Thread: Salary Sacrificing - the Good, Bad and Ugly

Be aware that some shonky employers will reduce their superannuation contribution as your taxable wage will be lower.

Government depts. don't usually do that, just private employers.

Lionel,

Hello from Brisbane.

Sounds like you are moving ahead - 9 to 5 has its downsides, but it helps keep the wolf from the door.

Re salary packaging - not a lot of experience with it, but the old adage about getting something for nothing probably applies here. Especially when the Tax Office is a party to the arrangement.

The benefits largely depend on your particular occupational classification, salary and circumstances. For example, and unless things have changed, the things you can sacrifice do vary between professions - for example, shift nurses generally get better options than clerks in terms of what can be sacrificed. People on the highest marginal tax bracket get the most gain, while those in middle brackets get virtually none - in fact, after establishment and management costs are deducted the gain is sometime in the red.

For a lot of occupations the main targets are super, cars, computers and school fees. Nurses used to be able to sacrifice school fees whereas clerks couldn't. Car leases are popular, but the catch there is the type of lease arrangement on offer and how many kms a year have to be traveled to get the favorable tax rate - unless you are doing a lot of miles the end result is often a mad rush to get them up to meet the threshold and/or a clapped out late model high mileage car with low resale value. Computers are generally a poor value option if your work already gives you access to one - they have to be a laptop in my profession and I have several already, so the attraction is pretty low there. I did actually sacrifice a laptop a few years ago and after fees etc it was pretty marginal.

Super is probably the most cost-effective of any of the options, but again it depends on the conditions.

The best thing to do is to talk to the agency that has the contract for handling sacrifice arrangements for your employer. Note in particular the fees that are involved in setting anything up and whether it is subject to ongoing handling fees. Others may have widely differing views, but in my profession very few people outside upper management actually take advantage of salary sacrificing and the majority of the few who took on car leases have not repeated the exercise after the first agreements ran out.

Cheers,

Lionel,
my wife and I have both salary sacrificed over the last 6-7 years.

my wife into novated vehicle leases and holidays of all things, including special dining cards etc.

I did it heavily into private superannuation , btw this years maximum is now $35,000 not $16,000.

it wont work for everyone and if you have had a lack of employment you'll probably want to review your financial situation first.

it's not something for nothing and it should be approached with proper advice.

a forum member here could give you all the help you need, try pmming stevo68.

hope the job works out for you.....good luck

Originally Posted by Lionelgee

Hello All, My employment drought may soon be coming to an end - cross fingers. Being a Community Service based job there is an offer of being able to salary package up to $16K. Have any other members on the forum had experience with a "Tax-Free Salary Package" - has it been a good, bad or ugly experience? What sort of things have you negotiated as part of your "Salary Package"? What are the traps and what type of things should be avoided? Kind Regards Lionel

I currently have the same SalSac limits as you are being offered.
It is fantastic.
Do you have an accountant do your tax? If do a conversation about this will be very beneficial.

Traps: company vehicles, phones ie fringe benefits can affect the amount you can package.
This simply means that some of these benefits will have to be considered as part of your 16k.
I believe the Fed Govt just changed the amount to 15899.

For us, property/ mortgage s the best place to put it. IMO use it where it will make the most impact on debts that qualify.

In my case, I was able to salary sacrifice my whole base salary into my superannuation at 15% tax. The remaining overtime and penalty rates usually came in at under the tax threshold so I paid no tax on that.

As I was over 60, I could draw down a tax free pension from my super to top up my monthly income.

Ron (at the airport spending the kid's inheritance)

Get some expert advice as it varies a lot depending on circumstances.

The list of what you can package is really only limited by your imagination and the willingness of your employer to facilitate it. If you are fortunate enough to work for an FBT Exempt or rebatable employer there are some excellent savings to be made. Holidays, weddings, birthday parties as well as the usual super, laptops, cars etc. As has been mentioned before, speak with your accountant to help you get the most benefit from what you have available.

+1 for talking to your accountant. We have done pretty well out of packaging vehicles but our circumstances are not the same as others and the benefits largely depend on your situation.

Regards,
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