Holiday Packaging Tips

Like you, coming into the Christmas period I find that I’m looking forward to spending quality time with friends and family!

For this week’s post, I’m going to hand you over to our Senior Tax Advisor Simon Ellis, who is going to give you some tips on ensuring your salary packaging program stays on track over Christmas.

Thanks Deven!

Whether you’re working or taking a break over the Christmas period, there are a few salary packaging tips and traps you might want to keep in mind.

Meal Entertainment: Smartsalary customers who are fortunate enough to be able to salary package meal entertainment already know that the Christmas period involves a lot of expenditure on food and drink!  It’s a great opportunity for salary packaging savings! Just remember that:

  • If your employer allows you to package ‘catering’ costs (WA employees in particular should check this) note that this will almost never cover any of the costs of your Christmas lunch/dinner. Only professional catering costs can be claimed.
  • Takeaway meals are not ‘meal entertainment’ as defined by the ATO so don’t succumb to the temptation to use your meal card to pay for takeaway meals while you’re on holidays!  Remember that restaurant meals must be consumed at a dine-in facility in order to qualify.
  • Don’t forget that you can’t claim the cost of restaurant meals or professional catering unless you actually pay for it.  It is tax evasion to claim meal costs that you or your spouse have not personally incurred!

Cars: Remember, if you have more than one family car then use the salary packaged car for your holiday transport!

It’s not just the extra kilometres that benefit you –  all the fuel and servicing costs associated with your trip can be claimed pre-tax as a ‘car expense’ too.

Documentation: All items you plan to salary package have substantiation requirements – and you won’t be surprised to learn that these requirements don’t go on holiday over Christmas!

Remember to look after your receipts and invoices– Smartsalary generally can’t process a claim if you have lost or misplaced the documentation.

There’s much more that I could say – but a blog post is only so long!  So if you have any specific queries about packaging over the holidays then feel free to ask in the comments section and I will do my best to answer.

11 Responses to “Holiday Packaging Tips”

  1. 1 harma mckergow December 21, 2010 at 5:41 pm

    After speaking to 2 people today about cessation of my salary packaging I finally spoke to someone who had the customer’s interest in mind. Viraj Vyas sent me the email while i was on the phone with her and did not go until it was here. Please thank her for me. it was a good idea. harma McKergow

  2. 2 jt January 7, 2011 at 6:44 am

    Smartpens. I specifically use the Livescribe Echo / Pulse pen which records and digitises meeting minutes, records of conversations etc.

    • 3 Simon Ellis January 17, 2011 at 4:54 pm

      I like this idea jt – it’s definitely a portable electronic device and it definitely has potential as a work tool. Leave it with me and I will see what can be done . . .

      • 4 Simon Ellis April 20, 2011 at 2:35 pm

        Hi JT

        Just following up on the post above.

        We’ve now almost finished our new Portable Electronic Devices benefit, which is designed to cover a much wider range of portable items that have a work functionality.

        Provided your employer agrees, your livescribe pen can be added as an eligible item once the benefit goes live.

        Thanks again for the comment and idea!

  3. 5 Erlinda Cabuang January 13, 2011 at 3:06 pm

    Dear Smartsalary Staff,
    With regards to electronics like this laptop still needs the approval of the manager? It is too hard to ask them to sign whereas it is not their money it is the employees money. I hope this will change because we can give you the receipt anyway.
    Thanking you.

    • 6 Simon Ellis January 17, 2011 at 4:53 pm

      Hi Erlinda

      As you would be aware, the main requirement for a laptop to be eligible for salary packaging is that it is intended primarily as a tool that will be used in your day to day employment duties. I’m sure you understand that this is not something that can be determined just from a review of the receipt!

      Most employers require that a manager sign-off on all laptop packaging requests to confirm that your day to day duties actually do require you to have access to a laptop computer. This signature is important evidence to support your salary packaging arrangement.

      Without it both you and your employer could get into a lot of trouble with the ATO, so unfortunately I don’t think the requirement will change in the near future.

  4. 7 Deidra Young April 29, 2011 at 1:10 pm

    Some possible items:

    Portable label maker
    External portable drives
    USB Flash sticks / thumb drives

  5. 8 kim August 13, 2011 at 4:37 pm

    Can I package the net book, partly for work?

    • 9 Simon Ellis August 19, 2011 at 4:37 pm

      Hi Kim

      Only you can answer that question!

      I can tell you the law: which is that you can only package a laptop if the primary reason you purchased it was as a tool to assist you in your ordinary employment duties.

      But only you and your employer know whether you pass that test.

  6. 10 Wayne Lam October 19, 2011 at 11:18 am

    My question relates to the purchase of vouchers from Cudo, Spreets etc for dine in meals at Restaurants and Cafes. Why don’t these qualify as Meal Entertainment expenditure?

    • 11 Simon Ellis November 2, 2011 at 8:39 am

      Hi Wayne

      You’ve asked quite a technical question so unfortunately I have to give you a technical answer!

      Under Australian FBT law meal entertainment fringe benefits are defined as “the provision of entertainment by way of food or drink”. In a reimbursement scenario (such as a salary packaging arrangement) this definition is generally interpreted to mean that your expenditure must directly relate to an event that confers entertainment on the employee (and any other participants). A meal at a restaurant, for example, is an event that confers entertainment on the participants and direct expenditure on such a meal would therefore qualify.

      By contrast there are various items that, while ultimately destined to be consumed as meal entertainment, will not confer entertainment on anyone at the time of purchase. A good example of this is an unopened bottle of wine purchased from a liquor store: the bottle will eventually be consumed, thus providing meal entertainment at a later time, but it does not confer any entertainment on anyone at the time it is purchased. This can be contrasted with an opened bottle of wine served during dinner, which obviously is intended to entertain immediately.

      Spreets/Scoupon/Cudo vouchers are akin to an unopened bottle of wine in this regard. They will eventually be used (and will confer entertainment at that time) but at the time of purchase they are merely items of property that entitle the holder to a meal at a later date. No entertainment is conferred on the employee through purchase of the voucher, and thus the legislative requirements of “meal entertainment” are not fulfilled.

      Whilst we appreciate that this is a conservative interpretation of the law, Smartsalary’s view is that taking the alternate approach would create unacceptable taxation risk for your employer.

Comments are currently closed.

Deven Billimoria
Chief Executive Officer

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