If you’re confused about what salary packaging is, asking your employer what packaging options are available or doing your own research into salary sacrifice arrangements could save you from losing out to tax when making large-scale purchases or paying off loans.
This video from Salary Options explains the concept and working of salary packaging, as well as offering advice to employers who are thinking of setting up these mutually beneficial arrangements. Salary packaging has become a popular option for employees who can reduce the size of their taxable income and lose less money to tax, by setting aside an agreed portion of their pre-tax salary for day-to-day expenses – whether that involves paying off a home mortgage or buying a car through a novated lease.
Without salary packaging, employees could ultimately be taking home less pay, after these expenses are taken care of outside of pre-tax arrangements. Salary packaging offers a more cost-effective option for people of all backgrounds in a variety of jobs to pay off loans earlier and make purchases more affordable, and typically offers savings between 1000 and 6000 dollars per year, depending on income.
A range of living expenses may be paid through salary packaging arrangements using your pre-tax income, depending on what’s offered by your employer, and these salary deductions are monitored closely by the Australian taxation office. For more details about salary packaging and buying novated lease vehicles in Broome at a flat 20 per cent of taxable deductions, contact Fleet Network on 08 6555 3854.