Is salary sacrifice for you?

ALTERNATIVES: Salary packaging can vary depending on your job, your industry sector or your location, as well as what employers are able and willing to offer. Always seek expert advice before making a decision about packaging.
ALTERNATIVES: Salary packaging can vary depending on your job, your industry sector or your location, as well as what employers are able and willing to offer. Always seek expert advice before making a decision about packaging.

Salary packaging is a great way to manage some of your regular expenses and potentially reduce the tax you pay, and MyState Wealth Management Financial Planner Tiffany Hardwick has some advice on 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 provided in exchange for the packaged amount can cover a vast array of expenses:

Superannuation: employees may be able to salary sacrifice additional amounts into their super fund every year, within allowable limits.

Everyday expenses: some employers will allow you to package household groceries, utility bills and even petrol and other transport costs. Other everyday expenses can include school fees, mortgage or rent payments, as well as other loan and credit card repayments.

Entertainment expenses: some employers allow you to package the cost of entertainment and meals.

Holiday and travel costs: it may be possible to package the cost of your holiday, which can help make travel more affordable.

Cars and vehicles: many employers allow employees to package through a novated lease to reduce the cost of running vehicles.

It’s not possible to claim expenses direct debited from your bank account, like private health insurance, and the rules around fringe benefits make salary packaging complicated so it’s important to get expert advice before entering into a salary packaging arrangement.

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 and in remote areas, people may be entitled to additional benefits due to their location.”

“Check what your employer will allow to be packaged, and speak to a financial adviser about the best way to make the most of these benefits.”

Call Tiffany Hardwick, Financial Planner at MyState Wealth Management on 1300 651 600 or visit mystate.com.au/wealth today.

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.