First published on February 1, 2018
Did you know that salary packaging is a great way to manage some of your regular expenses and potentially reduce the tax you pay?
Let’s talk about some of the potential benefits of salary packaging.
Salary packaging (also referred to as salary sacrificing) is an arrangement made between an employer and employee where an employee agrees to receive a lower salary in return for benefits equal to the sacrificed amount. Employees generally pay tax on the income they earn, which in a salary package arrangement is lower than if the amount were included as a cash part of their income.
The benefits the employer can provide in exchange for the packaged amount can cover a vast array of expenses:
Keep in mind however that it’s not possible to claim expenses direct debited from your bank account, for instance private health insurance or home and contents premiums. There are rules around fringe benefits that make salary packaging complicated and it’s important to get expert advice before entering into a salary packaging arrangement.
These are some of the most common opportunities for people to salary package, however, there are also a range of lesser-known expenses people can claim depending on where they work.
What you can claim depends on your job and industry sector. For instance, special provisions apply to people who work for not-for-profit organisations or within the certain areas of the health sector, while people working in remote areas may be entitled to additional benefits due to their location.
Every employer has an individual approach, so check what your employer will allow to be packaged. It pays to speak to a financial adviser about the best way to structure the package to help you make the most of these benefits. To find out more about salary packaging call us on 1800 806 645 – we’ll introduce you to our colleagues at MyState Wealth Management for an obligation-free discussion. For more information visit mystate.com.au/wealth.
Information is current as at 22 January 2018. We recommend you seek independent tax advice. This is general advice only and does not take into account your personal objectives, financial situation or needs and you should consider whether it is appropriate for you.