Pendragon has provided the salary packaging (also known as salary sacrifice) service for over 12 years and it still amazes me how little is known by the general employee on this; most people think it is something applicable to the high earners only.
What is salary packaging?
Salary Packaging allows you to claim work related tax deductions during the year, in your pay instead of having to wait until the end of financial year to make your claim.
It enables you to buy a range of 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 each 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.
What items can be salary packaged?
Some of the 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 in some cases, work clothing.
Who can benefit?
• Companies to assist with employment negotiations by adding value to the individuals package
• Individuals to maximise their net income
To find out how Pendragon can advise individuals or companies on salary packing options please don’t hesitate to talk to us…
02 9407 8700