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Does salary sacrificing for a motor vehicle count as taxable income?

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Can anyone help me with this question?

If my Ex partner has salary sacrificed thru her employer to buy a private vehicle for private use, is that deemed as taxable income for CS purposes even tho the salary sacrifed amount might not necessarily show up on her group certificate? The value of the vehicle new when purchased was RRP $40,000.00 which if you took over 4 years would mean she is not potentially declaring between $9k/$10K a year in salary.

I'm assuming that as it was a private vehicle for private use, that this is seperate to what is called "Fringe Benefits" which involves private use of a company vehicle? Have I understood that correctly?


I have found legislation that says when changes were made in 2009, salary sacrificing for super does count but nothing about motor vehicles.
I believe it is one of the things that CSA "adds back" for calculating Adjusted Taxable Income for C$ purposes

Does salary sacrificing for a motor vehicle count as taxable income?

Thanks Seriously,

But can you expalin what you mean, I'm a newbie to all this..lol
You should ring the CSA and ask them about it
You are correct - C$A will only automatically add back salary sacrificing to super $$$ and not salary packaging such as a car. In that package the provider will be paying the fringe benefits tax depending on how many kilometres she is doing each year and nothing shows up on their payment summary.

Only if you are going through a change of assessment process with C$A will they look at this and use it as an excuse to increase one's child support income to increase their liability. It becomes an issue when only one parent has access to salary sacrificing benefits.

Payees will access salary packaging to lower their taxable income to increase their child support payments, and payers will use salary packaging to lower their income to lower their child support liability.

Does this help?
Fairgo is wrong. The amount is taken into account as Reportable Income, not as Taxable Income. And it is taken as the "grossed up" amount rather than the actual amount. It still has a direct bearing on your child support income. Trust me. I have the same arrangement as your ex with my employer and it is taken into account by the CSA.
Jamalu is right on this matter. It may be of interest to see how much vehicle use is claimed as a tax deduction which effectively offsets the Fringe Benefits Tax on one's reportable income. eg. travel to and from training or property inspections.
Sorry guys but I live and breathe what I say and what I have stated is what actually happens.

I've just done my 2010 tax return and I use a tax agent as well as an accountant and even with the new additions on the return such as reportable income , child support paid etc… the only reportable salary sacrifice arrangement required on the return is salary sacrificed to super - nothing else.

Does salary sacrificing for a motor vehicle count as taxable income?

Thanks guys for your responses,

Seriously, Fairgo and Jamalu, you guys will be familiar with my post the other day thats become a hot topic..lol..about having my CS increased from my Ex having a baby with her new husband…

I guess the answer I'm seeking is that if I suggest to CSA that she is salary sacrificing this car and effectively hiding 9K/10K of her salary, will it deemed "reportable income" that CSA will take into account when calculating her earnings and will they pursue it? Thus helping to offset my recent rise in CS to fund her new child with her husband?
Yes you can use that argument - have you worked out how much another 10K on top of her adjusted child support income will reduce your liability by?

I have made a post to the other thread and i think it is worth arguing that her new hubby should bear some responsibility as he contributed to the decision to have another child. Also his income is used to determine the family benefits they receive for your kids if they qualify for it so he is deemed by Family Assistance to be a financial provider for your kids because they live in his house.

I say this a lot but you should get professional financial advice on your situation to see how you can minimise outgoings and maximise incomings.

The other posters above are getting mixed up with Fringe Benefits received that are reportable for TAX, C$A & FAO purposes, whereas I am talking about salary packaged vehicles through a private provider where they make all the payroll deductions and pay Fringe Benefits Tax and manage all aspects of the salary package on behalf of the employer and employee. In this arrangement the employer is not obliged to report anything to the ATO.

Also in regards to my previous post go to the tax return form and see on page 8

Redirect Page | Australian Taxation Office

and see where it states at IT2 Reportable employer superannuation contributions - which is only for superannuation contributions made by salary sacrifice. This does not include any other salary sacrifice arrangements. And you will see what other income types are also taken into consideration.
Well I responded to CSA's refusal to follow up the payee's significant salary sacrifice arrangements through a registrar initiated COA by leasing a nice new german saloon car under the contribution method.  With the tax and CS savings combined with asking employer to reimburse any work related costs means it is just about cost neutral. I would like to thank CSA for opening my eyes to to this option.      

Guest

Bigred said
Well I responded to CSA's refusal to follow up the payee's significant salary sacrifice arrangements through a registrar initiated COA by leasing a nice new german saloon car under the contribution method.  With the tax and CS savings combined with asking employer to reimburse any work related costs means it is just about cost neutral. I would like to thank CSA for opening my eyes to to this option.
 

Big Red,

Are you saying CSA refused to take into consideration the payee's salary sacrifice arrangement in relation to a RICA?

