Eligible health workers can pay salary packages, living expenses, car loans, and extra superannuation. It is a great way to reduce income tax and increase your disposable income yearly. It is essential to seek independent financial advice before establishing salary packaging arrangements.
Salary packaging is an Australian Taxation Office-approved method of receiving a remuneration package by paying for some of your expenses with pre-tax dollars. It may save you thousands of dollars each year. For more information about the ACT health sector salary packaging, click here.
Benefits
Salary packaging, or salary sacrifice, as it is often called, allows you to pay for items out of your pre-tax income and reduce your taxable income. It leaves you with more money to cover everyday expenses and save annually. We work with employees from various industries, including government, healthcare and emergency services and can help you find a strategy to suit your circumstances.
All employees who have salary packages or are considering it should seek independent financial advice from a professional. Employees should also inform their advisers of their current superannuation concessional contribution cap and salary packaging arrangements to ensure they don’t breach the cap. Employees should be aware that they could lose their salary packaging entitlement if they go on extended leave, are unable to participate due to injury or illness or cease to be eligible for the ACT Health Service.
Taxes
Employees who access salary packaging can reduce the income tax they pay by sacrificing part of their cash salary in return for certain benefits. These fringe benefits are taxable at the Fringe Benefits Tax (“FBT”) rate. FBT is a separate tax from income tax, and the taxable value of each fringe benefit package item will be shown on their payment summary at the end of each financial year.
The ACT public service provides a range of benefits for employees that are subject to FBT, including:
Documentation
Salary packaging, or salary sacrificing, allows staff to reduce their income tax by preceding some cash salary in exchange for fringe benefits such as computers, mobile phones and cars. It is an option available to ACT Public Service employees who can access it through their Enterprise Agreement, Attraction and Retention Incentives Policy or Australian Workplace Agreement. HCC recommends seeking independent financial advice before entering into a package.
HCC will keep the terms of a staff member’s Salary Packaging Arrangement confidential between them and AccessPay and will not disclose those terms to anyone else without the employee’s consent. The arrangement will continue to apply until the employee notifies AccessPay that they no longer wish to receive the salary package or if their employment is terminated.
Staff should regularly check their expenses to ensure they do not breach grossed-up reporting thresholds (particularly for motor vehicles). The fees associated with salary packaging vary from provider to provider, so staff should confirm these with their provider.
Expenses
Expenses are a crucial consideration when salary packaging. While it’s a great way to boost your disposable income, it’s essential to understand the costs associated with salary packaging before making any decisions. For more information about the ACT health sector salary packaging, click here.
Using salary packaging to pay for your everyday expenses can significantly reduce the tax you must pay. While there’s a limit to the number of costs you can package each Fringe Benefits Tax (FBT) year, saving a substantial amount of money through salary packaging is possible.
Salary packaging is an Australian Tax Office (ATO) approved method of structuring your remuneration package to pay for non-cash benefits such as cars, living expenses and professional membership fees. The amount of cash salary you receive is reduced or’sacrificed’ to pay for the packaged item, which is then paid for from your pre-tax allowance. The ATO has a Salary Packaging Guideline that includes information about the tax consequences of various salary packaging options.