These benefits are paid out of your pre-tax salary. This short video explains it all! Aged care & disability costs for a loved one. Salary packaging can work but you need to be looking for a low cost car and making after tax contributions and using the car reasonably extensively. Salary packaging lowers your taxable income and increases your take-home pay, giving you more money in your pocket to spend on the things you want. To work out how much, you’ll save, head over to our salary packaging calculator or contact our team with any questions you may have. Salary packaging is only available to eligible employees of the Queensland Government as per the Standing Offer Arrangement PTDOD27-16. The tax part explained. Let’s tackle the tax-free thing first up. But what is salary packaging? Salary packaging follows the Fringe Benefits Tax (FBT) year, which commences on 1 April and ends on 31 March every year. Check with your organisation to find out what they’re offering for salary packaging. This could reduce your taxable income and decrease the amount of tax you pay. But it can also seem quite complicated in the beginning. Salary packaging is an Australian Taxation Office approved way of paying for some everyday items and living expenses with your pre-tax salary. If someone told you that they knew a way that you could pay less tax, would you want to know about it? Also commonly known as salary sacrifice, salary packaging is an employee-employer agreement that lets you deduct a range of expenses from your pre-tax salary. For example, if you’re on a $100,000 income, you may agree to only receive $75,000 as income in return for a $25,000 car as a benefit. This week we are going to explore what ... working effectively with your adviser getting advice that suits you. How Does Salary Packaging Work? Any employee can salary package, regardless of your salary or industry – and with any provider. Strategic salary packaging example: If the job market is paying around $80,000 for an NFP professional, your organisation could advertise the annual salary package of $80,000, with the actual cost to the organisation of $63,000. OK, now we need a little more detailed information about you. You can get a pay rise today by simply being paid in a more tax-effective way. We all know that salary packaging is popular with employees, as it allows them to reduce the amount of tax that they pay. Additional benefits and rewards Salary packaging calculator Find out how much you could save on income tax with our salary packaging calculator. Read on as we explain how it all works and share some of the benefits that are available to eligible employees. Due to the Government’s existing tax-free threshold, salary packaging won’t be beneficial to you if you earn less than $18,200. Take a look at Maxxia’s salary packaging FAQs here for general information. Since some of the benefits need to be listed on the employee’s end-of-year payment summaries for tax purposes, they could affect tax considerations and government benefits. If the device is salary packaged through your employer, you would save the GST amount ($70) and the tax amount (roughly $245 for a $770 phone). It is an arrangement between an employer and an employee, where the employee: agrees to permanently forego part of their future entitlement to salary or wages; receives benefits of a similar cost (to the employer) in return I work in Health, how much can I Salary Package? You pay for these benefits before you get taxed and then get taxed on your … Read on as we explore how much you may be eligible to package. Often referred to as ‘salary sacrificing’, it’s an employee-employer agreement in which eligible expenses can be paid for with an agreed portion of pre-tax dollars. These include: For more information on FBT please click here. Salary Packaging means to arrange your salary or wages in a tax effective way so that you pay less tax. Ordinarily, you get paid in return for work but before this happens, your employer deducts income tax. This website contains general information and doesn't take your personal circumstances into account. Let’s assume you have paid $770 for the phone. For example: If you have purchased a mobile phone that’s used predominately for work purposes you can benefit from salary packaging. Our Privacy Policy contains important information about how we collect, hold, use and disclose personal information. From home payments to childcare, cars to computers, we all have expenses. Salary packaging is the easy way to give yourself a pay rise. Usually, we pay for these things once our payroll department has taken tax out of our salary. For those who haven’t at least considered salary packaging to find out what you are eligible to package, you are essentially telling your employer that you prefer to be paid less than what you are entitled to. Salary packages typically include your base salary as well as additional benefits, incentives or rewards, such as superannuation, annual and sick leave, car allowance or bonuses. Eligible health industry workers could package up to $9,010 in capped benefits each year, and charity employees, up to $15,900. The implications of salary packaging for you (including tax savings and impacts on benefits, surcharges, levies and/or other entitlements) will depend on your individual circumstances. Often called salary packaging, many employees choose to set up these types of arrangements with their employer to forgo part of their salary or wages to help pay for a range of benefits like cars, school fees or extra super contributions. By offering salary packaging to their employee’s, employers are able to help their employee’s get the most out of the remuneration package without affecting the bottom line. The reason why you should salary package is so that you can pay less tax. How does salary packaging work? I work for a Charity Organisation, how much can I Salary Package? What is Salary Packaging? Salary packaging your next car (or even your current car), a new laptop or tablet or your superannuation can give you a significant financial advantage. How does salary packaging affect my organisation’s FBT requirements? So how does salary packaging work? While it requires you to understand the intricacies involved throughout the process thoroughly, a novated lease can indeed result into being one of the most feasible choices to financing a car – provided that the car is treated as … How does it work? How does a salary sacrifice pension work? Car salary packaging is where you direct your employer to pay vehicle expenses on your behalf, instead of paying wages into your bank account after deducting tax. If you work for an organisation that offers salary packaging, you can use some of your salary to pay for everyday expenses before income tax is calculated, meaning you pay less tax and have more money to spend. Whilst salary packaging doesn’t change the amount of salary you’re paid, it allows you to pay for selected expenses before you’re taxed. By paying for these things before you have to pay tax you end up with greater purchasing power with the same income. Salary packaging is part of the ADF employment offer, but what is it, and how do you know if it’s right for you? You can also make further GST savings on the items you package. How exactly