GST on employee contributions - cars and uniforms
13 December 2009
The rules are as follows:
1. The provision of a fringe benefit is a 'supply' for GST purposes;
2. Any payment from after tax salary for the provision of the benefit is 'consideration';
3. Any payment which is made pre-tax as part of a salary sacrifice arrangement is NOT 'consideration';
4. Thus, any payment as in 2 above will include 1/11th as GST (unless the benefit is GST-free or input taxed or out of scope);
5. Thus, any payment as in 3 above will have no amounts included as GST;
6. If an employee makes a payment to Council for the provision of a car which Council leases, 1/11th will be GST unless the payment is salary sacrificed;
7. If an employee is provided with a laptop and the employee sacrifices the cost to Council of this laptop, no amount will be subject to GST. The amount to be sacrificed is usually the GST-exclusive cost to Council. This is because Council can claime the GST and the GST is therefore not a cost to Council;
7. If an employee sacrifices an amount for a uniform that Council purchased and then provides to the employee, the amount to be sacrificed is the GST-exclsuive cost for the same reasons as the laptop above.