Salary Sacrifice fact sheet

Portable electronic devices such as a laptop computer tablet computer (including iPads), or
mobile phone are free from FBT (Fringe benefits tax), making them ideal to buy via salary
sacrifice.

Employee should obtain financial advice from a qualified financial adviser / accountant
before proceeding with any salary sacrifice agreement.

Advantages:

• Employee doesn’t bare the cost of GST, being 10%

• Full cost of the portable electronic device is subtracted from employee pay before tax,
which may provide the employee a tax benefit

Example:

1. An employee would like to purchase a Microsoft Surface Pro 8; she visits JB HI-FI and
makes the purchase for $1,799.
2. The employee completes the FBT declaration for exempt work expense form, attaches
the invoice / receipt and uploads both to expensify, after processing and approval AP
reimburse the employee, the full amount they paid, $1,799.
3. Payroll will than deduct from the employees next pay the before GST amount being
$1,635.45, therefore the employee has already saved the 10% GST $163.54 (note -the
total amount must be deducted over a maximum of 2 consecutive weeks, this applies
only when the gross earnings do not cover over one week).
4. Employee’s normal gross pay is $1,413.46 less tax of $305.00 so they take home
$1,108.46
5. Payroll deducts the salary sacrifice over 2 pay periods. Pay is then calculated at gross
$1,413.46 less salary sacrifice $817.73 this reduces tax to $57 for the week, the take
home pay is $538.73

Total end cost of the surface pro to the employee $1,139.46. Therefore, a saving of $659.54

Conditions do apply:

1. Tax saving will be different depending on individual circumstances

2. Salary sacrifice deduction cannot exceed 2 weeks / pays
3. To obtain the FBT exemption the devices must be used primarily for work.
4. Limit one device with similar functionality within the same FBT year (the FBT year
commences on 1 April and runs to the following 31 March).
5. FBT declaration to be completed by employee & uploaded with receipt of purchase
6. Employee to make purchase and provide a clear receipt of purchase through
expensify. AP will reimburse full amount of purchase and then payroll will deduct from
employee the purchase amount before GST

Further details can be found:

• https://secure.flarehr.com/#/my-benefits/manage
• https://www.ato.gov.au/general/fringe-benefits-tax-(fbt)/in-detail/employees/salary-
sacrifice-arrangements-for-employees/
• https://www.ato.gov.au/Individuals/Jobs-and-employment-types/Working-as-an-
employee/Salary-sacrificing-for-employees/