Also known as ‘salary sacrifice’, Salary Packaging is an arrangement between you and your employer that lets you trade some of your future pre-tax salary in return for certain benefits you may require – like a new car, for example.
While there is no restriction on the types of benefits that can be sacrificed, different employers may offer different benefits to be packaged as a replacement for salary. A Novated Lease is one of the most popular benefits to include in a Salary Package, as the car lease payments and running costs come straight out of your salary, making it an easy way to get into a new car. Other common benefits include mobile phones, laptops and airport lounge memberships. Depending on the type of group your employer falls into for Fringe Benefit Tax (FBT) purposes, it will determine the amount of benefits you can package. To find out more about what benefits are available depending on your employer’s FBT Status group, click here.
While Salary Packaging is ideal for big-ticket items, like novated leases on vehicles, it could also save you money on smaller things, too. For example, say you need a new laptop, which you’ll be using primarily for work. You choose and pay for one valued at $1500, and decide to salary package it. Firstly, the GST of $136 is credited back to you via your salary package, so the laptop actually only costs you $1364. Secondly, the cost of the laptop is paid in pre-tax dollars, meaning the payment is deducted from your gross income, which reduces your taxable income by $1364. This in turn has the potential to reduce the amount of income tax you owe (and increase your refund!) come tax time.
With pre-tax deductions from your salary, you could enjoy potential tax savings that add up to thousands.
With Salary Packaging, the things you need end up costing you less because GST is not payable on the benefit and you can potentially save on income tax. That’s Salary Packaging in a nutshell.
You work hard for every dollar so why not make every dollar work harder for you? At Toyota Fleet Management, we can show you how to get into the car of your dreams and help you determine other benefits you can salary package to reduce your taxable income. So, if you’d like to know how we could make Salary Packaging work for you, enquire now.
DisclaimerThe information provided by Toyota Fleet Management (TFM), a division of Toyota Finance Australia Limited ABN 48 002 435 181, AFSL and Australian Credit Licence 392536, in this article is of a general nature and for your information only. Nothing in this article constitutes or should be considered to constitute legal, taxation or financial advice. Before making a decision about any Salary Packaging arrangement, TFM recommends that you seek independent professional advice about that arrangement, such as from your accountant, taxation or financial adviser or lawyer, who can advise you about your personal circumstances and what would be suitable for you.
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