Everything you need to know about salary packaging and how it can save you money

December 2017

Salary package or Salary sacrifice can reduce your taxable income

Did you know that you could potentially pay for your car, or even for part of your mortgage with pre-tax dollars? It’s true, and it’s possible with Salary Packaging. Salary Packaging or Salary Sacrifice (as it’s otherwise known), lets you pay for selected benefits from your pre-tax salary, which could help to reduce your taxable income.

Firstly, different rules on Fringe Benefit Tax (FBT) apply to different types of organisations. So, when it comes to Salary Packaging, where you work plays a huge role. Below we have detailed the different types of FBT groups, plus created a handy checklist of all the things you can package, depending on which FBT group your organisation fits in.

FBT Exempt organisations

FBT Exempt organisations include not-for-profit bodies like charities. If you work for one of these, you can salary package up to $15,900 from your pre-tax salary each FBT year (April 1 – March 31). This means, by salary packaging you can potentially reduce your taxable income by up to this amount, thus potentially providing you with substantial income tax benefits.

FBT Rebatable organisations

Rebatable organisations include private schools, testing authorities and sporting clubs. If you work for one of these, you need to pay FBT. But the good news is, you receive an FBT rebate on amounts salary packaged up to $15,900. However, your salary needs to be over $87,000 to make this tax-effective for you.

Corporates

Corporates pay the full rate of FBT. There are certain items you can salary package that are FBT-exempt, including Novated Leases on vehicles, plus work related items like laptops and mobile phones. These items combined could provide substantial potential tax savings.

What can I Salary Package with no FBT?

No matter which group you work for, you can package extra super payments and work-related items like laptops and mobile phones^.

Rebatable and Exempt groups can also package mortgages, rent, school fees and credit card payments. If you work for an Exempt organisation, you can even package accommodation, meals and entertainment. But to make things even easier to understand, we have created the handy checklist below.

BENEFIT   CAN I SALARY PACKAGE IT?
   CORPORATE REBATABLE  EXEMPT
(including Public Hospital)
Novated Lease  YES YES  YES 
Associated Lease  YES  YES  YES 
 Laptop/PDA YES YES  YES 
Mobile Phone  YES YES  YES 
Airport Lounge
Membership 
YES  YES  YES 
 Extra Superannuation YES YES  YES 
 Expense Items 
(mortgage, rent, school fees, 
credit card etc.)
NO YES  YES 
 Meal / Entertainment NO NO  YES 
 Accommodation NO NO  YES 
 Remote Area Benefits YES YES  YES 


Say YES to reducing your tax bill today

As you can see above, a Novated Lease is just one of the ways you can reduce your income tax bill. You could also save on the GST amount on any items you’re eligible to package, putting the money back in your pocket. At Toyota Fleet Management, we have helped thousands of employees do just that, and access more potential savings with the help of Salary Packaging.

If you’re ready to start paying less tax, we’re here to help. For no-obligation advice on how to salary package a car or anything else from the above list of benefits, click here or call 1300 888 870.

Enquire now Calculate


Disclaimer

The 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. ^Conditions apply. Please speak to a TFM consultant for more information.

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