Depending on your level of income, the industry you work in and your employer it may be of benefit to you to consider the way you receive your income.
Salary Sacrifice of Superannuation contributions is one of the most popular ways to package your salary. In this case you have part of your “pre tax” or “gross” salary contributed to your super fund rather than receiving it in cash and being taxed on it personally.
For individuals with incomes that push them into the 30% tax bracket this strategy can be attractive. Salary sacrifice contributions are taxed at 15% on the way into the super fund. However, if you are over the “Superannuation Surcharge Tax” income level (currently about $97,000) you may also have to pay up to an extra 15% tax. This is still a saving of 18.5% per dollar.
If you work for a public benevolent institution or charity you may have access to a Fringe Benefits Tax (FBT) Exemption, which means you can package things like home loan repayments and avoid the FBT. For example, a nurse working in a public hospital can package up to $8,750 per annum without having any tax liability.
Substantial tax savings are available – contact us to assist in determining what advantage you may get from salary packaging.
Call LIPS today to discuss your Salary Packaging options