I have valid work related receipt for $500 shouldn’t I get a full refund of $500?
Well, firstly provided that the item that you purchased is tax deductible, then you would include the full $500 in your tax return as a deduction. This will, however, not result in you receiving $500 from the tax office, but rather a proportion of the amount (depending on your tax bracket).
For example, if your income tax bracket falls in the 30% range, and you were due tax refund prior to the inclusion of the deduction, then you would basically get an additional refundable amount of $150 from the $500 that you have claimed. This is why I always recommend to my clients that if their employer has the option for reimbursement of out of pocket business expenses, it is a better option for them to claim it through work and get the whole amount paid back, rather than claim the deduction.
If my employer pays for my car expenses, am I better off tax wise?
With the top marginal rate of 46.5% coming into effect on earnings greater than $180,000, just because you are salary sacrificing your car, does not mean that you are actually better off. Before entering into a Salary Sacrifice arrangement, it is highly recommended that you arrange for your payroll department (or even better, your accountant) to do a calculation on your personal circumstances as to whether you are actually better off salary sacrificing, or not.
This is mainly due to Fringe Benefits Tax (FBT) which is a tax that is calculated on benefits, which in simple terms is a tax of 46.5%. From our example mentioned above, if you’re in the marginal tax bracket of 30%, why would you want to pay a higher rate of tax than you otherwise would, had you not been salary sacrificing?
$5,000 tax write-off on Motor Vehicles
I bought a car for $30,000 – can I get a refund of $5,000 back immediately?
In short – no. The May 2011 Budget announced that from 1 July 2012, those classified as Small Business Owners are eligible for an immediate deduction of $5,000 of the total purchase price on NEW vehicles purchased. This amount is not a refund, it simply allows a deduction of $5,000 to be claimed, thereby reducing profit (& paying less tax).
What happens to the remainder, you ask? Well, in keeping with Small Business Entity rules, the balance must be placed in to a Pooled Depreciation Fund. With the first year allowing a 15% depreciating deduction (on top of the immediate $5,000 deduction), and 30% each year following until the asset is "written off."