A salary sacrifice (Salary Packaging) arrangement is an arrangement between an employer and an employee, whereby the employee agrees to forgo part of their future entitlement to salary or wages in return for the employer providing them with benefits of a similar cost (to the employer).
Under an effective arrangement:
- The employee pays income tax on the reduced salary or wages
- The employer may be liable to pay FBT on the fringe benefits provided, and
- Salary-sacrificed superannuation contributions are classified as employer superannuation contributions (rather than employee contributions) and are taxed in the superannuation fund under the tax laws dealing specifically with this subject.
Your employer will determine whether salary packaging can be made available to you and what benefits are offered.
- Additional superannuation
- Notebook computer
- Education expenses
- Home mortgage repayments
- Utility payments
- Private travel
- Novated leasing of a motor vehicle
- Membership fees
- Work clothing and tools of trade.
Your own personal circumstances will determine whether salary packaging will be of benefit to you.
Some of these items attract Fringe Benefits Tax, so it is important to review your situation with your Future Planning Solutions’ financial adviser.
