Salary Packaging - Can you please enlighten me?

baldur on 10/11/2017 - 20:02

Hi,
My employer offered me a permanent position with around 40k gross annual salary and two options, first is with salary packaging and the second is without it. I am going to also discuss with my manager later on but at this point the meeting was brief and here i ask my questions scratching my head.

I'll be getting net 170 Aud extra salary with salary package. is this my pocket money or like superannuation of which i can access under certain conditions? i am not paying any mortgage or car loan. i have only private health insurance which is 75 dollars a month. So it sounded a bit tricky to me. for example, are there any hidden fees or cuts? Will i possibly have troubles with Taxation Office?

So do you think i should choose the salary with packaging?

Thanks in advance.

Financial

Comments

  • robbyjones on 10/11/2017 - 20:18
    +2

    Packaging a salary is just a way for employers to make the salary look better than what it is. Salary packaging would include compulsory super, car allowance and anything else they may pay you for that you use for work. I am confused what your question is though you mention an extra $170 what is this for? You can't elect to take home the super part of your salary. Is it perhaps $170 per week car allowance versus a company car, something like that?

    • stratbargain on 10/11/2017 - 20:29
      +1

      It depends on the job. Heck my wife salary packages our mortgage and meals out. (up to a certain amount). In theory her salary packaging means an extra $10k that she wouldn't get otherwise due to tax benefits.. A nice difference in the scheme of things and an amount that certainly should be taken into consideration when comparing a base salary (with no salary packaging) vs one with.

      • John Kimble on 10/11/2017 - 20:31
        +4

        Pretty sure you can only do those type of things if you work for a non profit/charity?

        • stratbargain on 10/11/2017 - 20:31
          +1

          And a few others… But as I said, it depends on the job.

          EDIT: OP you need to look into it more and see who they salary package with (if it's a third party) and then contact them and get a better understanding of what you can package and to what value.

          Then do the math and work out how it compares to a non salary packaged salary.

    • baldur on 10/11/2017 - 20:41

      170 is the difference between non packaged salary and packaged salary. there is also superannuation and i know i cant touch it.

  • monkeybusiness on 10/11/2017 - 21:50
    +3

    40k Is fairly low for them to offer salary packaging but I suppose every dollar saved counts. Hence you may be only 170 better off by packaging but you need to determine if it is worth it for you as it will depend on what it is being packaged with

    What packaging typically does is that it allows you to reduce your taxable salary while replacing it with something else instead. Since your taxable salary is reduced, your tax bill is also reduced.

    E.g Instead of Employer saying I'll pay you 40k for the year, you may get it packaged so that they only pay you 39k + a laptop to the value of 1k. Since your income is now only 39k, you saved having to pay tax on a extra k of income.

  • [Deactivated] on 10/11/2017 - 23:22
    -1

    40k? are you a slave

    • baldur on 11/11/2017 - 05:09
      +1

      It's part time.

    • rambutann on 11/11/2017 - 12:02

      In my first full time job I was paid $32k as a 20 year old. Literal bottom of the bottom minimum wage. I would have killed for $40k. This was only a couple of years ago.

      Also, it was a clerical job in an office in the CBD.

  • try2bhelpful on 11/11/2017 - 08:00

    Suggest you have a chat to an accountant on this. It depends on FBT rules etc as to what will be useful and what won't. Leasing cars is a pretty popular packaging item.

  • Meho2026 on 12/11/2017 - 09:15
    +2

    Usually you can salary package $9009/year which is $173.25 a week.
    It basically means your taxable income is reduced by $9009/year.
    Its easy, no worries with the tax man, your employer meets the tax mans criteria to offer salary packaging.
    Assuming the $40K is your only annual income, you would normally pay $4547 tax, leaving you with $35453 net.
    If you salary package $9009, your taxable income becomes $30991, you'll pay a total tax amount of $2430. This will leave you with $37550 net.
    Increasing your net income by $2037/year.
    Its clearly advantageous to you to accept the salary sacrifice.
    Officially you are supposed to have acceptable living expenses of $9009/year. My last employer did not require evidence of expenses eg loan repayments, rent etc. However my current employer does.
    Ask your employer if you are required to show evidence and what that can be, sometimes credit card statements are enough regardless of what you purchased using it. Rental statements are evidence too, if you live with family and dont pay rent, you could consider putting the power bill in your name if that was acceptable evidence.

    • baldur on 12/11/2017 - 09:42

      Perfect, I'll ask that and probably go with that.

  • retiredfeline on 12/11/2017 - 09:21

    As monkeybusiness and kenh2003 have explained, SP is a way to help you stretch your salary. Some sectors, e.g. NSW public health, have a generous list of things that can be packaged, even things like utility bills and strata levies from years ago can be claimed.

  • T-man on 12/11/2017 - 21:04
    +1

    I was offered a salary package and the company paid for my novated leasing car, at the end of the leasing you can buy it which is cheap and just buy a new car, and sell the novated car, you can get a lot tax benefits by doing this.

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