Benefits of salary packaging tools of trade

Start making your money work for you by salary packaging tools of trade. By paying for these expenses with pre-tax dollars, you could potentially save hundreds on tax every year!

• Potential to reduce your taxable income and increase your disposable income
• No need to wait until tax time to claim reimbursement for your expenses

How does salary packaging tools of trade work?

If you make a purchase related to tools of trade, and you have a Maxxia salary packaging account, you may be able to claim reimbursement.

The funds in your salary packaging account are made up from deductions from your salary BEFORE tax is taken out. These funds are sent straight from your payroll office to your Maxxia account.

If you make a tools of trade purchase (for example, a drill), you can submit a claim and have the funds reimbursed from your Maxxia account.

Tools of trade

This includes tools and equipment primarily used for work duties, such as:

• Hand tools - for example, spanners, hammers and screwdrivers
• Power tools - for example, grinders, sanders and hammer drills
• Toolboxes
• Tool belts
• Technical equipment
• Safety equipment such as hard hats or steel cap boots

Major equipment, such as a lathe or drill press, do not qualify under this benefit. Contact your employer to find out if this benefit is available to you.

How much can I salary package for tools of trade?

When it comes to Fringe Benefits Tax (FBT) rules, there is no cap for salary packaging tools of trade. This is because they are considered ‘above the cap’ and don’t incur FBT.

You can claim items that are $300 or less, provided they meet the guidelines as set out by the Australian Tax Office (ATO). Where an item is a part of a set, the cost of the set must not exceed $300. If items of a similar nature are identical or substantially identical, the cost of these items together must not exceed $300.

Additionally, your employer may have their own rules and policies as to what can be packaged as a tool of trade. It is best to speak to your employer to find out more.

Important things to know

Any salary packaged tools of trade must be used at least 50% for work, which you can prove through a declaration from your employer.

• The expense must be paid for outright, e.g., a phone on a plan would be ineligible.
• The expense must be purchased in your name.
• If your employer paid for the expense, it cannot also be salary packaged.
• If a tool of trade is salary packaged, it can’t also be claimed as a tax deduction.

For additional information, please refer to the ATO: Tools and equipment to perform your work | Australian Taxation Office (ato.gov.au)

Things you need to know: The above information is not intended to constitute taxation or financial product advice. Your benefits and savings will vary depending on your personal objectives, financial situation and needs. We recommend you obtain independent financial advice before making any financial decisions.

Eligibility criteria and terms and conditions apply. All salary packaging proposals are subject to the requirements of your employer. Administration fees will apply. The actual administration fee that applies to you may vary depending on your employer. Maxxia may pay and receive commission or rebates in connection with some services and products it provides or arranges to be provided by third parties. Maxxia Pty Ltd ABN 39 082 449 036 Authorised Representative (No. 278683) of McMillan Shakespeare Limited (AFSL No. 299054).