Tax Tip – Salary Sacrifice your rental property expenses and beat the GST
A very effective tax planning technique for any employee with rental properties is to salary sacrifice their share of the rental property expenses.
By having an effective salary sacrifice arrangement in place the employee can package the GST-exclusive cost and save on the GST.
The employer will not be subject to FBT as its taxable value will be reduced to nil under the ‘otherwise deductible’ rule.
In addition, the employee can ‘double dip’ by claiming an outright deduction for the GST-inclusive cost of any asset purchased that meets the immediate write off for non-business assets costing less then $300 [section 40-80(2) ITAA 1997].
A salary sacrifice arrangement is between an employer and an employee, where the employee agrees to forgo part of their future entitlement to salary or wages in return for the employer providing them with benefits of a similar value. It is very important that an effective salary sacrifice agreement is in place, else the tax benefits will be denied.
If you would like to discuss how this tax tip can help you please contact our office.