,870 | $ 1,870 |
| Net Take-home salary | $57,035 | $57,712 |
| Total saving made by salary sacrificing laptop | $677 |
Note: * Cost less the GST is salary sacrificed.
** Based on the $10 set
up fee plus $5 fortnightly administration fee.
What can I salary sacrifice?
The following items may be salary sacrificed subject to the conditions outlined above.
1. Exempt items
- Work-related casual and permanent car parking fees at a commercial
car park, claimable on a monthly basis.
Note: For salary sacrificing car parking fees through Campus Services please refer to the following web site for further information: http://www.unisa.edu.au/hrm/employment/remuneration/sacrifice/car.asp - Work-related membership fees and subscriptions.
- A subscription to a trade or professional journal
- An entitlement to use an airport lounge membership.
2. Otherwise deductible items
- Membership fees for a work-related professional association.
- Financial Advice.
3. Primarily for work-related items
- Computer software
- Protective clothing
- A briefcase
- A tool of trade
- A portable electronic device
Examples include a laptop, calculator, personal digital assistant, portable printer and portable global positioning system (GPS) navigation receiver. The device needs to be easily portable and designed for use away from an office environment, small and light, can operate without an external power supply and is designed as a complete unit.
Items allowable (acquired as part of initial purchase) are inbuilt modem/network cards, DVD drive, memory upgrade, operating system or an inbuilt graphics card.
Items not allowable are external modem/back up devices, non-business related software, external mouse/keyboard/speakers, carry bag, finance/insurance/credit charges and additional warranty.
If the laptop is to be used on the University network please refer to following guidelines prior to purchasing: http://www.unisa.edu.au/ists/Staff/Purchasing/Hardware/default.asp
What about laptops used for 'self education'?A laptop purchased for the dual purpose of employment and self-education satisfies the rules for FBT exemption. However, a laptop purchased solely for the purpose of self-education or professional development may not be FBT exempt.
You should seek clarification on your specific circumstances prior to purchasing the laptop. Forward details of the course you are undertaking, how it relates to your current employment and a copy of the approved study release form HR-8.1 to the Salary Sacrifice Officer. Individual claims will be reviewed by the University Tax Accountant on a case by case basis.
Items purchased overseas
If the item is to be purchased overseas, it will need to be declared to customs on the employee's arrival in Australia and the necessary paperwork obtained stating the value in Australian dollars. Any excise tax or GST due on the item will need to be paid. The customs documentation will serve as a fully paid tax invoice and can be attached to the HRIS 044 form
Note: The declaration on page 2 of the HRIS 044 must be submitted on each occasion that a salary sacrifice claim is made for a portable electronic device.
What do I do next?
- Read the Salary Sacrifice Guidelines & Conditions
- Attach the original tax invoice and proof of payment to the HRIS 044 - Salary Sacrifice Form
- If the salary sacrifice claim is for a portable electronic device complete the declaration on page 2 of the HRIS 044.
- Forward form, original tax invoice and proof of payment to the
Salary Sacrifice Officer,
Human Resources Unit, Third Floor, 101 Currie Street, GPO Box 2471, Adelaide 5001
Disclaimer
The University of South Australia, its staff members or agents are not engaged in providing advice and any information received should be confirmed with independent sources i.e. Accountant or Financial Adviser. Any cost incurred in obtaining financial advice is the responsibility of the staff member. The University of South Australia accepts no liability should the staff member fail to seek financial advice or for financial and taxation advice received by the staff member. A directory of financial planners is available from the Financial Planning Association at http://www.fpa.asn.au/