In Australia, some employers offer an option to salary sacrifice a car purchase. The cost of the car is taken from your pre-tax salary, so your gross income will be less, and therefore, your income tax would be less as well.
However, I read around and saw that items bought using salary sacrifice will have the Fringe Benefits Tax, which, if I understand correctly, is a separate 20% tax for the value of purchases made using salary sacrifice multiplied by a premium.
This is essentially a two-part question :
- Did I understand salary sacrificing and the fringe benefits tax correctly?
- Should I or should I not salary sacrifice my car purchase?