Can I Salary Sacrifice My Laptop?

Dear Lifehacker, I have an old MacBook that I primarily use for work, that I have recently killed by spilling a cup of coffee onto it. I have been searching the net for tips regarding salary sacrificing a laptop and the tax benefits. I haven't really found any helpful information and were wondering if you would be able to assist? I know you people are not accountants, and that the process may differ from workplace to workplace, but I'm wondering if you can least point me in the right direction. Thanks, Anthony

Dear Anthony,

The concept of salary sacrificing laptops as a way of buying them cheaply has been a popular choice for employees in the past. With a salary sacrifice scheme, a piece of work equipment such as a laptop is paid for out of your pre-tax income. That effectively offers a discount equivalent to your top marginal tax rate (and you didn't have to pay GST either). However, following a tightening of the relevant rules in 2008, the chances of your actually scoring a discounted laptop this way dropped significantly.

In the 2008 budget, the rules applying to salary sacrifice for laptops were tightened. The first major change was that people who had purchased a laptop via salary sacrifice could not then also claim depreciation on that machine in subsequent years. That loophole, which made it possible to purchase a laptop for almost no cost, has been completely closed.

The ATO also tightened up the rules surrounding whether or not fringe benefits tax (FBT) was payable on a laptop provided through salary sacrificing. FBT is paid by the employer, not the employee, on certain benefits provided through work. A laptop purchased through work via salary sacrifice is exempt from FBT, but there's two big conditions attached: the machine has to be primarily for work use, and that exemption is restricted to just one machine a year.

What does that mean? It means that if your employer already provides you with a laptop, then you're not going to be able to score a second one without it attracting FBT payments. And since they'll be paid be your employer, the incentive for them to offer a salary sacrifice arrangement is pretty low.

In any event, you'll only know if the salary sacrifice option is available by chatting with your boss. But if you fall into the "already have a notebook PC for work" category, the conversation is not very likely to come out in your favour.

A final thought: lids for coffee cups can often be a good idea.

Cheers Lifehacker

Lifehacker's weekly Loaded column looks at better ways to manage (and stop worrying about) your money.


Comments

    I did salary sacrifice my previous computer, just before the depreciation loophole was closed. For my last one, I just purchased it outright myself, and will claim its depreciation in my next few tax returns. Couldn't be bothered with the red tape of arranging for salary sacrifice, when it has no benefit now apart from quicker reimbursement.

    Unrelated question. If I am employed full time and decide to purchase a laptop to start up a blog who's revenue would hopefully come from potential advertising, would I be able to claim the laptop for tax purposes **if I didn't make a single cent from the blog**?

      I am not an accountant. I suspect that if there was zero income from the blog AND zero other expenditure to demonstrate you were serious as a business, it would be disallowed. If you could demonstrate real business intent -- ABN, business registration, domains, a formal business plan -- then it would more likely be taken seriously. Of course, that would cost you, but it would demonstrate you had serious intentions and weren't just looking for a tax dodge.

      DISCLAIMER: I haven't fully researched into this, so this may not be 100% correct.

      From what my accountant has told me, you have to have an income of around $20k before you can start claiming business expenses against it. The good news is that if you have expenses from previous years before you hit the threshold, you can claim those once you're over.

        Wrong end of stick? There is no legal income minimum before you claim deductions. However, it might not be worth your while to do the whole business setup/pay accountants/etc unless you're making at least $20 grand.

      Firstly - If you don't make a cent from the blog - exactly what income are you claiming to deduct the laptop from?

      Secondly - If you're full time employment is in IT (Which seems likely if you're writing a tech blog) then claim it against that income!

      Thirdly - if you're running a blog as a serious business and have registered it with an ABN then I'd recommend you speak to an accountant generally. Plant and equipment can be claimed by your business in some circumstances.

    Did you mean "paid by your enployer" in this paragraph; I am confused?

    What does that mean? It means that if your employer already provides you with a laptop, then you’re not going to be able to score a second one without it attracting FBT payments. And since they’ll be paid be your employer, the incentive for them to offer a salary sacrifice arrangement is pretty low.

    If the place where you buy your computer is real cool, you can get them to put 'laptop' on the invoice when you buy a desktop. Salary sacrifice win.

    A few notes..and this is not "official" advice, just a web opinion ...

    Firstly, "providing you with a laptop" is different to buying you a laptop. If your employer provides you with a laptop, but they own (and maintain) it, then it's not your laptop. You can still salary sacrifice (once) for a laptop that YOU own.

    Secondly, the point at which a laptop is either an asset (and needs depreciating) or is an expense (can can be written off immediately) is dependent on the cost of the laptop, and the size of the firm. Generally, a laptop is an asset over $300. However, small businesses (turnover less than $1million) have a $1000 expense it now point.

    Thirdly, depending on how much your boss likes you /the informality of the firm, your boss may be happy for the company to buy and let you use the laptop of your choice. It will just officially belong to them. Whether you can also use it for personal use, is officially up to the firm - but most firms have no trouble with it as long as you don't play games in work hours. In fact, it's a sneaky way to get you to take your work home with you at night :-)

    @Jason and Angus - You don't need a real ABN etc to show that you are intent on making money from your blog via advertising, you just need to make money from your blog. "Deductions" have to be deducted from related income. If you buy a laptop, but there's no income from the blog to tax, then there's nothing to deduct your $1000 from.

    You can't claim your blog expenses against non-related income (eg your job, your dividends, etc). That would be negative gearing, and is currently only allowed for a few asset/expense types (such as investment properties).

    PR

    What about the salary sacrifice benefit of it being paid for out of pre-tax income? This is exactly the same as getting a tax deduction for the purchase cost and you don't have the hassle of justifying the claim in your tax return.

    Ok so you can't then claim depreciation but you will have already got a tax deduction for the cost of it anyway which is what depreciation effectively is, only spread over a period of years.

    General Comemnt

    As far as employers shying away from salary sacrifice arrangements if they have to pay any FBT
    it is quite common in reality for part or all of the FBT cost to be factored into the arrangement resulting in the the employee bearing part or all of the FBT cost.

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