There are still opportunities for tax-effective salary packaging – especially if you are in the not-for-profit sector.
Salary sacrificing is where your employer pays you the same salary, but you pay for selected expenses before the tax is taken out, rather than after. This could reduce your taxable income and give you more money to spend on the things you want.
The key to a tax-effective salary sacrifice is for the employee to take some of their salary in the form of concessionally taxed benefits or even exempt benefits instead of taking it all as taxable salary.
For the employer, salary packaging has some advantages such as the ability to attract employees. The administration costs of salary packages also need to be considered. Some employers may only offer limited forms of packaging to reduce their costs.
The most common salary packaging items are:
- Car fringe benefits (i.e. Novated Lease)
- Expense payment fringe benefits (especially otherwise deductible expenses)
- Portable digital devices – laptops, mobile phones etc
- Car parking fringe benefits
- Superannuation.
The advantages of salary sacrifice are that you are buying the benefit in pre-tax dollars, saving money you would otherwise pay in tax.
Contact us today to discuss options for your situation.