We’re always pleased when more people get the chance to learn about the ins and outs of salary packaging and the associated benefits it can offer. That’s why we were thrilled to be featured in a recent piece from one of Australia’s leading publications, The Australian.
Written by Personal Finance Writer, Anthony Keane, the article provides some tips for employers to retain top talent by offering salary packaging benefits, and for employees to lower their taxable income and keep more in their back pocket. We’re going to cover some of the article’s key points below.
It’s all about the ways you can save
Keane opens with an overview of some of the ways people can save through tax – with salary packaging front and centre.
Smartgroup’s Chief Operating Officer Sarah Haas mentions to Keane that people are often missing out on taking advantage simply because they’re not aware of the opportunities available to them. As she explains – we often receive feedback from people saying “wow – we wish we knew about this before”.
Superannuation
The Australian article offers some great insights into maximising your superannuation benefits with Keane exploring something we’re very familiar with here at Smartgroup: contributing additional funds to super using salary sacrifice.
These extra contributions then get taxed at the reduced rate of 15% instead of the employee’s marginal tax rate (up to an annual total of $27,500 in super contributions, which includes anything paid by the employer).
He notes: “an average wage earner who salary sacrifices $10,000 into super can potentially save $1,950 in tax each year. This won’t increase their take-home pay but it will inject extra money into their retirement savings”.
Keane offers a few other handy suggestions, like using government incentives such as the First Home Super Saver Scheme.
Salary packaging other items
The article also runs through some of the other benefits open to employers and their staff.
As Sarah Haas shared with The Australian, more employers are using salary packaging as a way to attract and retain staff.
“Common benefits offered to the private sector include novated leasing (for vehicles), superannuation, work-related items such as a portable electronic device, home office expenses, financial or taxation advice and airport lounge memberships”.
Add to that some extra salary packaging items for the non-profit and health sector – like tax-free caps on everyday living expenses, meals, and holiday accommodation.
Sarah Haas also gave some examples to add extra context:
- Someone earning an annual salary of $50,000 or more in the not-for-profit sector could potentially keep about an extra $5,000 each year with salary packaging
- Salary packaging a lease on a $35,000 car could mean an average saving of $12,000 over 5 years
What is salary packaging…and how can it benefit employers and employees?
Fully approved by the ATO, salary packaging is a way employees can potentially increase their take-home pay by using their pre-tax salary to pay for certain items…and all at no cost to their employer.
The rules that make up each salary packaging benefit (what they are, how they’re applied and who they can be offered to) are set out by the ATO. An organisation can then decide which benefits from those available, it’ll offer to its employees.
We’ve found that salary packaging is an efficient way for employers to help attract and retain high-calibre staff. Along the way, it helps reduce the cost of recruitment, lowers staff turnover and increases employee satisfaction.
Seamless salary packaging with Smartgroup
You can partner with a Smartgroup company to deliver your salary packaging program. It’s a cost-effective way to reward your employees, while taking pressure off your internal teams.
We’re here to work with you to build an effective program. And once that’s in place, we’ll take care of the administration for you - leaving you free to spend time on other important work.
Get started today
If you’re interested in finding a tailored salary packaging solution that can help your organisation thrive, click here to get started.