Salary sacrifice to repay car purchased from employer – FBT implications?

 Author: Tax1423(Newbie)Newbie

12 June 2025

Hi all,

We’re looking at selling one of our work vehicles to an employee. The plan is to sell it to them for the same amount we were offered as a trade-in, which we believe represents fair market value.

The employee has asked to pay for the car over a short period via a salary sacrifice arrangement (pre-tax deductions from their pay). We’re happy with that in principle and would document it properly upfront.

From my reading:

• The sale would be at market value, with the car transferred immediately to the employee — so no ongoing use or benefit is provided.
• The salary sacrifice arrangement is just the repayment mechanism (no loan, no waived debt).
• The ATO states there's no restriction on the types of benefits that can form part of a salary sacrifice, as long as they reduce future remuneration.
• Loan FBT shouldn't apply because there's no cash lent or interest benefit.

So to me, these are two separate events:

1. A market-value property sale (no FBT),
2. A salary sacrifice arrangement to pay for the purchase (pre-tax).

Just checking if others agree or if there’s a reason this wouldn’t be compliant?

Thanks!

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