And what was the salary sacrifice arrangement - also a car?

Did they give a reason why they refused to consider the salary sacrifice arrangement?

salary sacrificing for car

I am a CPA accountant and I am afraid that unless you ask for a CoA then your ex will get away with the salary sacrifice for the car.

You wife has entered into a 'novated lease' arrangement. So her car lease payments and fuel, rego, insurance (if applc for these extras) will be met by the employer. The wife will get a lower PAYG summary tax figure and the CSA will never know the difference because there is nothing to 'add back'. This is because the novated lease arrangement benefit will not appear on the PAYG summary or the tax return.

But there may be a "reportable fringe benefit amount" on her PAYG summary but this will depend on the taxable value of the benefit your wife gets (threshold of $2000). If she drives over 40,000 km per year (its around this amount but i dont have FBT Act in front of me) then the TV may fall below the $2000 threshold. Just pray that your ex doesnt drive huge kms overwise you will be paying more C$A. If you wife only got into this arrangement in the last 6 weeks or so, then she will have until 30 April (end of FBT year) to do these huge kms so you may be ok for next CSA assessment.

CSA will only add back in the event of a reason 8 CoA application.

btw- have you though of getting a novated lease yourself for your new car (assuming you have an employer). You wife may complain buit she will only be exposing herself to 'add backs'.
Guest, it was super I screamed the house down about.  They wanted me to initiate.  I said "too intrusive, f@#$ off".  Payee iniated COA on spec and I responded with salary sacrifice super hadn't been declared.  Funny thing, is I had just set up salary sacrfice on car and they didn't pick it up.  They didn't ask, I didn't tell.

S72a Notice

Familyman & Fairgo - your right what your saying.



The only other issue I see with a CoA is if CSA decide to lodge a s72A notice and ignore any PEA - and request full deductions from the employer - could leave one struggling to meet repayments.
Ok so C$A see that you are utilising a number of methods to lower your taxable income. They still need to justify a departure from the standard child support assessment which can only use your taxable income.

Most of the time they will justify a departure if there are special circumstances with the children that require more $$$ to cover their costs.

C$A will say that your standard of living is greater than the ex's (assuming they have majority care) due to your higher income or that you have a higher earning capacity and can therefore carry more of the financial burden. They will add back salary sacrifices for example to give weight to their case.

With health industry workers (who are mostly women and therefore payees) who can sacrifice a certain amount of their salary to their credit card or their home mortgage for example - I think payees are the people that need to be careful about falling foul to paying ex's lodging COA's to reduce their liability, especially if they do not have access to  such generous benefits to lower their taxable income.


Reason for CoA

Hi Fairgo

All good in theory - except CSA will just go by the black letter rule - what your taxable income is.

I had my children fulltime and at the time I had a novated lease and salary sacrificed into super as well - in fact had done so for many years.  So my children lived with my committments and debts.

When I lost the children through another round of family court proceedings the CSA initiated a RICA (on the basis my earning capacity was greater)

Of course my taxable income (albeit with salary sacrifice had been around the same amount for 4-5 years) but this made no difference.  CSA even prior to making a determination (some 10 months down the track) did a s72A notice on my employer even though CSA were advised by the employer it put me below the PEA.

Then when I become quite ill and was entitled to income protection (which I gained through salary sacrifice) and still had my novated lease debts - they refused to recognise or take into consideration the debt.  Needless to say this went through SSAT and FMC without any success.

In fact in my situation my daughter was not even a party to the assessment (although they slugged me 30 days of care by my ex - which is below regular care) and my son was in a public high school and no special expenses in relation to health issues or the like were present.  In fact my daughter was even working at the time as mentioned in my ex's FMC Affidavits.

So the end result was I was well and truely shafted after 18 months and the appeal to the SSAT was all backdated, and applied to my income whilst I was working ignoring the novated lease, and then applied to what I could have earmed if I had applied for income protection and been succesful in obtaining it.

So as you said at the time of decision both myself and my ex were on disability support pensions and yet because I could earn more money - they consider that was good reason to raise a huge debt against me and backdate it from July 2009 to Jan 2008. Needless to say I am still trying to pay this off at 3 times the rate being deducted from my Centrelink and incurring late fees everyday.  Cant get a loan from a bank because I am on Centrelink and cant pay the debt in full.

And as I have read in so many other forums here - there was the issue of breaches of privacy with SSAT documents, state government agencies believing they had obligations to report to CSA, and not even once has my ex has not once even filled out a financial statement - not even when it went to the FMC, and I tried to raise the issue of her gambling addiction and membership with the state based lotteries commission.

So yes novated leases and salary sacrifice are a great thing - just so long as no CoA occurs or has any reason to occur, and one can keep things hidden well from CSA.
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