My question concerns fringe benefits tax and salary sacrificing.
It's my understanding that:-
· So long as my employer is agreeable, I can purchase a mobile phone, get reimbursed by my employer and then have the reimbursed amount salary sacrificed; and
· As the phone will be for work purposes and is a portable electronic device, it is exempt from fringe benefits tax.
I have purchased gift cards for myself. The gift cards is sold by a company separate to the actual vendors that accept the cards. There was a promotion online that sold the gift cards at a discount. I want to use the gift cards to buy a phone for work purposes.
If I do this however, the receipt for the phone will only display the advertised price and not the actual amount I would be out of pocket for. You need to look at the receipts for both the gift card company and the mobile phone vendor to figure out the true out-of-pocket cost to the buyer.
So for example:-
- $1,000.00 worth of gift cards are discounted and purchased for $850.00.
- $1,000.00 phone is then purchased with gift cards, meaning I am out of pocket only $850.00
- I am reimbursed $850.00 from my employer, which is then salary sacrificed.
- I supply copies of both the gift card receipts and the phone receipt, so that my employer is not misled as to the true cost of the phone.
My questions:-
If a person can prove that they bought gift cards using their own money and then used the same gift cards to purchase a phone:-
- is the phone purchased on gift cards/store credit still a fringe benefits exempt item that can be salary sacrificed?
- is the salary sacrificed and fringe benefits tax amount based off the advertised price of the phone or the true out-of-pocket cost to the owner (I'm assuming the latter)?
I'm assuming that the ATO is concerned with the out-of-pocket-cost of the phone for tax purposes, and not the advertised or "sticker" price. It would seem dishonest to have my taxable income reduced by $1,000.00 when I would only really be out-of-pocket $850.00 and I want to make sure I'm doing the right thing.
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