Can I immediately sell a salary-sacrificed laptop to make a profit?

May 1, 2008 6:50 PM

OzTaxFilter: What's in the tax law to stop me from salary sacrificing a new laptop then immediately flogging it second-hand (but effectively new-in-box) on eBay for a few hundred off retail and a spare grand in my pocket?

For people who aren't called Bruce:

Australians can 'salary sacrifice' one laptop per year. This means that the cost of the laptop comes from their pre-tax rather than post-tax salary, and they also don't pay sales tax or fringe benefits tax. By reducing their pre-tax income, they pay less tax. The savings can be quite dramatic.

For example, a Macbook Pro might retail for $2699 - with my salary, the savings would be around 40% (ie, I'd only end up paying around $1100, a saving of almost $1600). There are fees toset it all up, but they're small (about $75, I think.)

So, could I legally get the laptop for $1100, sell it for $2100, help somebody save $600 and earn myself $1000?

posted by obiwanwasabi to work & money (18 comments total)

So your target market for selling the laptop would be people who buy two laptops per year?
posted by winston at 7:04 PM on May 1

Or people who want to think they are getting a deal. Or people who don't have jobs. Or people who don't make enough money to be able to do that effectively.
posted by gjc at 7:24 PM on May 1

I forgot my answer- I'm sure the law has something in there about personal use. And you'd most likely have to declare what you make on the sale as income.
posted by gjc at 7:26 PM on May 1

Why not just call the ATO on 13 2866 and ask?
posted by flabdablet at 7:49 PM on May 1

obiwanwasabi: In practical terms: bugger all.

Oh, LEGALLY? NFI. You're likely not meant to do it, but no-one is going to check.

winston: You can only sal-sac if you're a permanent, tax-paying, employee with a non-idiot HR department, so this arrangement offers a deal for students, causals, unemployed, self-employed, people who have unhelpful HR departments, etc etc etc....
posted by pompomtom at 8:11 PM on May 1

I don't believe there is anything stopping you. My dad (an upright law abiding former Tax Department worker) salary sacrificed a laptop and gave it to my sister last year. If there was any law (or even implication) that it had to be for his use he wouldn't have done it.
posted by jacalata at 8:41 PM on May 1

In legal terms, if you own something, you own the right to dispose of it as you wish, eg by selling it.

In practical terms, nobody is going to police this - do you think they have squads of tax officers raiding houses to verify the presence of laptops? And what if you said you lost it?

This is not legal advice. Just a perspective.
posted by UbuRoivas at 9:26 PM on May 1

You can do it. You're still paying the computer off. I doubt you will get the same price for it if you sold it on eBay, so you're not doing yourself a favour.
posted by mattoxic at 9:39 PM on May 1

Without looking at any figures, I would say that the money you make during the sale would negate the benefits of salary sacrificing but you would have some money in your pocket, although not as much as if you had not purchased the laptop in the first place.

If your HR dept was like mine, I couldn't make instalment payments, it all had to come out in one hit. For me though, I needed a laptop so it worked as my income was reduced for tax.
posted by micklaw at 12:29 AM on May 2

the money you make during the sale would negate the benefits of salary sacrificing

Why would it negate the benefits? I don't have to declare the proceeds from selling secondhand stuff on my tax return (do I?). Isn't it just $1000 profit? $1100 out, $2100 in?
posted by obiwanwasabi at 1:27 AM on May 2

I don't have to declare the proceeds from selling secondhand stuff on my tax return (do I?)

I think you do.. whether you choose to report it is of course another matter. For instance do you accurately record how much interest you earn on your accounts? Or do you put the salutary $10?

FWIW I probably wouldn't report it. But if you get audited (as my mum, a humble nurse, was) you might have some 'splainin to do :)
posted by TheOtherGuy at 2:57 AM on May 2

Your figures are wrong, you would get the laptop for $1,600, or a savings of $1,100. Atleast that is the way I think it would work.

You say your tax rate is 40%, your figures contemplate 60%.
posted by jmugrapler at 5:58 AM on May 2

"I don't have to declare the proceeds from selling secondhand stuff on my tax return (do I?)."

You don't if the goods were paid for with post-tax money and/or if you aren't adding value to the product. There may be some kind of metric where you can deduct out the loss in value (what you paid minus what you sell it for) against the tax you might owe and come out even in the eyes of the tax man.
posted by gjc at 7:35 AM on May 2

I don't understand the Bruce reference ...
posted by mccxxiii at 7:39 AM on May 2

mccxxiii: http://www.youtube.com/watch?v=_f_p0CgPeyA :)
posted by meta_eli at 8:51 AM on May 2

I realize this is not a US Tax Law question, but at least around these parts, if you "paid" $1,000 for the laptop, it would have a cost basis of $1,000 (regardless of what it was actually worth) and if you then turned around and sold it for $1,500 you would have $500 of income which would need to be reported.

I'm not sure how pre-tax purchases would impact it, but my guess is that the government would require you to claim all $1,500 as income since you were never taxed on the $1,000 to begin with.

Your government surely contemplated this type of behavior, and I highly doubt they want to allow you have a tax-free payday from selling the laptop. Are they going to check on it? Probably not, but it seems unlikely that you wouldn't have to pay taxes on the gain.
posted by toomuchpete at 8:52 AM on May 2

Agreeing with toomuchpete:

At least in the US, selling the laptop for $2100 would result in $2100 worth of taxable income. Granted, if you did it in cash, and don't think you'll get audited, you'll get away with it, but let's be frank, this is tax fraud. The point of computers being tax-deductible is to subsidize ownership and help people out, not to allow you to turn a profit.
posted by explosion at 9:16 AM on May 2

I don't think the hive mind hit the spot this time, with a lot of speculation and anecdote but no hard answers. Thanks for taking the time to answer, though.
posted by obiwanwasabi at 3:17 AM on May 14