What is salary packaging?
Salary Packaging is a way of gaining more cash flow into your pocket by calculating tax deductions from your gross income each and every pay period. It enables you to buy a range of work related everyday items out of your pre-tax salary rather than your after-tax salary, leaving more money in your pocket each pay.
By salary packaging throughout the year you increase your net income every pay period.
Example A) An increase in your net income per month of just say $50 is like receiving an increase in your salary of an average $71 per month which equate to $857 per year.
If you earn $50,000 per annum you have just given yourself the equivalent of 1.71% rise for the year.
Example B) An increase in net per month of say $100 is equivalent to receiving an increase in your salary of $162 per month which equates to $1944 per year.
If you earn $80,000 per annum you have just given yourself the equivalent of an approximate 2.43% rise for the year. You can congratulate yourself!!!
What Items can be salary packaged?
Some work related items which can be considered for salary packaging are;
Superannuation, Laptops, Cars, Professional membership or subscriptions, newspapers magazines, self-education, relocation expenses, Living Away From Home Allowance, home office expenses, car parking, transport and travel, mobile phone, computer software, income protection insurance, investment loans, and industry work clothing.
Who can benefit?
Everyone can look at salary packaging
- Organisations should look at salary packaging as a way of rewarding their employees with nil or minimum cost to them.
- Individual employees should ask how they can look at salary packaging to help with their monthly cash flow.
- If you are running your own ABN or are an Independent Contractor that is tired with procedures such as BAS statements, invoicing and paperwork, but still want maximum cash flow, salary packaging is also available for you to.
What is next?
“Salary packaging creates happy employees”…
If you are an organisation looking to give your employees the options of salary packaging then you should discuss this situation with your CFO, Accountant or talk to us about salary packaging.
“Give Yourself A Raise You Deserve It”…
If you are an individual and you would like to consider the salary packaging options available to you, you will need to talk with your employer to see what they are able to offer you. You may also want to discuss your options with us regarding salary packaging.
Own ABN – Independent Contractor
Pendragon is a specialised salary packaging company who can help you set up your own ABN an operate as an independent contractor.