does salary sacrifice boost your pension pot? Salary packaging, sometimes referred to as Salary Sacrificing, is an Australian Tax Office (ATO) approved way of receiving benefits, such as motor vehicles, self-education expenses, airport lounge membership and many more, by way of a pre-tax deduction. Do you work in the health industry and have been considering salary packaging? This could reduce your taxable income and decrease the amount of tax you pay. Salary Packaging is an arrangement between an employer and an employee, where the employee agrees to forgo part of their salary or wages in return for the employer providing them with benefits of a similar value. Read on as we delve into how much you may be entitled to package. (More about ‘capped’ – as well as ‘uncapped’ and ‘concessionally taxed’ – benefits below). If you’re an employee and you don’t fully understand salary packaging, then you are probably not fully maximizing your potential income. A salary sacrifice arrangement is also referred to as salary packaging or total remuneration packaging. Try out our salary packaging calculator to discover how much you could save and how salary sacrificing might impact your pay. It is an easy to understand guide on how salary packaging works for employees and employers and will show you how you can maximize your salary, no matter which industry you work in. Both employees and employers will need to be aware of things like the Medicare levy surcharge, tax offsets, and child support payments which can all be affected. This block is broken or missing. When you Salary Package, money for certain personal expenses (called benefits) is deducted or ‘sacrificed’ from your salary before tax is taken out. It works like this: you lease a car, and your employer takes the repayments and running costs out of your pre-tax income. Salary packaging is a smarter way to use your salary to pay for a vehicle, a mortgage and many of your other everyday expenses before you pay tax. We all have expenses – from mortgage or rent payments, childcare to groceries, devices and cars. Through salary packaging you can use up to $9,009 of your pre-tax income each year towards an approved personal expenses. Most employees in Australia are eligible to package their salary in a way that allows them to get more benefit from their current income than they are currently enjoying, but very few people do it and even fewer properly understand it. Put simply a $20,000 car purchase cost brings a 20% Fringe benefit value on the default (Statutory method-if you can't justify a log book because of low business kilometres) method is $4000. We all have expenses – from mortgage or rent payments, childcare to groceries, devices and cars. By minimizing your tax, you increase the purchasing power of your current income. If you were offered a pay increase, would you take it? With salary packaging, you can pay for some of these expenses with your pre-tax salary. These are items not subject to FBT (and which health and not-for-profit employees can package in addition to their caps) and include: Some benefits are partly subject to FBT. Leave your details below we’ll call you back to discuss your options. Usually, we pay for these things once our payroll department has taken tax out of our salary. If all that you had to do was fill out a form, do you think that you would take the time to do it to save yourself hundreds or even thousands of dollars per year? The most common arrangement is what's called a novated lease. But some workers are allowed to package items up to a certain capped amount before they’re liable for the 47% FBT rate currently in place. Elizabeth Street Salary packaging is an ATO-approved employee benefit that affords you the ability to spend your pre-tax dollars. The main benefit of salary sacrificing is that it reduces your pre-tax income, and therefore the amount of tax you must pay. With a salary package, money is usually deducted from your salary before tax for these items or services. Jane has a salary of £35,000 a year and contributes 5% into her pension, while her employer contributes 3%. As one of Australia’s oldest and most trusted salary packaging providers, we know how important workplace benefits are to employees. Depending on your employer and the industry or sector you work in, you could be eligible to salary package a range of expenses, including: Find out more about these and other industry-specific benefits here. Salary packaging is an employer-employee arrangement that helps thousands of Australians across a range of industries make the most of their salaries. With all the options that can be considered when financing your new car, a Novated Lease is regarded as the most viable options to go with. Aside from the tax benefits of salary packaging such a significant life expense another key benefit of novated leasing is that all of your vehicle costs are budgeted and included in your fortnightly repayments, which means you generally get a fuel card for your fuel expenses, your routine service costs are covered and your registration and insurance is paid for without you … Using your pre-tax salary to pay for things allows you to increase your disposable income and pay … Benefits can include goods and services like a car or laptop or contributions to your superannuation account. Capped benefits are items that are subject to fringe benefits tax (FBT) – which is a tax employers pay on certain benefits they provide to their employees. We offer a range of services aimed at enabling you to make a confident choice about salary packaging, at a minimum effort to you. Expenses you would’ve paid anyway, after-tax. If you are salary packaging with your employer and you are receiving any benefits from Centrelink it is important that you let Centrelink know that you are receiving fringe benefits and the … By completing this form, I agree to Maxxia sending me emails about its products, services and offerings. For example, it’s common for businesses to allow additional superannuation contributions but not all organisations will offer salary-packaged cars. With salary packaging, you can pay for some of these expenses with your pre-tax salary. Employers are required to pay fringe benefits tax (FBT) on certain salary-packaged benefits provided to employees. By choosing to salary package, you allocate a portion of your income to the payment of certain expenses before your income tax is calculated. Salary packaging is a simple way for eligible NSW Health employees to increase their take home pay by reducing their taxable income and therefore the amount of tax they pay. Salary Packaging is not only for full time employees, if you work casual hours or part time and your employer allows you to participate in salary packaging Paywise is here to help. At the end of each FBT year, we recommend that salary packaging customers have a zero balance left over. Put simply, salary packaging allows you to increase your disposable income by reducing the tax you pay. The pros and cons of salary packaging a car Cars and running costs are another popular way to make use of salary sacrificing. A salary sacrifice arrangement is when you agree to receive less take-home income from your employer in return for benefits.

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